PARTICIPATION AGREEMENT
Among
XXXXXX XXXXXXX UNIVERSAL FUNDS, INC.
XXXXXX XXXXXXX ASSET MANAGEMENT INC.
and
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
THIS AGREEMENT, made and entered into this 28th day of June, 1996 by
and among NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION, (hereinafter the
"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 such account hereinafter referred to as the "Account"), and XXXXXX
XXXXXXX UNIVERSAL FUNDS, INC., a Maryland corporation (hereinafter the "Fund"),
and XXXXXX XXXXXXX ASSET MANAGEMENT INC. (hereinafter the "Adviser"), a
Delaware corporation.
WHEREAS, the Fund intends to engage in business as an open-end
management investment company and is available to act as (i) the investment
vehicle for certain qualified pension and retirement plans ("Qualified Plans")
and (ii) the investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts (collectively, the
"Variable Insurance Products") to be offered by insurance companies which will
enter into participation agreements with the Fund and the Adviser (hereinafter
"Participating Insurance Companies"); and
WHEREAS, the shares of the Fund are divided into several series (each
designated a "Portfolio") and representing the interest in a particular managed
portfolio of securities and other assets; and
WHEREAS, the Fund has filed an application for an order from the
Securities and Exchange Commission (hereinafter the "SEC"), granting
Participating Insurance Companies and variable annuity and variable 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,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies, as well as certain
Qualified Plans (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is or will be registered as an open-end management
investment company under the 1940 Act and its shares are or will be registered
under the Securities Act of 1933, as amended (hereinafter the "1933 Act") prior
to the issuance and sale of shares to the Company; and
WHEREAS, the Adviser is duly registered as an Investment Adviser under
the Federal Investment Advisers Act of 1940 and any applicable state securities
law; and
WHEREAS, the Company has registered or will register certain variable
life and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more variable life and annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid variable life and variable
annuity contracts,
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 agrees to sell to the Company those shares of each
Portfolio of the Fund listed on Schedule B attached hereto which each Account
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the order for the shares
of the Fund. For purposes of this Section 1.l, the Company shall be the
designee of the Fund for receipt of such orders from each Account and receipt
by such designee shall constitute receipt by the Fund; provided that the Fund
receives notice of such order by 10:00 a.m. 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 Accounts and the Fund calculate
their net asset value pursuant to the rules of the SEC.
1.2. The Fund agrees, so long as the Agreement is in effect, to make
its shares available indefinitely (for so long as the respective Portfolios are
in existence) for purchase at the applicable net asset value per share by the
Company and its Accounts on those days on which the Fund calculates its net
asset value pursuant to rules of the SEC and the Fund shall use reasonable
efforts to calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Board of
Directors of the Fund (hereinafter the "Board") may refuse to permit the Fund
to sell shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Board acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, necessary in the best interest of the
shareholders of such Portfolio.
1.3. The Fund and the Adviser agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts and,
in accordance with the terms of the Shared Funding Exemptive Order, certain
Qualified Plans. No shares of any Portfolio will be sold to the general public.
1.4. The Fund will not sell Fund shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Articles I, III, V, VII and Section 2.5 of Article II of this Agreement
is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption on the next following Business Day.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio, as listed on Schedule B which is attached hereto, offered by the
then current prospectus of the Fund and in accordance with the provisions of
such prospectus. The Company agrees that all net amounts available under the
variable life and variable annuity contracts (the "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, shall be
invested in the Fund, in such other Funds advised by the Adviser, or an
affiliate of the Adviser, 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 Fund 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 Portfolios of the Fund; or (b) the Company gives the Fund
and the Adviser 45 days written notice of its intention to make such other
investment company available as a funding vehicle for the Contracts; 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 Adviser prior to their signing this Agreement; or (d) the Fund or
Adviser consents to the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. For purpose of Section 2.9 and 2.10, upon receipt by the Fund 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.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Fund's shares. The Company hereby
elects to receive all such income dividends and capital gain distributions as
are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Fund shall notify
the Company of the number of shares so issued as payment of such dividends and
distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally 5:00 p.m.
Eastern time) and shall use its best efforts to make such net asset value per
share available by 6:00 p.m. Eastern time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects 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 it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under Section 2932 of the Delaware Insurance Code and has
registered or, prior to any issuance or sale of the Contracts, will register
each Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for the Contracts.
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 the laws of the State of Maryland and all
applicable federal and state 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 or
the Adviser.
2.3. The Fund represents that it intends to qualify as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify or that it might not so qualify in
the future.
2.4. The Company represents that the Contracts are currently treated
as endowment, annuity or life 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 and the Adviser 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.
2.5. The Fund may adopt a plan to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to
have a board of directors, a majority of whom are not interested persons of
the Fund,formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
polices) complies with the insurance laws or regulations of the various states
except that the Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Maryland and the Fund and the Adviser represent that their respective
operations are and shall at all times remain in material compliance with the
laws of the State of Delaware to the extent required to perform this Agreement.
2.7. The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.8. The Adviser represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable federal
and state securities laws and that the Adviser shall perform its obligations
for the Fund in compliance in all material respects with the laws of the State
of Delaware and any applicable state and federal securities laws.
2.9. The Fund and Adviser represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund are
(or at the time the Fund's Registration Statement is granted effectiveness will
be) 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
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 shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.10. The Company represents and warrants that all of its directors,
officers and employees dealing with the money and/or securities of the Fund are
(or at the time the Fund's Registration Statement is granted effectiveness will
be) and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage, in an amount not less than the minimal coverage as required
currently by entities subject to the requirements of Rule 17g-1 of 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.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Fund shall provide such documentation (including a final copy
of the new prospectus and SAI meeting the size requirements specified by the
Company as set in type or in camera ready copy 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 printed together in one
document and sent to existing contract owners (such portion of the printing
attributable to the Fund's prospectus to be at the Fund's expense). In
determining the number of prospectuses, shareholder reports and other materials
reasonably required by the Company, the Adviser and the Company shall jointly
and in good faith consider a number of factors, including, but not limited to,
the number of registered representatives supporting the Contracts.
3.2. The Fund's prospectus shall state that the Statement of
Additional Information (hereinafter the "SAI") for the Fund is available from
the Adviser (or in the Fund's discretion, the Prospectus shall state that such
SAI is available from the Fund), and the Adviser (or the Fund), at its expense,
shall print and provide such SAI free of charge to the Company and to any owner
of a Contract or prospective owner who requests such SAI. If requested by the
Company in lieu thereof, the Fund shall provide such documentation (including a
final copy of the current SAI meeting the size requirements specified by the
Company as set in type 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 SAI for the Fund is amended) to have the SAI for the
Contracts and the Fund's SAI printed together in one document (such portion of
the printing attributable to the Fund's SAI to be at the Fund's expense).
3.3. 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.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(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 so long as and to the extent that the Securities and
Exchange Commission continues to interpret the 1940 Act to require pass-through
voting privileges for owners of Variable Insurance Products. The Company
reserves the right to vote Fund shares held in any segregated asset account in
its own right, to the extent permitted by law. Participating Insurance
Companies shall be responsible for assuring that each of their separate
accounts participating in the Fund calculates voting privileges in a manner
consistent with this Section.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Fund is not one of the trusts described in Section 16(c) of that
Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Fund will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees
and with whatever rules the Commission may promulgate with respect thereto.
3.6. The Company shall be responsible for delivering prospectuses,
SAIs, shareholder reports, proxy materials and others shareholder
communications to owners of and applicants for Contracts, as applicable, in
accordance with pertinent laws.
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 in which the Fund or its investment adviser or the underwriter is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus 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 or by the Adviser, except with the permission of the Fund or the
Adviser or the designee of either.
4.3. The Fund, and the Adviser, or its designee shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the Company and/or its
separate account(s), is named at least ten Business Days prior to its use. No
such material shall be used if the Company or its designee reasonably objects
to such use within ten Business Days after receipt of such material.
4.4. The Fund and the Adviser shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement 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 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, SAI, proxy statements, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Fund or its shares, contemporaneously with, or immediately
following, the filing of such document with the Securities and Exchange
Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy
of all registration statements, prospectuses, SAI, 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 Account,
contemporaneously with, or immediately following, the filing of such document
with the SEC or other regulatory authorities.
4.7. The Adviser will assist the Company in creating, preparing and
printing sales literature and other promotional materials, including, but not
limited to, sales brochures for series of the Fund included as investment
vehicles for the Contracts. The Adviser will share equally with the Company the
expense of creating, preparing and printing such materials, but in no event
will the Adviser be required to pay more than $15,000 per year under this
Section 4.7.
4.8. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as materials 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 by the Company to some or all agents, registered representatives or
employees, and registration statements, prospectuses, SAI, shareholder reports,
and proxy materials.
4.9. The Fund must obtain written approval of the Company prior to
visiting any Company office or communicating with Company personnel (except for
communications between the legal departments of the Company and the Adviser or
legal counsel to the Company, the Fund or the Adviser or routine communications
necessary for the day to day operations of the Fund and the Contracts or for
the processing of trades for Fund shares).
4.10. The Fund agrees to use best efforts to make available to the
Company personnel to conduct training and seminars. The Company agrees to give
the Fund reasonable advance notice of its need for such training and seminars.
The Fund also agrees to make available to the Company a representative
designated to perform services in connection with the marketing and sale of the
Fund, including, but not limited, to (a) responding to inquiries regarding the
Fund from the Company; and (b) providing general information regarding the
Fund.
ARTICLE V. Fees and Expenses
5.1. The Adviser shall pay the Company a fee computed daily at an
annual rate equal to (1) .15% of the aggregate net asset value of shares of the
Fund and of any other Funds distributed or advised by an affiliate of the
Adviser (the "Xxxxxx Funds") purchased by the Company and any of its
affiliates, including shares of the Xxxxxx Funds purchased through reinvestment
of dividends and distributions, until the aggregate net asset value of such
shares equals $250 million and (2) .20% of the aggregate net asset value of all
shares of the Xxxxxx Funds purchased by the Company and any of its affiliates,
including shares of the Xxxxxx Funds purchased through reinvestment of
dividends and distributions, when the aggregate net asset value of all shares
of the Xxxxxx Funds (including the shares referenced in 5.1(1) above) exceeds
$250 million. The parties agree that the Adviser's payments to the Company are
to assist the Company in providing administrative services to its Contract
owners.
5.2. The Fund shall see to it that all its shares are registered and
authorized for issuance in accordance with applicable federal law and, if and
to the extent deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting in type and printing the prospectus, proxy materials and reports to
shareholders (including, if so elected, 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 as applicable, 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, proxy statements, shareholder reports and other communications, and
reports to such Contract owners except that the Fund shall bear the cost of
distributing any proxy materials initiated by the Fund or the Adviser.
5.4. The Adviser will reimburse the Company for costs as set forth in
this paragraph 5.4 incurred by it as a result of (1) the failure of the Fund to
be registered as an open-end management investment company under the Investment
Company Act of 1940 prior to October 1, 1996; and (2) the failure of the Fund
shares to be registered under the Securities Act of 1933 prior to October 1,
1996. Costs include but are not limited to: preparation, printing and
distribution of prospectus supplements and plans of operations, including
regulatory filing fees; and revising, preparing, printing and distributing
sales support training and marketing materials with respect to the Contracts.
If the Company elects to sticker the prospectus for the Contracts as a result
of failure of the Fund or Fund shares to be registered under (1) or (2) above,
the Adviser will bear all expenses in connection therewith. Such expenses shall
not exceed $15,000. If the Company elects to reprint the prospectus for the
Contracts as a result of the failure of the Fund or Fund shares to be
registered under (1) or (2) above, the Company and the Adviser will bear
equally all expenses in connection therewith. Such expenses shall not exceed
$250,000.
5.5. If the Fund or any Portfolio adopts and implements a plan
pursuant to Rule 12b-1 to finance distribution expenses, then the Company, the
Fund, the Adviser and the Fund's underwriter will consider appropriate
amendments to this Agreement.
ARTICLE VI. Diversification
6.1. The Fund will at all times, consistent with instructions from the
Company received initially and from time to time thereafter, invest money from
the Contracts in such a manner as to ensure that the Contracts will be treated
as variable contracts under the Code and the regulations issued thereunder.
Without limiting the scope of the foregoing, the Fund will at all times comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to
the diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section
or Regulations.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict among the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax or securities laws or regulations, or a public ruling, private
letter ruling, no- action or interpretive letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract owners and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
7.2. The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation of the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested directors 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 directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a
vote of all affected Contract owners and, as appropriate, segregating the
assets of any appropriate group (i.e., annuity contract owners, life insurance
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 affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
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 within six months
after the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. Until the end of the foregoing six
month period, the Adviser and Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict, but
in no event will the Fund be required to establish a new funding medium for the
Contracts. The Company shall not be required by Section 7.3 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the 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 3.4, 3.5, 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 each of their directors and officers and each person, if any,
who controls the Fund or the Adviser within the meaning of Section 15 of the
1933 Act (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, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or contained in
the Contracts or sales literature for the Contracts (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of untrue statements or
representations (other than statements or representations contained in
the Registration Statement, prospectus or sales literature of the Fund
not supplied by the Company, or persons under its control) or wrongful
conduct of the Company or persons under its control, 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, or sales literature of the Fund or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such a statement or
omission was made in reliance upon information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company, as limited by and in accordance with the
provisions of 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 incurred or assessed against an Indemnified Party as such
may arise from such Indemnified Party's willful misfeasance, bad faith, or
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
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 service on any designated agent or of any such
claim shall not relieve the Company from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Company shall be entitled to participate, at its
own expense, in the defense 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 operations
of the Fund.
8.2. Indemnification by the Adviser
8.2(a). The Adviser agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's 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
the Registration Statement or prospectus or sales literature
of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Adviser or Fund by or on behalf
of the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or 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 or sales
literature for the Contracts not supplied by the Adviser or
the Fund or persons under their control) or wrongful conduct
of the Fund or Adviser or persons under their control, 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 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 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 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 Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c)
hereof.
8.2(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 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 each Company or Account, whichever is applicable.
8.2(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Adviser of
any such claim shall not relieve the Adviser from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In case
any such action is brought against the Indemnified Parties, the Adviser will be
entitled to participate, at its own expense, in the defense thereof. The
Adviser also shall be entitled to assume the defense thereof with counsel
satisfactory to the party named in the action. After notice from the Adviser to
such party of the Adviser's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Adviser will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable
costs of investigation.
8.2(d). The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of New York.
9.2. This Agreement shall be subject to the provisions of the 1933 and
1940 Acts and the Securities and Exchange Act of 1934, and the rules and
regulations and rulings thereunder, including such exemptions from those
statutes, rules and regulations as the SEC may grant (including, but not
limited to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon 30 days' advance
written notice to the other parties unless otherwise agreed in a separate
written agreement among the parties; or
(b) at the option of the Company if shares of the
Portfolios delineated in Schedule B are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
(c) at the option of the Fund upon institution of formal
proceedings against the Company by the NASD, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's duties under
this Agreement; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; or
(e) at the option of the Company or the Fund upon receipt
of any necessary regulatory approvals and/or the vote of the Contract owners
having an interest in the Account (or any subaccount) to substitute the shares
of another investment company for the corresponding Portfolio shares of the
Fund in accordance with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying investment media. The
Company will give 30 days prior written notice to the Fund of the date of any
proposed vote or other action taken to replace the Fund's shares; or
(f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (i) all contract owners of variable insurance
products of all separate accounts or (ii) the interests of the Participating
Insurance Companies investing in the Fund as delineated in Article VII of this
Agreement; or
(g) at the option of the Company if the Fund 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 Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet
the diversification requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon
another party's material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines
in its sole judgment exercised in good faith, that either the Fund or the
Adviser has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company or the Contracts; or
(k) at the option of the Fund or Adviser, if the Fund or
Adviser respectively, shall determine in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Fund or Adviser; or
(l) at the option of the Fund in the event any of the
Contracts are not issued or sold in accordance with applicable federal and/or
state law.
10.2. Notice Requirement
(a) In the event that any termination of this Agreement is
based upon the provisions of Article VII, such prior written notice shall be
given in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(b)- (d), 10.1(g) - (i), or 10.1(l),
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,
but in no event later than five (5) business days from the mailing of such
notice by the non-terminating parties.
(c) In the event that any termination of this Agreement is
based upon the provisions of Sections 10.1(j) or 10.1(k), prior written notice
of the election to terminate this Agreement for cause shall be furnished by the
party terminating this Agreement to the non-terminating 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 termination of this Agreement
pursuant to Section 10.1 of this Agreement, the Fund may, at its option, or in
the event of termination of this Agreement by the Fund or the Adviser pursuant
to Section 10.1(a) of this Agreement, the Company may require the Fund and the
Adviser to, continue to make available additional shares of the Fund for so
long after the termination of this Agreement as the Fund or the Company, if the
Company is so requiring, desires pursuant to the terms and conditions of this
Agreement as provided in paragraph (b) below for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, if the Fund so elects
to make available additional shares of the Fund, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, 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 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) In the event of a termination of this agreement
pursuant to Section 10.1 of this Agreement, the Fund shall promptly notify the
Company whether the Fund will continue to make available shares of the Fund
after such termination, except that, with respect to a termination by the Fund
or the Adviser pursuant to Section 10.1(a) of this Agreement, the Company shall
promptly notify the Fund whether it wishes the Fund to continue to make
available additional shares of the Fund. If shares of the Fund continue to be
made available after such termination, the provisions of this Agreement shall
remain in effect except for Section 10.1(a) and thereafter the Fund 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.
10.5. Except as necessary to implement contract owner initiated or
approved transactions, or as required by state insurance laws or regulations,
the Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account), and the Company shall not prevent contract owners from allocating
payments to a Portfolio that was otherwise available under the Contracts, until
90 days after the Company shall have notified the Fund or Adviser of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Xxxxxx Xxxxxxx Universal Funds, Inc.
c/o Morgan Xxxxxxx Asset Management Inc.
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
0000 Xxxxxx xx Xxxxxxxx
Xxx Xxxx, XX 00000
If to the Company:
New York Life Insurance and Annuity Corporation
Attn: Xxxxxx X. Rock
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Adviser:
Xxxxxx Xxxxxxx Asset Management Inc.
Attn: Xxxxxx X. Xxxxxxx, Xx., Esq.
1221 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents, registered representatives or shareholders
assume any personal liability for obligations entered into on behalf of the
Fund.
12.2. Subject to the requirement of legal process and regulatory
authority, each party hereto shall treat as if confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement shall not disclose, disseminate or utilize such
names and addresses and other confidential information until such time as it
may come into the public domain without the express written consent of the
affected party.
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 records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Each party, at its expense and upon reasonable notice, shall have the right to
inspect the accounts, books and records of the other party as such accounts,
books and records relate to this Agreement or the transactions contemplated
hereby.
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. The Fund and the Adviser shall promptly notify the Company of
any event which causes the responses to the Preliminary Request for Information
to be materially untrue or misleading or to have a potential material adverse
impact on the Company or the Contracts.
12.9. No provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly executed by both parties. The
Company understands and agrees that it may be necessary to amend this Agreement
to include terms and conditions that the SEC may require in the Shared
Exemptive Order expected to be issued prior to October 1, 1996. The Company
shall not unreasonably withhold consent to any such amendment requested or
required by the SEC.
12.10. Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the written consent of the other party.
Such consent may not be unreasonably withheld.
12.11. The Fund shall use its best efforts to provide the Company, on
a timely basis, with such information about the Fund, the Portfolios and the
Adviser, in such form as the Company may reasonably require, as the Company
shall reasonably request in connection with the preparation of registration
statements, prospectuses and annual and semiannual reports pertaining to the
Contracts.
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 to be hereunder affixed hereto as of the date specified below.
NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION:
By its authorized officer,
By: /s/Xxxxxx X. Rock
-------------------------
Title: Senior Vice President
XXXXXX XXXXXXX UNIVERSAL
FUNDS, INC.:
By its authorized officer,
By: /s/ Xxxxxxx Xxxxx
-------------------------
Title: President
XXXXXX XXXXXXX ASSET
MANAGEMENT INC.
By its authorized officer,
By: /s/Xxxxxx X. Xxxxx
-------------------------
Title: Principal
SCHEDULE A
TO PARTICIPATION AGREEMENT
DATED JUNE 28, 1996
Xxxxxx Xxxxxxx Universal Funds, Inc. Emerging Markets Equity Portfolio will be
made available to the following Separate Accounts of the Company:
Name of Separate Account and Policy Form Numbers of Contracts
Established by Board of Directors Date Funded By Separate Account
NYLIAC Variable Universal Life Separate 93-90
Account I
(June 4, 1993)
NYLIAC Variable Universal Life Separate 93-90
Account II
(June 4, 1993)
NYLIAC Variable Annuity Separate Account I 993190
(October 15, 1992)
NYLIAC Variable Annuity Separate Account II 993190
(October 15, 1992)
NYLIAC LifeStages Annuity Separate Account 995190
(November 30, 1994)
SCHEDULE B
TO PARTICIPATION AG
DATED JUNE 28, 1996
Xxxxxx Xxxxxxx Universal Funds, Inc. Emerging Markets Equity Portfolio
