AGREEMENT
AGREEMENT effective September 4, 1990, between Bankers Security Life
Insurance Society ("Bankers"), having its principal place of business at 0000 X.
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, and Alliance Capital Management L.P.,
having its principal place of business at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Alliance").
WHEREAS, Bankers intends to utilize Alliance Variable Products Series
Fund, Inc., (the "Fund") as an underlying investment vehicle for premiums and
additional payments allocated to separate accounts Bankers has or may create to
issue Variable Contracts,
WHEREAS, Alliance is the Investment Advisor to the Fund;
WHEREAS, Alliance makes shares of the Fund available for sale only to
variable life insurance separate accounts and variable annuity insurance
separate accounts, and that such variable products separate accounts may be of
insurance companies not affiliated with Bankers or any of Bankers' affiliated
companies (hereinafter referred to as "shared funding") and the Fund may be the
investment vehicle for both variable life and variable annuity contracts
(hereinafter referred to as "mixed funding");
WHEREAS, a majority of the Board of Directors of the Fund shall consist
of persons who are not "interested persons" of the Fund as defined by Section
2(a)(19) of the Investment Act of 1940 ("Independent Directors");
WHEREAS, the Board of Directors of the Fund will monitor the Fund for
the existence of any material irreconcilable conflict between the interests of
the policyowners of all separate accounts investing in the Fund, which 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 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 participating insurance companies or owners of variable
annuity contracts and owners of variable life contracts; or (f) a decision by an
insurer to disregard the voting instructions of policyowners.
WHEREAS, the Fund and/or Bankers shall comply with Rules 6e-2, 6e-3(T)
and, if adopted, 6e-3, promulgated pursuant to the Investment Company Act of
1940 (the "Act"), if and to the extent they are amended to provide exemptive
relief with respect to mixed or shared funding; and
WHEREAS, the Board of Directors' determination of the existence of a
material irreconcilable conflict and its implications shall be made known
promptly in writing to Bankers and any other participating insurance companies,
and all reports received by the Board of Directors of the Fund and all action
with regard to a conflict will be properly recorded in the minutes of the Board
of Directors or other appropriate records, which will be made available to the
Securities and Exchange Commission upon request;
WHEREAS, no penalty will be imposed by the Fund or Bankers for
withdrawing assets from the Fund (or any portfolio of the Fund) in the event of
a material irreconcilable conflict should this said withdrawal be determined as
necessary to remedy or eliminate such conflict.
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agrees, as follows:
1. Bankers and Alliance, as a matter of ongoing responsibility, will
undertake and shall report to the Fund's Board of Directors any potential or
existing material conflicts between the policyowners. Bankers and Alliance will
be responsible for assisting the Board in carrying out its responsibilities in
monitoring such conflicts, by providing the Board in a timely manner with all
information reasonably necessary for the Board to consider any issues raised,
including information as to a decision by Bankers to disregard voting
instructions of policyowners. The responsibility to report such information and
conflicts and to assist the Board will be carried out with a view only to the
interests of the policyowners.
2. If it is determined by either a majority of the Board of Directors
of the Fund or a majority of its Independent Directors that a material
irreconcilable conflict exists, Bankers, at their own expense and to the extent
reasonably practicable as determined by a majority of the disinterested
Directors) will 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 its separate accounts from the Fund (or any
portfolio of the Fund) and reinvesting such assets in a different investment
medium, including another portfolio of the Fund, or submitting the question of
whether such segregation should be implemented to a vote of all affected
policyowners and, as appropriate, segregating the assets of any group voting in
favor of segregation, or offering to the affected policyowners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
For purposes of this paragraph 2, a majority of the Independent
Directors shall determine whether any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Fund or Alliance be
required to establish a new funding medium for any variable contract. Bankers
shall not be required by this paragraph 2 to establish a new funding medium for
any variable annuity contract if an offer to do so has been declined by vote of
a majority of the policyowners adversely affected by the material irreconcilable
conflict. Bankers will recommend to its policyowners that they decline an offer
to establish a new funding medium or take other remedial action only if it
believes it is in the best interests of the policyowners to do so.
3. Bankers will provide pass-through voting privileges to all variable
policyowners so long as the Commission continues to interpret the Act to require
pass-through voting privileges for variable policyowners. Bankers shall be
responsible for assuring that each of its separate accounts investing in the
Fund calculates voting privileges in a manner consistent with the Act, and will
vote shares of the Fund held in its separate account for which no timely voting
instructions are received from policyowners, as well as shares its own, in the
same proportion for which voting instructions are received.
4. Alliance and Bankers shall at least annually submit to the Fund's
Board of Directors such reports, materials or data as the Directors may
reasonably request so that the Directors may fully carry out the obligations
imposed upon them herein, and said reports, materials and data shall be
submitted more frequently if deemed appropriate by the Directors.
5. The Fund will comply with the provision of Section 4240(a) of the
New York Insurance Law.
6. Each portfolio of the Fund will comply with the provisions of
Section 817(h) of the Internal Revenue Code of 1986, as amended (the ("Code"),
relating to diversification requirements for variable annuity, endowment and
life insurance contracts. Specifically, each portfolio will comply with either
(i) the requirement of Section 817(h)(1) of the Code that its assets are
adequately diversified, or (ii) the "Safe Harbor for Diversification" specified
in Section 817(h)(2) of the Code, or (iii) the diversification requirement of
Section 817(h)(1) of the Code by having all or part of its assets invested in
U.S. Treasury securities which qualify for the "Special Rule for Investments in
United States Obligations" specified in Section 817(h)(3) of the Code.
7. The provisions of Paragraphs 2 and 3 of this Agreement shall be
interpreted in a manner consistent with any applicable order of the Securities
and Exchange Commission ("SEC") issued in a proceeding under the Act, initiated
by certain applicants, including the Fund (File No. 812-7585). In the event that
SEC Rules under the Act relating to variable contracts and insurance company
separate accounts are amended or adopted, containing provisions which are
applicable to the parties hereto and which conflict with the conditions of such
order, the parties hereto will conform to the conditions of such Rule or Rules
as adopted or amended.
8. No shares of any portfolio of the Fund may be sold to the general
public.
9. Any notice shall be sufficiently given when sent by prepaid first
class 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 Adviser:
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
If to Bankers:
Bankers Security Life Insurance Society
0000 X. Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
10. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of The State of New York.
11. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12. This Agreement incorporates the entire understanding and agreement
among the parties hereto, and supersedes any and all prior understandings and
agreements between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed as of the date and year above written.
BANKERS SECURITY LIFE INSURANCE SOCIETY
By:------------------------------------
Vice President
Attest:
ALLIANCE CAPITAL MANAGEMENT L.P.
By:------------------------------------
By:------------------------------------
------------------------------------
Attest:
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