PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of June, 2004 by
and among NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION (hereinafter the
"Company"), a life insurance company organized under the laws of the State of
Delaware, on its own behalf and on behalf of each separate account of the
Company set forth on Schedule B hereto as may be amended from time to time (each
such account hereinafter referred to as the "Account"), and ROYCE CAPITAL FUND
(hereinafter the "Fund"), a Delaware business trust, and ROYCE & ASSOCIATES,
LLC, a Delaware limited liability company (the "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established by insurance companies for individual and group life
insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans (hereinafter "Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into a
participation agreement with the Fund and the Adviser (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of securities
and other assets, any one or more of which may be made available for Variable
Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule A (each such series hereinafter referred to as a "Portfolio"), as may
be amended from time to time by mutual agreement of the parties hereto, under
this Agreement to the Accounts of the Company; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 24, 1996 (File No. 812-9988), granting Participating
Insurance Companies and Variable Insurance Product 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 Insurance Products
separate accounts of both affiliated and unaffiliated life insurance companies
and Qualified Plans (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment
Advisers Act of 1940, as amended, and any applicable state securities laws; and
WHEREAS, the Adviser manages certain Portfolios of the Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule B
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Products; 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 Insurance Products;
NOW, THEREFORE, in consideration of their mutual promises, the Company and the
Fund agree as follows:
ARTICLE I. Fund Shares
1.1. The Fund agrees to make available for purchase by the Company shares
of the Portfolios set forth on Schedule A and shall execute orders placed for
each Account on a daily basis at the net asset value next computed after receipt
by the Fund or its designee of such order. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee of orders prior to the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m. Eastern time) shall
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 11:00 a.m. Eastern time on the next following Business Day.
Notwithstanding the foregoing, the Company shall use its best efforts to provide
the Fund with notice of such orders by 9:00 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates the net
asset value pursuant to the rules of the SEC, as set forth in the Fund's
Prospectus and Statement of Additional Information. Notwithstanding the
foregoing, the Board of Trustees 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 interests of the shareholders of such Portfolio.
1.2. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance
Companies and their Variable Insurance Products and to certain Qualified Plans.
No shares of any Portfolio will be sold to the general public.
1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 2.9, 3.4 and Article VII of this
Agreement is in effect to govern such sales.
1.4. 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 1.4, 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 in accordance with the
timing rules described in Section 1.1.
1.5. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Accounts of the Company, under which
amounts may be invested in the Fund, are listed on Schedule B attached hereto
and incorporated herein by reference, as such Schedule B may be amended from
time to time by mutual written agreement of all of the parties hereto.
1.6. The Company will place separate orders to purchase or redeem shares
of each Portfolio. Each order shall describe the net amount of shares and dollar
amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall use its best
efforts to pay the redemption proceeds in federal funds transmitted by wire on
the next Business Day, in any event redemption proceeds shall be wired to the
Company within three Business Days or such longer period permitted by the 1940
Act, after an order to redeem a Portfolio's shares is made in accordance with
the provision of Section 1.4 hereof. Notwithstanding the foregoing, if the
payment of redemption proceeds on the next Business Day would require the
Portfolio to dispose of securities or otherwise incur substantial additional
costs, and if the Portfolio has determined to settle redemption transactions for
all shareholders on a delayed basis, it reserves the right to suspend the right
of redemption or postpone the date of payment or satisfaction upon redemption
consistent with Section 22(e) of the 1940 Act and the Portfolio shall notify in
writing the person designated by the Company as the recipient for such notice of
such delay promptly.
1.7. 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.
1.8. The Fund shall make the dividends or capital gain distributions per
share payable on the Fund's shares available to the Company as soon as
reasonably practical after the dividends or capital
gains are declared (normally by 6:30 p.m. Eastern time) and shall use its best
efforts to furnish same day notice by 7:00 p.m. Eastern time (by wire or
telephone, followed by written confirmation) to the Company of any dividends or
capital gain distributions per share payable on the Fund's shares. The Company
hereby elects to receive all such 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
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.
1.9. 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 by 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7:00 p.m. Eastern time. In the event that the Fund is unable to meet the 7:00
p.m. time stated immediately above, then the Fund shall provide the Company with
additional time to notify the Fund of purchase or redemption orders pursuant to
Sections 1.1 and 1.4, respectively, above. Such additional time shall be equal
to the additional time that the Fund takes to make the net asset values
available to the Company; provided, however, that notification must be made by
10:15 a.m. Eastern time on the Business Day such order is to be executed
regardless of when the net asset value is made available. If the Fund provides
the Company with materially incorrect share net asset value information, the
Separate Account(s) shall be entitled to any adjustment to the number of shares
purchased or redeemed necessary to make the Separate Account(s) whole.
1.10. In the event of an error in the computation of a designated
Portfolio's net asset value per share ("NAV") or any dividend or capital gain
distribution (each, a "pricing error"), the Adviser or the Fund shall
immediately notify the Company as soon as possible after discovery of the error.
Such notification may be verbal, but shall be confirmed promptly in writing in
accordance with Article IX of this Agreement. A pricing error shall be corrected
as follows: (a) if the pricing error results in a difference between the
erroneous NAV and the correct NAV of less than $0.01 per share, then no
corrective action need be taken; (b) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than $0.01 per share, but less than 1/2 of 1% of the designated Portfolio's NAV
at the time of the error, then the Adviser or Fund shall reimburse the
designated Portfolio for any net loss, after taking into consideration any
positive effect of such error; however, no adjustments to Variable Insurance
Product owner accounts need be made; and (c) if the pricing error results in a
difference between the erroneous NAV and the correct NAV equal to or greater
than 1/2 of 1% of the designated Portfolio's NAV at the time of the error, then
the Adviser or the Fund shall reimburse the designated Portfolio for any net
loss and shall reimburse the Company for reasonable administrative and/or
systems costs of adjustments made to correct Variable Insurance Product owner
accounts. With respect to (c) above, if an adjustment to a Variable Insurance
Product owner account is necessary to correct a material error which has caused
Variable Insurance Product owners to receive less than the amount to which they
are entitled, the number of shares of the appropriate designated Portfolio(s)
attributable to the accounts of the Variable Insurance Product owners will be
adjusted and the amount of any underpayments shall be credited by the Adviser or
the Fund to the Company for crediting of such amounts to the applicable Variable
Insurance Product
owners accounts. Upon notification by the Adviser or the Fund of any overpayment
due to a material error, the Company shall promptly remit to the Fund any
overpayment that has not been paid to Variable Insurance Product owners. A
pricing error within categories (b) or (c) above shall be deemed to be
"materially incorrect" or constitute a "material error" for purposes of this
Agreement.
The standards set forth in this Section 1.10 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the Parties may amend the
foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
1.11. The Parties acknowledge that market timing, short term trading, or
excessive trading (hereafter "Market Timing") may be harmful to the Portfolios.
The Company agrees to establish policies and procedures reasonably designed to
prevent Market Timing trading abuses.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the interests of the
Accounts (the "Contracts") are or will be registered and will maintain the
registration under the 1933 Act and the regulations thereunder to the extent
required by the 1933 Act; that the Contracts will be issued in compliance in all
material respects with all applicable federal and state laws and regulations.
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 the Delaware Insurance Law and the regulations
thereunder and has registered or, prior to any issuance or sale of the
Contracts, will register and will maintain the registration of each Account as a
unit investment trust in accordance with and to the extent required by the
provisions of the 1940 Act and the regulations thereunder to serve as a
segregated investment account for the Contracts. The Company shall amend its
registration statement for its contracts under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and the regulations
thereunder to the extent required by the 1933 Act, duly authorized for issuance
in accordance with the laws of the State of Delaware and sold in compliance with
all applicable federal and state securities laws and regulations and that the
Fund is and shall remain registered under the 1940 Act and the regulations
thereunder to the extent required by 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 and the Adviser represent that the Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the
"Code"), and that the Fund and the Adviser (with respect to those Portfolios for
which such Adviser acts as investment adviser) will make every effort to
maintain such qualification (under Subchapter M or any successor or similar
provision) and that the Fund or the appropriate Adviser will notify the Company
immediately upon having a reasonable basis for believing that a Portfolio has
ceased to so qualify or that a Portfolio might not so qualify in the future.
2.4 The Fund and the Adviser each represents that each designated
Portfolio complies and will comply at all times with the diversification
requirements set forth in Section 817(h) of the Code, and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts, and any amendments or other modifications or successor provisions to
such Section or Regulations. The Adviser will notify the Company immediately
upon having a reasonable basis for believing any designated Portfolio has ceased
to comply or might not so comply and will immediately take all steps necessary
to adequately diversify the designated Portfolio to achieve compliance within
the grace period afforded by Regulation 1.817-5.
2.5. The Company represents that each Account is and will continue to be a
"segregated account" under applicable provisions of the Code and that each
Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatments and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.6. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, 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.
2.7. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.8. The Fund and the Adviser represent that the Fund is lawfully
organized and validly existing under the laws of Delaware and that the Fund does
and will comply in all material respects with the 1940 Act.
2.9. The Adviser represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal securities laws
and that it will perform its obligations for the Fund and the Company in
compliance in all material respects with the laws and regulations of its state
of domicile and any applicable state and federal securities laws and
regulations.
2.10. The Company represents and warrants that all of its trustees,
officers, employees, investment adviser, and other individuals/entities dealing
with the money and/or securities of the
Fund are covered by a blanket fidelity bond or similar coverage, in an amount
equal to the greater of $5 million or any amount required by applicable federal
or state law or regulation. The aforesaid includes coverage for larceny and
embezzlement is issued by a reputable bonding company. 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 in the event
that such coverage no longer applies.
2.11 The Fund and Adviser each represents and warrants that all of its
respective 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 one or more blanket
fidelity bonds or similar coverage for the benefit of the Fund in an amount not
less than the minimal coverage required by Rule 17g-1 under the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bonds
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.12 Each party hereto shall comply with applicable anti-money laundering
laws and regulations, including the relevant provisions of the USA PATRIOT Act
(Pub. L. No. 107-56 (2001)) and the regulations issued thereunder.
2.13 Each party hereto shall comply with any applicable privacy and notice
provisions of 15 U.S.C. Sections 6801-6827 and any applicable regulations
promulgated thereunder (including but not limited to 17 C.F.R. Part 248) as they
may be amended.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements;
Voting
3.1(a) The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus (the "Fund Prospectus") as the
Company may reasonably request. If requested by the Company, in addition to
providing printed copies of the Fund Prospectus, the Fund shall provide
camera-ready film or computer diskettes containing the Fund Prospectus, or shall
provide the same electronically in .pdf format, and such other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the Fund Prospectus is amended during the year) to have the prospectus for
the Contracts (the "Contract Prospectus") and the Fund Prospectus printed
together in one document or separately. The Company may elect to print the Fund
Prospectus in combination with other fund companies' prospectuses. For purposes
hereof, any combined prospectus including the Fund Prospectus along with the
Contract Prospectus or prospectus of other fund companies shall be referred to
as a "Combined Prospectus." For purposes hereof, the term "Fund Portion of the
Combined Prospectus" shall refer to the percentage of the number of Fund
Prospectus pages in the Combined Prospectus in relation to the total number of
pages of the Combined Prospectus.
3.1(b) The Fund shall provide the Company with as many printed copies of
the Fund's current statement of additional information (the "Fund SAI") as the
Company may reasonably request. If requested by the Company in addition to
providing printed copies of the Fund SAI, the
Fund shall provide camera-ready film or computer diskettes containing the Fund
SAI, or shall provide the same electronically in .pdf format, and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the Fund SAI is amended during the year) to have the
statement of additional information for the Contracts (the "Contract SAI") and
the Fund SAI printed together or separately. The Company may also elect to print
the Fund SAI in combination with other fund companies' statements of additional
information. For purposes hereof, any combined statement of additional
information including the Fund SAI along with the Contract SAI or statement of
additional information of other fund companies shall be referred to as a
"Combined SAI." For purposes hereof, the term "Fund Portion of the Combined SAI"
shall refer to the percentage of the number of Fund SAI pages in the Combined
SAI in relation to the total number of pages of the Combined SAI.
3.1(c) The Fund shall provide the Company with as many printed copies of
the Fund's annual report and semi-annual report (collectively, the "Fund
Reports") as the Company may reasonably request. If requested by the Company in
lieu of providing printed copies of the Fund Reports, the Fund shall provide
camera-ready film or computer diskettes containing the Fund's Reports, or shall
provide the same electronically in .pdf format, and such other assistance as is
reasonably necessary in order for the Company once each year to have the annual
report and semi-annual report for the Contracts (collectively, the "Contract
Reports") and the Fund Reports printed together or separately. The Company may
also elect to print the Fund Reports in combination with other fund companies'
annual reports and semi-annual reports. For purposes hereof, any combined annual
reports and semi-annual reports including the Fund Reports along with the
Contract Reports or annual reports and semi-annual reports of other fund
companies shall be referred to as "Combined Reports." For purposes hereof, the
term "Fund Portion of the Combined Reports" shall refer to the percentage of the
number of Fund Reports pages in the Combined Reports in relation to the total
number or pages of the Combined Reports.
3.2 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, reports, proxy statements, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the designated Portfolios, promptly after the filing or
such document with the SEC or other regulatory authorities.
3.3 The Company will provide to the Fund at least one copy of all
registration statements, prospectuses, reports, proxy statements, application
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Variable Insurance Products contracts or the Separate
Accounts, promptly after the filing of such document with the SEC.
3.4 Expenses
3.4(a) Expenses Borne by Company. Except as otherwise provided in this
Section 3.2., all expenses of preparing, setting in type and printing and
distributing (i) Contract Prospectuses, Fund Prospectuses, and Combined
Prospectuses; (ii) Fund SAIs, Contract SAIs, and Combined SAIs; (iii) Fund
Reports, Contract Reports, and Combined Reports, and (iv) Contract proxy
material that the Company may require in sufficient quantity to be sent to
Contract owners, annuitants, or participants
under Contracts (collectively, the "Participants"), shall be the expense of the
Company.
3.4(b) Expenses Borne by Fund
Fund Prospectuses
With respect to existing Participants, the Fund shall pay the cost of
setting in type and printing Fund Prospectuses made available by the Company to
such existing Participants in order to update disclosure as required by the 1933
Act and/or the 1940 Act. With respect to existing Participants, in the event the
Company elects to prepare a Combined Prospectus, the Fund shall pay the cost of
setting in type and printing the Fund Portion of the Combined Prospectus made
available by the Company to its existing Participants in order to update
disclosure as required by the 1933 Act and/or the 1940 Act. In such event, the
Fund shall bear the cost of typesetting to provide the Fund Prospectus to the
Company in the format in which the Fund is accustomed to formatting prospectus.
Notwithstanding the foregoing, in no event shall the Fund pay for any such costs
that exceed by more than five (5) percent what the Fund would have paid to print
such documents. The Fund shall not pay any costs of typesetting and printing the
Fund Prospectus (or Combined Prospectus, if applicable) to prospective
Participants.
Fund SAIs, Fund Reports and Proxy Material
With respect to existing Participants, the Fund shall pay the cost of
setting in type and printing Fund SAIs, Fund Reports and Fund proxy material
made available by the Company to its existing Participants. With respect to
existing Participants, in the event the Company elects to prepare a Combined SAI
or Combined Reports, the Fund shall pay the cost of setting in type and printing
the Fund Portion of the Combined SAI or Combined Reports, respectively, made
available by the Company to its existing Participants. In such event, the Fund
shall bear the cost of typesetting to provide the Fund SAI or Fund Reports to
the Company in the format in which the Fund is accustomed to formatting
statements of additional information and annual and semi-annual reports.
Notwithstanding the foregoing, in no event shall the Fund pay for any such costs
that exceed by more than five (5) percent what the Fund would have paid to print
such documents.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of typesetting, printing or distributing any of
the foregoing documents other than as described above.
3.5. The Fund SAI shall be obtainable from the Fund, the Company or such
other person as the Fund may designate.
3.6. If and to the extent required by law the Company shall distribute all
proxy material furnished by the Fund to Participants to whom voting privileges
are required to be extended and shall:
(i) solicit voting instructions from Participants;
(ii) vote the Fund shares in accordance with instructions
received from Participants; 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 SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. 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. The Fund and the Company shall
follow the procedures, and shall have the corresponding responsibilities, for
the handling of proxy and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by reference. Participating
Insurance Companies shall be responsible for ensuring that each of their
separate accounts participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth on Schedule C, which standards
will also be provided to the other Participating Insurance Companies.
3.7. 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 (except insofar as the Securities and Exchange Commission may
interpret Section 16 not to require such 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 Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material prepared by the Company or any person contracting with the Company in
which the Fund or the Adviser is named. The Fund reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material, and no such material shall be used if the Fund so objects.
4.2. Neither the Company nor any person contracting with the Company shall
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 the Fund Prospectus, as such registration statement or Fund 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, except with the written permission of the Fund.
4.3. Upon request from the Company, the Fund 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 prepared by the Fund in
which the Company or its Account(s) are named. The Company reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material, and no such material shall be used if the Company so
objects.
4.4. Neither the Fund nor the Adviser shall 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 or solicitations for voting instructions for
each Account which are in the public domain or approved by the Company for
distribution to Participants, or in sales literature or other promotional
material approved by the Company or its designee, except with the written
permission of the Company.
4.5. The Fund 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 Fund or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the investment
in an Account or Contract contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following: 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, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
4.8 At the request of any party hereto, each other party hereto will make
available to the other party's independent auditors and/or representative of the
appropriate regulatory agencies, all records, data and access to operating
procedures that may be reasonably requested in connection with compliance and
regulatory requirements related to this Agreement or any party's obligations
under this Agreement.
ARTICLE V. [Reserved]
ARTICLE VI. Diversification
6.1. The Adviser represents, as to the Portfolios for which it acts as
investment adviser, that it will use its best efforts at all times to 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. In the event a Portfolio ceases to so qualify, the Adviser will
take all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the Portfolio so as to achieve compliance within the grace
period afforded by Regulation 817-5.
6.2 Notwithstanding anything herein to the contrary, the Fund, the Adviser
or their designee shall reimburse the Company for the reasonable costs
associated with substituting one or more different portfolios of a registered
investment company for one or more designated Portfolios where due to the acts
of the Fund or the Adviser the Fund ceases to qualify as a regulated investment
company under Subchapter M of the Code (or any successor or similar provision),
or fails to comply with the diversification requirements of Section 817(h) of
the Code (or any successor or similar provision), and as a result the Fund no
longer qualifies to serve as a funding vehicle for the Variable Insurance
Product contracts. Reimbursement by the Fund, the Adviser or their designee, of
costs associated with termination under Article X shall be offset by any amounts
paid by the substituting Portfolios to effect such substitution.
ARTICLE VII. Potential Conflicts
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. 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 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 owners and variable life insurance contract owners;
or (f) a decision by a Participating Insurance Company 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 material
irreconcilable 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 by 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 trustees), 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 policy
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. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
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
(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. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and these responsibilities will
be carried out with a view only to the interests of Contract owners.
7.5. For purposes of Sections 7.3 and 7.4 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 or 7.4 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.
7.6. 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 1940
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 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.
7.7 The Company and the Adviser shall at least annually submit to the
Board of the Fund such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them
by the provisions hereof, and said reports, materials and data shall be
submitted more frequently if deemed appropriate by the Board. All reports
received by the Board of potential or existing conflicts, and all Board action
with regard to determining the existence of a conflict, notifying Participating
Insurance Companies of a conflict, and determining whether any proposed action
adequately remedies a conflict, shall be properly recorded in the minutes of the
Board or other appropriate records, and such minutes or other records shall be
made available to the SEC upon request.
7.8 The Board's determination of the existence of a material
irreconcilable conflict and its implications shall be made known promptly and in
writing to the Company.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the Fund and each
member of its Board and officers, and the Adviser and each director and officer
of the Adviser, 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" and individually, "Indemnified Party," 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 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 any 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 and
other than statements or representations authorized by the Fund or
the Adviser) or unlawful 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 or as a result 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
and in conformity with 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.
8.1(b). Notwithstanding Section 8.1(a) above, 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 gross 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.
8.1(c). Notwithstanding Section 8.1(a) above, 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
unless the Company is materially prejudiced by failure to notify. 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 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 Adviser
8.2(a). The Adviser agrees, with respect to each Portfolio that it
manages, to indemnify and hold harmless the Company and each of its directors
and officers, employees, and agents and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually, "Indemnified Party," 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 operation of the Adviser or
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 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 the 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 Portfolio 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 persons under its
control and other than statements or representations authorized by
the Company) or unlawful conduct of the Adviser or persons under its
control, with respect to the sale or distribution of the Contracts
or Portfolio shares; or
(iii) arise out of or as a result 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 in writing to the Company by or on behalf of
the Adviser; or
(iv) arise as a result of any failure by the Adviser 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 Adviser in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Fund or the Adviser; including without
limitation any failure by the Fund or the Adviser to comply with the
conditions of Article VI hereof.
8.2(b).The Adviser 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 may arise from 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.
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,
trustees or directors in connection with this Agreement, the issuance or sale of
the Contracts with respect to the operation of each Account, or the sale or
acquisition of shares of the Fund.
8.2(e). It is understood that these indemnities shall have no effect on
any other agreement or arrangement between the Fund and/or its series and the
Adviser.
8.3. Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company and
each of its directors and officers, employees, and agents and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, "Indemnified Party,"
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, 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 operation 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 any Fund material,
or arises 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 Fund material or otherwise for use in connection with the
sale of the Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in any
Contract material), or arises out of or is based upon 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, provided that such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished in writing to the Company for
inclusion therein by or on behalf of the Fund; or,
(iii) arise as a result of any failure by the Fund to
provide the services and furnish the materials under the terms of this
Agreement; or
(iv) 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;
including without limitation any failure by the Fund to comply with the
conditions of Article VI hereof.
8.3(b).Notwithstanding Section 8.3(a) above, the Fund 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 may arise from 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.
8.3(c). Notwithstanding Section 8.3(a) above, the Fund 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 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 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 Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such Party of the Fund'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 Fund 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 agrees promptly to notify the Fund of the commencement
of any litigation or proceedings against it or any of its officers, trustees or
directors in connection with this Agreement, the issuance or sale of the
Contracts with respect to the operation of each Account, or the sale or
acquisition of shares of the Fund.
8.3(e). It is understood that these indemnities shall have no effect on
any other agreement or arrangement between the Fund and/or its series and the
Adviser.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from 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 continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason upon 120 days
advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund
and the Adviser with respect to any Portfolio based upon the
Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts.
Reasonable advance notice of election to terminate shall be
furnished by the Company, said termination to be effective ten (10)
days after receipt of notice
unless the Fund makes available a sufficient number of shares to
reasonably meet the requirements of the Account within said ten (10)
day period; or
(c) termination by the Company by written notice to the Fund
and the Adviser with respect to any Portfolio in the event any of
the 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 medium
of the Contracts issued or to be issued by the Company. The
terminating party shall give prompt notice to the other parties of
its decision to terminate; or
(d) termination by the Company by written notice to the Fund
and the Adviser with respect to any Portfolio in the event that such
Portfolio ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may
fail to so qualify; or
(e) termination by the Company by written notice to the Fund
and the Adviser with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified
in Article VI hereof; or
(f) termination by either the Fund or the Adviser by written
notice to the Company if the Adviser or the Fund shall determine, in
its sole judgment exercised in good faith, that the Company and/or
its affiliated companies 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 and as a result ability to perform obligations under this
Agreement is materially impaired, provided that the Fund or the
Adviser will give the Company sixty (60) days' advance written
notice of such determination of its intent to terminate this
Agreement, and provided further that after consideration of the
actions taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the Fund or
the Adviser shall continue to apply on the 60th day since giving of
such notice, then such 60th day shall be the effective date of
termination; or
(g) termination by the Company by written notice to the Fund
and the Adviser, if the Company shall determine, in its sole
judgment exercised in good faith, that either the Fund or the
Adviser (with respect to the appropriate Portfolio) 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; provided that the Fund or the
Adviser will give the Company sixty (60) days' advance written
notice of such determination of its intent to terminate this
Agreement, and provided further that after consideration of the
actions taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the Company
shall continue to apply on the 60th day since giving of
such notice, then such 60th day shall be the effective date of
termination; or
(h) termination by the Company in the event that formal
administrative proceedings are instituted against the Fund or
Adviser by the NASD, the SEC, or any state securities or insurance
department or any other regulatory body in respect of the sale of
shares of the Fund to the Company, 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 the Adviser to
perform its obligations under this Agreement; or
(i) termination by the Fund or the Adviser by written notice
to the Company, if the Company gives the Fund and the Adviser the
written notice specified in Section 1.6 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(h) shall be effective sixty (60)
days after the notice specified in Section 1.6 was given; or
(j) termination by any party upon the other party's breach of
any representation in Section 2 or any material provision of this
Agreement, which breach has not been cured to the satisfaction of
the terminating party within ten (10) days after written notice of
such breach is delivered to the Fund or the Company, as the case may
be; or
(k) termination by the Fund or the Adviser by written notice
to the Company in the event an Account or Contract is not registered
or sold in accordance with applicable federal or state law or
regulation, or the Company fails to provide pass-through voting
privileges as specified in Section 3.4; provided that the Fund or
the Adviser will give the Company sixty (60) days' advance written
notice of such intent.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund 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 such
further sale of Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 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.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct
from 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") or (iii) as permitted by an order of the
SEC pursuant to Section 26(b) of the 1940 Act. Upon request, the Company will
promptly furnish to the Fund the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund and the Adviser) 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 Portfolio that was otherwise available under the Contracts without
first giving the Fund or the appropriate Adviser 90 days prior written notice of
its intention to do so.
10.4. Notwithstanding any termination of this Agreement pursuant to
Article X hereof, all rights and obligations arising under Article VIII of this
Agreement shall survive.
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:
Royce Capital Fund
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to the Adviser:
Royce & Associates, LLC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to the Company:
New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx, with a copy to
the Office of General Counsel/Variable Product Attorney
ARTICLE XII. Foreign Tax Credits
The Fund and the Adviser agree to consult with the Company concerning
whether any Portfolio of the Fund qualifies to provide a foreign tax credit
pursuant to Section 853 of the Code.
ARTICLE XIII. Miscellaneous
13.1. 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 or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
13.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other 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.
13.3. 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.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13.6. 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.
13.7. 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.
13.8. 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; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company
under common control with the Adviser, if such assignee is duly licensed and
registered to perform the obligations of the Adviser under this Agreement.
13.9 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally
accepted accounting principles ("GAAP"), if any), as soon as
practical and in any event within 90 days after the end of each
fiscal year;
(b) the Company's June 30th quarterly statements (statutory)
(and GAAP, if any), as soon as practical and in any event within 45
days after the end of each semi-annual period:
(c) any financial statement, proxy statement, notice or report
of the Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders and/or
policyholders;
(d) any registration statement (without exhibits) and
financial reports of the Company filed with the SEC or any state
insurance regulator, as soon as practical after the filing thereof;
(e) any other public report submitted to the Company by
independent accountants in connection with any annual, interim or
special audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
13.10 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized by the Fund, the
Adviser, and the Company.
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 hereto as of the date specified above.
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION on behalf of itself and each of
its Accounts named in Schedule B hereto, as amended from time to time.
By: ______________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
ROYCE & ASSOCIATES, LLC
By: ______________________________
Name: Xxxx X. Xxxxxxxxx
Title: Chief Operating Officer
ROYCE CAPITAL FUND
By: ______________________________
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
SCHEDULE A
PORTFOLIOS OF ROYCE CAPITAL FUND
FUNDS AVAILABLE FOR
PURCHASE BY New York Life Insurance and Annuity Corporation
Royce Capital Fund - Micro-Cap Portfolio
SCHEDULE B
SEPARATE ACCOUNTS AND CONTRACTS
Separate Account
NYLIAC Corporate Sponsored Variable
Universal Life Separate Account - I
May 24, 1996
Contracts
CorpExec VUL - Corporate Executive Series Variable Universal Life
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done in
writing or via E-mail approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call
in the number of Customers to the Fund , as soon as possible, but no later
than two weeks after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Fund, at its expense, shall
produce and personalize the Voting Instruction Cards. The Company or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
4. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Fund).
Contents of envelope sent to Customers by the Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
12. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The
Fund may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
13. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
14. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
15. All approvals must be in writing.
OGC\202862.2
June 16, 2004
