Exhibit 8(b)(xxviii)
PARTICIPATION AGREEMENT
AMONG
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK,
VIRTUS VARIABLE INSURANCE TRUST
AND
VP DISTRIBUTORS, LLC
THIS AGREEMENT, effective as of the ___ day of April 2014, by and among
Lincoln Life & Annuity Company of New York (the "Company"), a New York life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (each account hereinafter referred to as the "Account"), VIRTUS
VARIABLE INSURANCE TRUST (the "Trust"), a Delaware statutory trust, and VP
DISTRIBUTORS, LLC (the "Distributor"), a Delaware limited liability company.
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance and variable annuity
contracts (the "Variable Insurance Products") to be offered by insurance
companies which have entered into participation agreements with the Trust and
Distributor ("Participating Insurance Companies");
WHEREAS, the shares of beneficial interest of the Trust are divided into
several separate series of shares, each representing the interest in a
particular managed portfolio of securities and other assets (each, a "Series");
WHEREAS, the Trust may rely on an order (THE PHOENIX EDGE SERIES TRUST, ET
AL., Investment Company Act Rel. Nos. 25687 (Jul. 26, 2002) (Notice) and 25703
(Aug. 20, 2002)(Order)) from the Securities and Exchange Commission (the "SEC")
which, among other relief, grants Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company
Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of
the Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(the "Mixed and Shared Trusting Exemptive Order");
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and shares of the Series are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Virtus Investment Advisers, Inc. (the "Adviser"), which serves as
investment adviser to the Trust and each Series, is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended;
WHEREAS, the Company has issued or will issue certain variable life
insurance and/or variable annuity contracts supported wholly or partially by the
Account (the "Contracts") and has registered or will register such Contracts
under the 1933 Act if required;
1
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act, if required;
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the
aforesaid Contracts;
WHEREAS, the Distributor, which serves as distributor to the Trust, is
registered as a broker-dealer with the SEC under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and is a member in good standing of the
Financial Industry Regulatory Authority ("FINRA");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Series as set forth
in Schedule A hereto, as it may be amended from time to time by mutual written
agreement (the "Designated Series") on behalf of the Account to fund the
aforesaid Contracts, and the Distributor is authorized to sell such shares to
the Account at their net asset value; and
WHEREAS, this Agreement shall be deemed to create a separate participation
agreement on the terms hereof with respect to each Designated Series, as if the
parties hereto had executed a separate, identical form of participation
agreement with respect to each Designated Series, such that no liability or loss
that might apply to one Series hereunder shall affect any other Series;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust and the Distributor agree as follows:
ARTICLE I.
SALE OF TRUST SHARES
1.1. The Trust has granted to the Distributor exclusive authority to
distribute the Trust's shares, and has agreed to instruct, and has so
instructed, the Distributor to make available to the Company for purchase on
behalf of the Account shares of beneficial interest in the Designated Series.
Pursuant to such authority and instructions, and subject to Article IX hereof,
the Distributor agrees to make available to the Company for purchase on behalf
of the Account, shares of those Designated Series, such purchases to be
effected at net asset value in accordance with Section 1.3 of this Agreement.
Notwithstanding the foregoing, the Board of Trustees of the Trust (the "Board")
may refuse to sell shares of any Designated Series to any person, or suspend or
terminate the offering of Trust shares of any Designated Series or class
thereof, or liquidate any Designated Series or class thereof, if such action is
required by law or regulatory authorities having jurisdiction or if, in the
sole discretion of the Board acting in good faith, such action is deemed
necessary or appropriate in the best interests of the shareholders of such
Designated Series.
1.2. The Trust shall redeem, at the Company's request, any full or
fractional Designated Series shares held by the Company on behalf of the
Account, such redemptions to be effected at net asset value in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, (i) the Company
shall not redeem Trust shares attributable to Contract owners except in the
circumstances permitted in Section 1.3 of this Agreement, and (ii) the Trust
may delay redemption of Trust shares of any Designated Series to the extent
permitted by the 1940 Act, and any rules, regulations or orders thereunder.
2
1.3. PURCHASE AND REDEMPTION PROCEDURES
(a) The Trust hereby appoints the Company as an agent of the Trust
for the sole and limited purpose of receiving purchase and redemption requests
on behalf of the Account (but not with respect to any Trust shares that may be
held in the general account of the Company) for shares of those Designated
Series made available hereunder, based on allocations of amounts to the Account
or subaccounts thereof under the Contracts and other transactions relating to
the Contracts or the Account. Receipt by the Company as such limited agent of
the Trust of any such request (or relevant transactional information therefor)
that is in good order on any day the New York Stock Exchange is open for trading
and on which the Trust calculates the net asset value per share of the
Designated Series pursuant to the rules of the SEC (a "Business Day") prior to
the time that the Trust calculates such net asset values per share as described
from time to time in the Trust's statutory prospectus, as such term is defined
in Rule 498 under the 1933 Act (which as of the date of execution of this
Agreement is ordinarily as of the close of the New York Stock Exchange, or 4:00
p.m. Eastern Time)(the "Valuation Time") shall constitute receipt by the Trust
on that same Business Day, provided that the Trust or its designated agent
receives notice of such request by 9:00 a.m. Eastern Time on the next following
Business Day.
(b) The Company shall pay for shares of each Designated Series on
the same day that it notifies the Trust of a purchase request for such shares.
Payment for purchased Designated Series shares shall be made in federal funds
transmitted to the Trust by wire to be received by the Trust by 4:00 p.m.
Eastern Time on the Business Day the Trust is notified of the purchase request
for Designated Series shares (which request may be net of redemptions of such
shares). If federal funds are not received on time, such funds will be invested,
and Designated Series shares purchased thereby will be issued, as soon as
practicable and the Company shall promptly, upon the Trust's request, reimburse
the Trust for any charges, costs, fees, interest or other expenses incurred by
the Trust in connection with any advances to, or borrowing or overdrafts by, the
Trust, or any similar expenses incurred by the Trust, as a result of portfolio
transactions effected by the Trust based upon such purchase request. Upon
receipt of federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Trust.
(c) Payment for Designated Series shares redeemed by the Account or
the Company shall be made in federal funds transmitted by wire to the Company or
any other person duly designated by the Company on the Business Day the Trust is
properly notified of the redemption order of such shares (which order may be net
of any purchase orders) except that the Trust reserves the right to redeem
Designated Series shares in assets other than cash and to delay payment of
redemption proceeds to the extent permitted under Section 22(e) of the 1940 Act
and the Rule or Rules thereunder, and in accordance with the procedures and
policies of the Trust as described in the then current statutory prospectus
and/or statement of additional information ("SAI"). The Trust shall not bear any
responsibility whatsoever for the proper disbursement or crediting of redemption
proceeds by the Company; the Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Designated Series shares
held or to be held in the Company's general account shall be effected at the net
asset value per share next determined after the Trust's receipt of such request
in good order, provided that, in the case of a purchase request, payment for
Trust shares so requested is received by the Trust in federal funds prior to
close of business on the applicable Business Day for determination of such
value, as defined from time to time in the Trust's statutory prospectus.
(e) The Company shall not redeem shares of the Designated Series
attributable to the Contracts (as opposed to shares of the Designated Series
attributable to the Company's assets held in the Account) except (i) as
necessary to implement Contract owner initiated or approved transactions, (ii)
as required by state and/or federal laws or regulations or judicial or other
legal precedent of general
3
application (hereinafter referred to as a "Legally Required Redemption"), (iii)
as permitted by an order of the SEC pursuant to Section 26(c) of the 1940 Act,
but only if a substitution of other securities for the shares of the Designated
Series is consistent with the terms of the Contracts, or (iv) as otherwise
permitted under the terms of the Contracts. Upon request, the Company will
promptly furnish to the Trust reasonable assurance 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 Designated Series that was
otherwise available under the Contracts without first giving the Trust 45 days
notice of its intention to do so.
The Trust shall use its best efforts to make the net asset value per
share for each Designated Series (or class thereof) available to the Company by
6:30 p.m. Eastern Time each Business Day, and in any event, as soon as
reasonably practicable after the net asset value per share for such Designated
Series or class thereof is calculated, and shall calculate such net asset value
in accordance with the Trust's statutory prospectus. None of the Trust, any
Designated Series, the Distributor, or any of their affiliates shall be liable
for any information provided to the Company pursuant to this Agreement which
information is based on incorrect information supplied by the Company or any
other Participating Insurance Company to the Trust or the Distributor.
1.4. The Trust shall furnish notice (by wire or telephone followed by
written confirmation) to the Company as soon as reasonably practicable of any
income dividends or capital gain distributions payable on any Designated Series
shares. The Company, on its behalf and on behalf of the Account, hereby elects
to receive all such dividends and distributions as are payable on any
Designated Series shares in the form of additional shares of that Designated
Series. The Company reserves the right, on its behalf and on behalf of the
Account, to revoke this election and to receive all such dividends and capital
gain distributions in cash. The Trust shall notify the Company promptly of the
number of Designated Series shares so issued as payment of such dividends and
distributions.
1.5. Issuance and transfer of Trust shares shall be by book entry only.
The Trust will not issue share certificates to the Company or the Account.
Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the
Account.
1.6. (a) The parties hereto acknowledge that the arrangement contemplated
by this Agreement is not exclusive. The Trust may offer and sell shares of its
Series to other insurance companies. Similarly, the cash value of the Contracts
may be invested in other investment companies.
(b) The Company shall not, without prior notice to the Trust (unless
otherwise required by applicable law), take any action to operate the Account as
a management investment company under the 1940 Act.
(c) The Company shall not, without prior notice to the Trust (unless
otherwise required by applicable law), induce or encourage Contract owners to
change or modify the Trust or remove or otherwise change the Trust's distributor
or investment adviser.
(d) The Company shall provide prior written notice to the Trust if
it determines that it will induce or encourage Contract owners to vote on any
matter submitted for consideration by the shareholders of the Trust in a manner
other than as recommended by the Board of Trustees of the Trust.
1.7. The Company acknowledges that, pursuant to Form 24F-2, the Trust is
not required to pay fees to the SEC for registration of its shares under the
1933 Act with respect to its shares issued to an Account that is a unit
investment trust that offers interests that are registered under the 1933 Act
and on which a registration fee has been or will be paid to the SEC (a
"Registered Account"). The
4
Company agrees to provide the Trust or its agent each year within 60 days of
the end of the Trust's fiscal year, or when reasonably requested by the Trust,
information as to the number of shares purchased by a Registered Account and
any other Account the interests of which are not registered under the 0000 Xxx.
The Company acknowledges that the Trust intends to rely on the information so
provided.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
2.1. The Trust represents and warrants that (i) the Trust is lawfully
organized and validly existing under the laws of the State of Delaware, (ii)
the Trust is and shall use its best efforts to remain registered under the 1940
Act during the term of this Agreement, (iii) Designated Series shares sold
pursuant to this Agreement are registered under the 1933 Act (to the extent
required by that Act) and are duly authorized for issuance, (iv) the Trust
shall amend the registration statement for the shares of the Designated Series
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of such shares, and (v) the Board has elected
for each Designated Series to be taxed as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The
Trust makes no representations or warranties as to whether any aspect of the
Designated Series' operations, including, but not limited to, investment
policies, fees and expenses, complies with the insurance laws and other
applicable laws of the various states. The Company agrees promptly to notify
the Trust of any investment restrictions imposed by state insurance law
applicable to the Trust or a Designated Series. The Trust shall not be
responsible, and the Company shall take full responsibility, for determining
any jurisdiction in which any qualification or registration of Trust shares or
the Trust by the Trust may be required in connection with the sale of the
Contracts or the indirect interest of any Contract in any shares of the Trust
and shall advise the Trust at such time and in such manner as is necessary to
permit the Trust to comply.
2.2. The Distributor represents and warrants that shares of the
Designated Series (i) shall be offered and sold in compliance in all material
respects with applicable federal securities laws, (ii) are offered and sold
only to Participating Insurance Companies and their separate accounts and to
persons or plans that communicate to the Trust that they qualify to purchase
shares of the Designated Series under Section 817(h) of the Code and the
regulations thereunder without impairing the ability of the Account to consider
the portfolio investments of the Designated Series as constituting investments
of the Account for the purpose of satisfying the diversification requirements
of Section 817(h) ("Qualified Persons"), and (iii) are registered and qualified
for sale in accordance with the laws of the various states to the extent
required by applicable law.
2.3. Subject to Company's representations and warranties in Sections 2.5
and 2.6, the Trust represents and warrants that it will invest the assets of
each Designated Series in such a manner as to assure that the Contracts will be
treated as annuity or life insurance contracts, whichever is appropriate, under
the Code and the regulations issued thereunder (or any successor provisions).
Without limiting the scope of the foregoing, the Trust represents and warrants
that each Designated Series has complied and will continue to comply with
Section 817(h) of the Code and Treasury Regulation ss.1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulation. The
Trust will make every reasonable effort (a) to notify the Company immediately
upon having a reasonable basis for believing that a breach of this Section 2.3
has occurred, and (b) in the event of such a breach, to adequately diversify
the Designated Series so as to achieve compliance within the grace period
afforded by Treasury Regulation ss.1.817-5.
5
2.4. The Trust represents and warrants that each Designated Series is or
will be qualified as a Regulated Investment Company under Subchapter M of the
Code, that the Trust will make every reasonable effort to maintain such
qualification (under Subchapter M or any successor or similar provisions) and
that the Trust will notify the Company promptly upon having a reasonable basis
for believing that a Designated Series has ceased to so qualify or that it
might not so qualify in the future.
2.5. The Company represents and warrants that the Contracts (a) are, or
prior to issuance will be, registered under the 1933 Act, or (b) are not
registered because they are properly exempt from registration under the 1933
Act or will be offered exclusively in transactions that are properly exempt
from registration under the 1933 Act. The Company also represents and warrants
that it is an insurance company duly organized and in good standing under
applicable law, that it has legally and validly established the Account prior
to any issuance or sale thereof as a segregated asset account under relevant
state insurance laws, and that it (a) has registered or, prior to any issuance
or sale of the Contracts, will register the Account as a unit investment trust
in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts, or alternatively (b) has not registered
the Account in proper reliance upon an exclusion from registration under the
1940 Act. The Company further represents and warrants that (i) the Contracts
will be issued and sold in compliance in all material respects with all
applicable federal securities and state securities and insurance laws, (ii) the
sale of the Contracts shall comply in all material respects with state
insurance and other applicable suitability requirements; (iii) the information
provided pursuant to Section 1.7 shall be accurate in all material respects;
and (iv) it and the Account are Qualified Persons. The Company shall register
and qualify the Contracts or interests therein as securities in accordance with
the laws of the various states if and to the extent required by applicable law.
If the Trust elects to adopt use of the summary prospectus, as defined in Rule
498 under the 1933 Act, and the Company elects to make use of such summary
prospectuses in connection with satisfying prospectus delivery requirements
under the 1933 Act, the Company represents and warrants that it shall comply
with the requirements of Rule 498 under the 1933 Act and any applicable
guidance received from the SEC or from the SEC staff thereunder in connection
with the delivery of the Trust's summary prospectuses and any other duties
assumed by the Company in this Agreement. The Company represents and warrants
that it has reasonable policies and procedures in place to ensure that it can
appropriately meet its obligations under this Agreement.
2.6. The Company represents and warrants that the Contracts are
currently, and at the time of issuance shall be, treated as life insurance or
annuity contracts, under applicable provisions of the Code, that it will make
every reasonable effort to maintain such treatment, and that it will notify the
Trust and the Distributor immediately upon having a reasonable basis for
believing the Contracts have ceased to be so treated or that they might not be
so treated in the future. In addition, the Company represents and warrants that
each of its Accounts is a "segregated asset account" and that interests in the
Accounts are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Code and the regulations thereunder. Company will use every reasonable effort
to continue to meet such definitional requirements, and it will notify the
Trust and the Distributor immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not
be met in the future.
2.7. The Distributor represents and warrants that it is a member in good
standing of the FINRA and is registered as a broker-dealer with the SEC.
2.8. The Trust and the Distributor represent and warrant that all of
their trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than the
minimum coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time
6
to time. The aforesaid bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable bonding company.
2.9. The Company represents and warrants that all of its directors,
officers, employees, and other individuals/entities employed or controlled by
the Company dealing with the money and/or securities of the Account are covered
by a blanket fidelity bond or similar coverage for the benefit of the Account,
in an amount not less than $5 million. The aforesaid bond includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to hold for the benefit of the Trust and to pay to the Trust any
amounts lost from larceny, embezzlement or other events covered by the
aforesaid bond to the extent such amounts properly belong to the Trust pursuant
to the terms of this Agreement. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Trust and the Distributor in the
event that such coverage no longer applies.
2.10. Each party hereto represents and warrants that it shall comply with
any applicable privacy and notice provisions of 15 U.S.C. xx.xx. 6801-6827 and
any applicable regulations promulgated thereunder (including but not limited to
17 C.F.R. Part 248), and any other applicable federal and state privacy law, as
they may be amended from time to time. Each party hereto represents and
warrants that it has implemented and shall maintain during the term of this
Agreement appropriate security measures for personal information that comply
with all applicable law and regulation.
2.11. The Company represents and warrants that it has in place an
anti-money laundering program ("AML program") that does now and will continue
at all times during the term of this Agreement to comply with applicable laws
and regulations, including the relevant provisions of the USA PATRIOT Act (Pub.
L. No. 107-56 (2001)) and the regulations issued thereunder (the "Patriot
Act"). The Company hereby certifies that it has established and maintains an
AML program that includes written policies, procedures and internal controls
reasonably designed to identify its Contract owners and has undertaken
appropriate due diligence efforts to "know its customers" in accordance with
all applicable anti-money laundering regulations in its jurisdiction including,
where applicable, the Patriot Act. The Company further confirms that it will
monitor for suspicious activity in accordance with the requirements of the
Patriot Act. In addition, the Company represents and warrants that it has
adopted and implemented policies and procedures reasonably designed to achieve
compliance with the applicable requirements administered by the Office of
Foreign Assets Control of the U.S. Department of the Treasury. The Company
agrees to provide the Distributor with such information as it may reasonably
request, including but not limited to the filling out of questionnaires,
attestations and other documents, to enable the Distributor to fulfill its
obligations under applicable law, and, upon its request, to file a notice
pursuant to Section 314 of the Patriot Act and the implementing regulations
related thereto to permit the voluntary sharing of information between the
parties hereto. Upon filing such a notice, the Company agrees to forward a copy
to the Distributor, and further agrees to comply with all requirements under
the Patriot Act and implementing regulations concerning the use, disclosure,
and security of any information that is shared.
2.12. The Company represents and warrants that (a) the Company has, and
will maintain, policies and procedures reasonably designed to monitor and
prevent market timing or excessive trading activity by its customers and (b)
the Company will provide the Trust or its agent with assurances regarding the
compliance of its handling of orders with respect to shares of the Designated
Series with the requirements of Rule 22c-1 under the 1940 Act, regulatory
interpretations thereof, and the Trust's market timing and excessive trading
policies upon reasonable request. Additionally, the Company shall comply with
the requirements of applicable provisions of the summary prospectus and
statutory prospectus (collectively, the "Prospectus") and SAI of the Trust, and
with applicable federal and state securities laws. Among other things, and
without limitation of the foregoing, the Company shall be responsible for
reasonably assuring that only orders to purchase, redeem or exchange Series
shares
7
received by the Company or any Indirect Intermediary (as defined below) prior to
the Valuation Time shall be submitted directly or indirectly by the Company to
the Trust or its transfer agent or other applicable agent for receipt of a price
based on the net asset value per share calculated for that day in accordance
with Rule 22c-1 under the 1940 Act (orders to purchase, redeem or exchange
Series shares received by the Company subsequent to the Valuation Time on any
given Business Day or on a day that is not a Business Day shall receive a price
based on the applicable net asset value per share next determined by the Trust
in accordance with Rule 22c-1 under the 1940 Act. The Company further agrees to
make reasonable efforts to assist the Trust and its service providers (including
but not limited to the Distributor) to detect, prevent and report market timing
or excessive short-term trading of Series shares. To the extent the Company has
actual knowledge of violations of Trust policies (as set forth in the then
current Prospectus or SAI) regarding (i) the timing of purchase, redemption or
exchange orders and pricing of Series shares, (ii) market timing or excessive
short-term trading, or (iii) the imposition of redemption fees, if any, the
Company agrees promptly to report such known violations to the Distributor.
2.13. The Trust represents and warrants that its summary prospectuses and
the hosting of such documents prepared by the Trust that, pursuant to Rule 498
under the 1933 Act, will be publicly accessible, free of charge, at the website
address specified on the cover page or at the beginning of the summary
prospectus, and will comply in all material respects with all applicable
requirements of Rule 498. The Trust and Distributor agree that the website used
for hosting the Trust's summary prospectuses will lead Contract owners directly
to the current Trust documents required to be posted in compliance with Rule
498, and no other content or links will appear on the website.
ARTICLE III.
PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1. Subject to Section 6.1 and the Trust's determination to use summary
prospectuses, as such term is defined in Rule 498 under the 1933 Act, the
Distributor shall provide the Company with as many copies of the Trust's
current Prospectuses as the Company may reasonably request. The Company shall
bear the expenses of printing copies of the Trust's Prospectuses: (i) if
requested by Contract owners, for the Contracts that will be distributed to
existing Contract owners and (ii) that are used in connection with offering the
Contracts issued by the Company. If requested by the Company in lieu thereof or
if required by applicable law or applicable guidance from the SEC or SEC staff,
the Trust shall provide such documentation (including a final copy of the
Trust's summary and/or statutory prospectus in electronic format at the Trust's
expense) and other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the summary prospectus for the
Trust is amended) to have the prospectus for the Contracts and the Trust's
summary prospectus bound together in one document in accordance with applicable
law and regulation, including but not limited to, Rule 498 under the 1933 Act
and any applicable guidance from the SEC or SEC staff (such printing to be at
the Company's expense). As required by, and in accordance with, Rule 498 and
all other applicable laws and guidance from the SEC or SEC staff, the Company
represents and warrants that it shall: (1) deliver the Trust's summary
prospectus, if used, to existing Contract owners and potential investors in a
manner that satisfies all applicable legal requirements, and (2) adhere to any
applicable binding requirements regarding the summary prospectus.
3.2. The Distributor (or the Trust), at its expense and upon request of
the Company, shall provide an electronic copy of the current SAI for the Trust
free of charge to the Company for itself and so that the Company can print and
deliver the SAI to any owner of a Contract who requests such SAI.
3.3. Within three (3) Business Days of receiving a request for a paper
copy or an electronic copy of a Trust statutory and/or summary prospectus,
including any supplements, SAI, including any
8
supplements, and most recent annual and semi-annual reports to shareholders
under Rule 30e-1 of the 1940 Act ("Trust Documents"), the Company shall send a
paper copy or electronic copy, respectively, of any requested Trust Document to
any person requesting such copy at no cost to the Contract owner and by U.S.
first class mail or other reasonably prompt means or by email for electronic
requests. The Company shall deliver the most current version of the Trust
Document that it has received from the Trust pursuant to Section 3.1 above.
3.4. The Trust shall provide the Company with information regarding the
Trust's expenses, which information may include a table of fees and related
narrative disclosure for use in any prospectus or other descriptive document
relating to a Contract. The Company agrees that it will use such information in
the form provided. The Company shall provide prior written notice of any
proposed modification of such information, which notice will describe in detail
the manner in which the Company proposes to modify the information, and agrees
that it may not modify such information in any way without the prior consent of
the Trust.
3.5. The Trust hereby grants to the Company a non-exclusive, worldwide,
royalty-free license for the duration of the Agreement to create a hyperlink
from the Company's website to the Trust's website. Notwithstanding the
foregoing, the Trust shall be and remain solely responsible for ensuring that
the statutory prospectuses, the summary prospectuses and other documents for
the Designated Series, comply with Rule 498 and any applicable guidance
received from the SEC or from the SEC staff thereunder.
3.6. The Trust, at its expense, or at the expense of its designee, 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. The Company shall
deliver such documents to Contract owners in accordance with applicable laws.
3.7. The Company shall:
(i) solicit voting instructions from Contract owners eligible
to vote on a matter;
(ii) vote the Trust shares in accordance with instructions
received from such Contract owners; and
(iii) vote Trust shares of Contract owners eligible to vote
for which no instructions have been received in the same proportion
as Trust shares of Contract owners eligible to vote on such matter
for which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act
and/or relief and interpretations thereunder to require pass-through voting
privileges for variable contract owners or to the extent otherwise required by
law.
3.8. Participating Insurance Companies shall be responsible for assuring
that each of their separate accounts participating in a Designated Series
calculates voting privileges as required by the Mixed and Shared Trusting
Exemptive Order and consistent with any reasonable standards that the Trust may
adopt and provide in writing.
9
ARTICLE IV.
SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material that the Company or its affiliates develop and in which the Trust (or
a Designated Series thereof) or the Adviser or the Distributor is named. No
such material shall be used until approved by the Trust or its designee, and
the Trust will use its best efforts for it or its designee to review such sales
literature or promotional material within ten Business Days after receipt of
such material. Materials not approved or disapproved by the Trust or its
designee within the ten Business Days shall be deemed approved, provided that
the Trust confirms that it or its designee received such materials. The Company
shall be responsible for any required regulatory filings of sales literature or
other promotional material it produces. The Trust or its designee reserves the
right to reasonably object to the continued use of any such sales literature or
other promotional material in which the Trust (or a Designated Series thereof)
or the Adviser or the Distributor is named, and no such material shall be used
if the Trust or its designee so objects.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust, a
Designated Series, the Adviser or the Distributor in connection with the sale
of the Contracts other than the information or representations contained in the
registration statement or applicable Prospectus or applicable SAI for the Trust
shares, as such registration statement and Prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the
Trust, or in sales literature or other promotional material approved by the
Trust or its designee or by the Distributor for use with the public, except
with the written permission of the Trust or the Distributor or the designee of
either. The Company shall comply with all applicable laws, including Rule 498
under the 1933 Act, when composing, compiling and delivering sales literature
or other promotional material. The Trust shall be entitled to review Company's
placement of sales materials with the summary prospectus in order to review
Company's compliance with applicable laws and regulations.
4.3. The Trust and the Distributor, or their designee, shall furnish, or
cause to be furnished, to the Company, each piece of sales literature or other
promotional material that it develops and in which the Company, and/or its
Account, is named. No such material shall be used until approved by the
Company, and the Company will use its best efforts to review such sales
literature or promotional material within ten Business Days after receipt of
such material. The Company reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which the Company and/or its Account is named, and no such material shall be
used if the Company so objects.
4.4. The Trust and the Distributor shall not give any information or make
any representations on behalf of the Company or concerning the Company, the
Account, or the Contracts other than the information or representations
contained in a registration statement, prospectus (which shall include an
offering memorandum, if any, if the Contracts issued by the Company or
interests therein are not registered under the 1933 Act), or SAI for the
Contracts, as such registration statement, prospectus, or SAI may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the Company for distribution to
Contract owners, or in sales literature or other promotional material approved
by the Company or its designee, except with the written permission of the
Company.
4.5. The Trust will provide to the Company at least one complete copy of
all summary and/or statutory prospectuses, reports, proxy statements,
applications for exemptions to the extent material to the Company, requests for
no-action letters to the extent material to the Company, and all amendments
10
to any of the above, that relate to the Trust or its shares promptly after the
filing of such document(s) with the SEC or other regulatory authorities. The
Trust shall provide copies of registration statements and SAIs upon request of
Company. The Company shall not alter any of such documents provided by the Trust
without the prior written consent of the Trust or Distributor.
4.6. The Company will provide to the Trust at least one complete copy of
all prospectuses (which shall include an offering memorandum, if any, if the
Contracts issued by the Company or interests therein are not registered under
the 1933 Act), SAIs, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that
relate to the Contracts or the Account and to the extent material to the Trust,
Adviser or Distributor, promptly after the filing of such document(s) with the
SEC or other regulatory authorities. The Company shall provide to the Trust and
the Distributor any complaints received from the Contract owners pertaining to
the Trust or the Designated Series.
4.7. For purposes of this Article IV, the phrase "sales literature and
other promotional materials" includes, but is not limited to, any of the
following that refer to the Trust or any affiliate of the Trust: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Trust.
ARTICLE V.
FEES AND EXPENSES
5.1. Except as otherwise provided herein or in a separate agreement
entered into by some or all the parties hereto, no party to this Agreement
shall pay any fee or other compensation to any other party to this Agreement.
Except as otherwise provided herein, all expenses incident to performance by a
party under this Agreement shall be paid by such party.
5.2. The Trust 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 Trust, in accordance with applicable
state laws prior to their sale. The Trust shall bear the expenses for the cost
of registration and qualification of the Trust's shares, preparation and filing
of the Trust's Prospectuses and registration statement, proxy materials and
reports, setting the Prospectuses in type, setting in type and printing the
proxy materials and reports to shareholders, the preparation of all statements
and notices required by any federal or state law, and all taxes on the issuance
or transfer of the Trust's shares.
5.3. The Company shall bear the expenses of distributing the Trust's
Prospectuses to owners of Contracts issued by the Company and the Trust shall
bear the expenses of distributing the Trust's proxy materials and reports to
such Contract owners.
11
ARTICLE VI.
POTENTIAL CONFLICTS
6.1. The parties to this Agreement agree that the conditions or
undertakings required by the Mixed and Shared Trusting Exemptive Order that may
be imposed on the Company, the Trust and/or the Distributor by virtue of such
order by the SEC, including those relating to material irreconcilable
conflicts, apply to the activities contemplated in this Agreement and are
incorporated herein by reference as terms of this Agreement at all times that
the Company, the Trust and/or the Distributor rely on the relief provided by
such order. At all times the conditions and undertaking apply as set forth
above, each of the parties agree to comply with such conditions and
undertakings to the extent applicable to such party, notwithstanding any
provision of this Agreement otherwise to the contrary. The parties hereto agree
that each shall assume that it is relying upon the relief provided by the Mixed
and Shared Trusting Exemptive Order when acting in accordance with this
Agreement, unless the Trust or Distributor provides a written notification to
each party that the parties are not acting in reliance on the relief provided
by such order.
6.2. 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 Mixed and Shared Trusting Exemptive Order) on terms
and conditions materially different from those contained in the Mixed and
Shared Trusting Exemptive Order, then (a) the parties to this Agreement 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 3.7 and 3.8 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 VII.
INDEMNIFICATION
7.1. INDEMNIFICATION BY THE COMPANY
(a) The Company agrees to indemnify and hold harmless the Trust, the
Adviser and the Distributor and each of its trustees/directors and officers, and
each person, if any, who controls the Trust or Distributor within the meaning of
Section 15 of the 1933 Act or who is under common control with the Distributor
(collectively, the "Indemnified Parties" for purposes of this Section 7.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including
reasonable legal and other expenses), to which the Indemnified Parties may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a written
description of a Contract that is not registered under the 1933
Act), or SAI for the Contracts or contained in the Contracts or
sales literature or other promotional material for the Contracts (or
any amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, 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
12
furnished to the Company by or on behalf of the Trust for use in
the registration statement, prospectus or SAI for the Contracts or
in the Contracts or sales literature or other promotional material
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained
in the registration statement, prospectus, SAI, or sales literature
or other promotional material of the Trust not supplied by the
Company or persons under its control) or wrongful conduct of the
Company or its agents or persons under the Company's authorization
or control, with respect to the sale or distribution of the
Contracts or Trust Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI, or sales literature or other promotional material
of the Trust or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in
reliance upon information furnished to the Trust by or on behalf of
the Company; or
(iv) arise as a result of any material failure by the Company
to provide the services and furnish the materials under the terms of
this Agreement (including a failure, whether unintentional or in
good faith or otherwise, to comply with the qualification
requirements specified in Section 2.6 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 7.1(b) and
7.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, fraud, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of its obligations or duties under this
Agreement.
(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, the Company shall be entitled to participate, at
its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
13
(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 Trust shares or the Contracts or the operation of
the Trust.
7.2. INDEMNIFICATION BY THE DISTRIBUTOR
(a) The Distributor 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 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation
(including reasonable 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:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature or
other promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, 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
Distributor or Trust by or on behalf of the Company for use in the
registration statement, prospectus or SAI for the Trust or in sales
literature or other promotional material (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained
in the registration statement, prospectus, SAI or sales literature
or other promotional material for the Contracts not supplied by the
Distributor or persons under its control) or wrongful conduct of the
Trust or Distributor or persons under their control, with respect to
the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI or sales literature or other promotional material
covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Trust or the Distributor; or
(iv) arise as a result of any failure by the Distributor to
provide the services and furnish the materials it is required to
provide and furnish 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 Distributor in this
Agreement or arise out of or result from any other material breach
of this Agreement by the Distributor;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
14
(b) The Distributor 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, fraud, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company or the Account, whichever is applicable.
(c) The Distributor 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 Distributor 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 Distributor of
any such claim shall not relieve the Distributor 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 Party, the Distributor will be entitled to participate,
at its own expense, in the defense thereof. The Distributor also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Distributor to such party of the
Distributor'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 Distributor will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(d) The Company agrees promptly to notify the Distributor 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 the Account.
7.3. INDEMNIFICATION BY THE TRUST
(a) The Trust 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 7.3) against any and all
losses, claims, expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Trust) or litigation (including
reasonable legal and other expenses) to which the Indemnified Parties may be
required to pay or may become subject under any statute or regulation, at common
law or otherwise, insofar as such losses, claims, expenses, damages, liabilities
or expenses (or actions in respect thereof) or settlements, are related to the
operations of the Trust and:
(i) arise as a result of any failure by the Trust to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good
faith or otherwise, to comply with the diversification and other
qualification requirements specified in Section 2.3 and 2.4 of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Trust;
as limited by and in accordance with the provisions of Sections 7.3(b) and
7.3(c) hereof. The parties acknowledge that the Trust's indemnification
obligations under this Section 7.3 are subject to applicable law.
15
(b) The Trust 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, fraud, bad faith, or gross negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Trust, the Distributor or the Account,
whichever is applicable.
(c) The Trust 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 Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability 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 Trust will be entitled to participate, at
its own expense, in the defense thereof. The Trust also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Trust to such party of the Trust'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 Trust will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
(d) The Company and the Distributor agree promptly to notify the
Trust of the commencement of any litigation or proceeding against it or any of
its respective officers or directors in connection with the Agreement, the
issuance or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Trust.
ARTICLE VIII.
APPLICABLE LAW
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, as amended, 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 Mixed and
Shared Trusting Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith. If, in the future, the Mixed and Shared
Trusting Exemptive Order should no longer be necessary under applicable law,
then Article VI shall no longer apply.
ARTICLE IX.
TERMINATION
9.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to some or
all Designated Series, by six (6) months advance written notice delivered to the
other parties; or
(b) termination by the Company by written notice to the Trust and
the Distributor based upon the Company's determination that shares of a Series
are not reasonably available to meet the
16
requirements of the Contracts, provided, however, that such termination shall
apply only to those Series the shares of which are not reasonably available to
meet the requirements of the Contracts, and in such event notice of its election
to terminate for such cause shall be furnished by the Company promptly; or
(c) termination by the Company by written notice to the Trust and
the Distributor in the event any of the Designated Series' shares are not
registered, issued or sold in accordance with applicable state and/or federal
law or such law precludes the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the Company; or
(d) termination by the Trust or Distributor in the event that formal
administrative proceedings are instituted against the Company by FINRA, the SEC,
the Insurance Commissioner or like official of any state or any other regulatory
body regarding the Company's duties under this Agreement or related to the sale
of the Contracts, the operation of any Account, or the purchase of the Trust's
shares; provided, however, that the Trust or Distributor determines in its sole
judgment exercised in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Company to perform its
obligations under this Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the Trust or Distributor by
FINRA, the SEC, or any state securities or insurance department or any other
regulatory body; provided, however, that the Company determines in its sole
judgment exercised in good faith, that any such administrative proceedings will
have a material adverse effect upon the ability of the Trust or Distributor to
perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the Trust and
the Distributor with respect to any Designated Series in the event that such
Series ceases to qualify as a Regulated Investment Company under Subchapter M or
fails to comply with the Section 817(h) diversification requirements specified
in Section 2.4 hereof, or if the Company reasonably believes that such Series
may fail to so qualify or comply; or
(g) termination by the Trust or Distributor by written notice to the
Company in the event that the Contracts fail to meet the qualifications
specified in Section 2.6 hereof; or
(h) termination by either the Trust or the Distributor by written
notice to the Company, if either one or both of the Trust or the Distributor
respectively, shall determine, in their sole judgment exercised in good faith,
that the Company has suffered a material adverse change in its business,
operations, financial condition, or prospects since the date of this Agreement
or is the subject of material adverse publicity; or
(i) termination by the Company by written notice to the Trust and
the Distributor, if the Company shall determine, in its sole judgment exercised
in good faith, that the Trust, Adviser, or the Distributor 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; or
(j) termination by the Company upon any substitution of the shares
of another investment company or series thereof for shares of a Designated
Series of the Trust in accordance with the terms of the Contracts, provided that
the Company has given at least 90 days prior written notice to the Trust and
Distributor of the date of substitution; or
(k) termination by the Trust if the Board has decided to (i) refuse
to sell shares of any Designated Series to the Company and/or any of its
Accounts; (ii) suspend or terminate the offering of shares of any Designated
Series; or (iii) dissolve, reorganize, liquidate, merge or sell all assets of
the Trust or any Designated Series, subject to the provisions of Section 1.1; or
17
(l) termination by any party in the event that the Trust's Board of
Trustees determines that a material irreconcilable conflict exists as provided
in Article VI.
9.2. (a) Notwithstanding any termination of this Agreement, and except as
provided in Section 9.2(b), the Trust and the Distributor shall, at the option
of the Company, continue, until the one year anniversary from the date of
termination, and from year to year thereafter if deemed appropriate by the Trust
and the Distributor, to make available additional shares of the Designated
Series pursuant to the terms and conditions of this Agreement, for all Contracts
in effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, based on instructions from
the owners of the Existing Contracts, the Accounts shall be permitted to
reallocate investments in the Designated Series of the Trust and redeem
investments in the Designated Series, and shall be permitted to invest in the
Designated Series in the event that owners of the Existing Contracts make
additional premium payments under the Existing Contracts.
The Company agrees, promptly after any termination of this
Agreement, to take all steps necessary to redeem the investment of the Accounts
in the Designated Series within one year from the date of termination of the
Agreement as provided in Article IX. Such steps shall include, but not be
limited to, obtaining an order pursuant to Section 26(c) of the 1940 Act to
permit the substitution of other securities for the shares of the Designated
Series. The Trust may, in its discretion, permit the Accounts to continue to
invest in the Designated Series beyond such one year anniversary for an
additional year beginning on the first annual anniversary of the date of
termination, and from year to year thereafter; provided that the Trust agrees in
writing to permit the Accounts to continue to invest in the Designated Series at
the beginning of any such year.
(b) In the event (i) the Agreement is terminated pursuant to Sections
9.1(g) or 9.1(l), at the option of the Trust or the Distributor; or (ii) the one
year anniversary of the termination of the Agreement is reached or, after waiver
as provided in Section 9.2(a), such subsequent anniversary is reached (each of
(i) and (ii) referred to as a "triggering event" and the date of termination as
provided in (i) or the date of such anniversary as provided in (ii) referred to
as the "request date"), the parties agree that such triggering event shall be
considered as a request for immediate redemption of shares of the Designated
Series held by the Accounts, received by the Trust and its agents as of the
request date, and the Trust agrees to process such redemption request in
accordance with the 1940 Act and the regulations thereunder and the Trust's
registration statement.
(c) The parties agree that this Section 9.2 shall not apply to any
terminations under Article VI and the effect of such Article VI terminations
shall be governed by Article VI of this Agreement. The parties further agree
that, to the extent that all or a portion of the assets of the Accounts continue
to be invested in the Trust or any Designated Series of the Trust, Articles I,
II, III, VI, VII and VIII will remain in effect after termination.
9.3. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties shall survive.
ARTICLE X.
NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail or overnight delivery service 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.
18
If to the Trust: Virtus Variable Insurance Trust
c/o Virtus Investment Partners
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Counsel
If to the Company: Lincoln Life & Annuity Company of New York
0000 X. Xxxxxxx Xx.
Xxxx Xxxxx, XX 00000
Attention: Funds Management
If to Distributor: VP Distributors, LLC
c/o Virtus Investment Partners
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Counsel
ARTICLE XI.
MISCELLANEOUS
11.1. All persons dealing with the Trust must look solely to the property
of the applicable Designated Series, as appropriate, set forth on Schedule A
hereto as though each such Designated Series had separately contracted with the
Company and the Distributor for the enforcement of any claims against the
Trust. The parties agree that none of the Board, officers, agents or
shareholders of the Trust assume any personal liability or responsibility for
obligations entered into by or on behalf of the Trust.
11.2. 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 without the express
written consent of the affected party until such time as such information has
come into the public domain.
11.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
11.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
FINRA, 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the applicable Insurance
19
Commissioner with any information or reports in connection with services
provided under this Agreement which such Commissioner may request in order to
ascertain whether the variable insurance contract operations of the Company are
being conducted in a manner consistent with the applicable variable insurance
contract laws and regulations and any other applicable law or regulations.
11.7. 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.
11.8. This Agreement may be amended only by the mutual written consent of
the parties.
11.9. This Agreement or any of the rights and obligations hereunder may
not be assigned, as that term is defined by and interpreted under the 1940 Act,
by any party without the prior written consent of all parties hereto. The
Company shall promptly notify the Trust and the Distributor of any change in
control of the Company.
11.10. The Company shall furnish, or shall cause to be furnished, to the
Trust 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) filed with any state or federal regulatory body or
otherwise made available to the public, as soon as practicable and in any event
within 90 days after the end of each fiscal year; and
(b) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange Commission or any
state insurance regulatory, as soon as practicable after the filing thereof.
ARTICLE XII.
RULE 22C-2 COMPLIANCE
12.1. The Company agrees to provide promptly to the Distributor, upon
written request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN"), or other
government-issued identifier ("GII") and the Contract owner number or
participant account number, if known, of any or all Contractholder(s) of the
account, the name or other identifier of any investment professional(s)
associated with the Contractholder(s) or account (if known), and the amount,
date and transaction type (purchase, redemption, transfer, or exchange) of
every purchase, redemption, transfer, or exchange of shares held through an
account maintained by the Company during the period covered by the request.
Unless otherwise specifically requested by the Distributor, the Company shall
only be required to provide information relating to Contractholder-Initiated
Transfer Purchases or Contractholder-Initiated Transfer Redemptions.
(a) Period Covered by Request. Requests must set forth a specific
period, normally not to exceed 120 days from the date of the request, for which
transaction information is sought. The Distributor may request transaction
information older than 120 days from the date of the request as it deems
necessary to investigate compliance with policies established or utilized by the
Trust or the Distributor for the purpose of eliminating or reducing any dilution
of the value of the outstanding shares issued by a Series. If requested by the
Distributor, the Company will provide the information specified in this Section
12.1 for each trading day.
20
(b) Form and Timing of Response. The Company agrees to provide,
promptly upon request of the Distributor, the requested information specified in
this Section 12.1. The Company agrees to use its best efforts to determine
promptly whether any specific person about whom it has received the
identification and transaction information specified in this Section 12.1 is
itself a "financial intermediary," as that term is defined in Rule 22c-2 under
the 1940 Act (an "Indirect Intermediary") and, upon request of the Distributor,
promptly either (i) provide (or arrange to have provided) the information set
forth in this Section 12.1 for those Contractholders who hold an account with an
Indirect Intermediary or (ii) restrict or prohibit the Indirect Intermediary
from purchasing shares in nominee name on behalf of other persons. The Company
additionally agrees to inform the Distributor whether it plans to perform (i) or
(ii) above. Responses required by this paragraph must be communicated in writing
and in a format mutually agreed upon by the parties. To the extent practicable,
the format for any Contractholder and transaction information provided to the
Distributor should be consistent with the NSCC Standardized Data Reporting
Format.
(c) Limitations on Use of Information. Unless the Company provides
prior written consent, Distributor and Trust agree not to use the information
received pursuant to this Article for any purpose other than as necessary to
comply with the provisions of Rule 22c-2 or to fulfill other regulatory or legal
requirements subject to the privacy provisions of Title V of the
Xxxxx-Xxxxx-Xxxxxx Act (Public Law 106-102) and comparable state laws; provided,
however, that this provision shall not limit the use of publicly available
information, information already in the possession of the Distributor, the Trust
or their affiliates at the time the information is received pursuant to this
Section 12.1 or information which comes into the possession of the Distributor,
the Trust or their affiliates from a third party.
(d) Agreement to Restrict Trading. The Company agrees to execute
written instructions from the Distributor to restrict or prohibit further
purchases or exchanges of Series shares by a Contractholder that has been
identified by the Distributor as having engaged in transactions in Series shares
(directly or indirectly through the Company's account) that violate policies
established or utilized by the Trust or the Distributor for the purpose of
eliminating or reducing any dilution of the value of the outstanding shares
issued by a Series. Unless otherwise directed by the Distributor, any such
restrictions or prohibitions shall only apply to Contractholder-Initiated
Transfer Purchases or Contractholder-Initiated Transfer Redemptions that are
effected directly or indirectly through the Company.
(e) Form of Instructions. Instructions must include the TIN, ITIN or
GII and the specific individual Contract owner number or participant account
number associated with the Contractholder, if known, and the specific
restriction(s) to be executed. If the TIN, ITIN, GII or the specific individual
Contract owner number or participant account number associated with the
Contractholder is not known, the instructions must include an equivalent
identifying number of the Contractholder(s) or account(s) or other agreed upon
information to which the instruction relates.
(f) Timing of Response. The Company agrees to execute instructions
from the Distributor as soon as reasonably practicable, but not later than five
(5) business days after receipt of the instructions by the Company.
(g) Confirmation by the Company. The Company must provide written
confirmation to the Distributor that the Distributor's instructions to restrict
or prohibit trading have been executed. The Company agrees to provide
confirmation as soon as reasonably practicable, but not later than five (5)
business days after the instructions have been executed.
(h) Definitions. For purposes of this Section 12.1, the following
terms shall have the following meanings, unless a different meaning is clearly
required by the context:
21
(i) The term "Contractholder" means the holder of interests in
a Contract or a participant in an employee benefit plan with a
beneficial interest in a Contract.
(ii) The term "Contractholder-Initiated Transfer Purchase"
means a transaction that is initiated or directed by a
Contractholder that results in a transfer of assets within a
Contract to a Series, but does not include transactions that are
executed: (i) automatically pursuant to a contractual or systematic
program or enrollment such as a transfer of assets within a Contract
to a Series as a result of "dollar cost averaging" programs,
insurance company approved asset allocation programs, or automatic
rebalancing programs; (ii) pursuant to a Contract death benefit;
(iii) as a result of a one-time step-up in Contract value pursuant
to a Contract death benefit; (iv) as a result of an allocation of
assets to a Series through a Contract as a result of payments such
as loan repayments, scheduled contributions, retirement plan salary
reduction contributions, or planned premium payments to the
Contract; or (v) pre-arranged transfers at the conclusion of a
required "free look" period.
(iii) The term "Contractholder-Initiated Transfer Redemption"
means a transaction that is initiated or directed by a
Contractholder that results in a transfer of assets within a
Contract out of a Series, but does not include transactions that are
executed: (i) automatically pursuant to a contractual or systematic
program or enrollments such as transfers of assets within a Contract
out of a Series as a result of annuity payouts, loans, systematic
withdrawal programs, insurance company approved asset allocation
programs and automatic rebalancing programs; (ii) as a result of any
deduction of charges or fees under a Contract; (iii) within a
Contract out of a Series as a result of scheduled withdrawals or
surrenders from a Contract; or (iv) as a result of payment of a
death benefit from a Contract.
(iv) The term "Series" shall mean the constituent series of
the Trust, but for purposes of this Section 12.1 shall not include
Series excepted from the requirements of paragraph (a) of Rule 22c-2
by paragraph (b) of Rule 22c-2.
(v) The term "promptly" shall mean as soon as practicable but
in no event later than five (5) business days from the Company's
receipt of the request for information from the Distributor.
(vi) The term "written" includes electronic writings and
facsimile transmissions.
(vii) In addition, for purposes of this Section 12.1, the term
"purchase" does not include the automatic reinvestment of dividends
or distributions.
[Signature page follows.]
22
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 as of the date first listed above.
Lincoln Life & Annuity Company of New York
By its authorized officer
By: _______________________________
Name: _______________________________
Title: _______________________________
Date: _______________________________
VIRTUS VARIABLE INSURANCE TRUST
By its authorized officer
By: _______________________________
Name: _______________________________
Title: _______________________________
Date: _______________________________
VP DISTRIBUTORS, LLC
By its authorized officer
By: _______________________________
Name: _______________________________
Title: _______________________________
Date: _______________________________
23
SCHEDULE A
The term "Designated Series" of the Trust will include any Series of the Trust
(as listed below) as well as any Series of the Trust or any share class of any
Series (now existing or hereafter created) created subsequent to the date
hereof, in the specified class or classes, if applicable.
VIRTUS VARIABLE INSURANCE TRUST:
Virtus Capital Growth Series
Virtus Growth & Income Series
Virtus International Series
Virtus Multi-Sector Fixed Income Series
Virtus Premium AlphaSector(R) Series
Virtus Real Estate Securities Series
Virtus Small-Cap Growth Series
Virtus Small-Cap Value Series
Virtus Strategic Allocation Series
SEGREGATED ASSET ACCOUNTS:
Lincoln New York Account N for Variable Annuities
24
