EXHIBIT (h)(25)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 14th day of August, 2006 (the
"Agreement"), by and among New York Life Insurance and Annuity Corporation,
organized under the laws of the State of Delaware (the "Company"), on behalf of
itself and each separate account of the Company named in Schedule A to this
Agreement, as may be amended from time to time (each such separate account being
hereinafter referred to as a "Separate Account" and, collectively, as the
"Separate Accounts"); Delaware VIP Trust, an open-end management investment
company organized as a statutory trust under the laws of the State of Delaware
(the "Trust"); Delaware Management Company, a series of Delaware Management
Business Trust, a statutory trust organized under the laws of the State of
Delaware and investment adviser to the Trust (the "Adviser"); and Delaware
Distributors, L.P., a limited partnership organized under the laws of the State
of Delaware and principal underwriter/distributor of the Trust (the
"Distributor") (individually a "Party," collectively, "Parties").
WHEREAS, the Trust engages in business as an open-end diversified,
management investment company and was established for the purpose of serving as
the investment vehicle for separate accounts established for variable life
insurance contracts and variable annuity contracts (collectively, the "Variable
Insurance Products") to be offered by insurance companies that have entered into
participation agreements with the Trust substantially similar to this Agreement
("Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Trust are divided into several series
of shares, each representing the interest in a particular managed portfolio of
securities and other assets (each, a "Fund" and collectively, the "Funds"); and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission ("SEC"), dated November 2, 1987 (File No. 812-6777), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of Sections 9(a),
13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended ("1940
Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) hereunder, 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 life insurance
companies that may or may not be affiliated with one another and qualified
pension and retirement plans ("Qualified Plans") ("Mixed and Shares Funding
Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and shares of the Fund(s) are registered under the
Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS, the Adviser is a series of a statutory trust which 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 Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended ("1934 Act") and is a member in good
standing of the
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National Association of Securities Dealers, Inc. ("NASD") and serves as
principal underwriter of the shares of the Funds; and
WHEREAS, the Company, as depositor, has established the Separate Accounts
to serve as investment vehicles for certain variable annuity contracts and
variable life insurance policies and funding agreements offered by the Company
set forth on Schedule A ("Contracts"); and
WHEREAS, the Company has registered interests under the Contracts that are
supported wholly or partially by the Separate Accounts under the 1933 Act; and
WHEREAS, each Separate Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of Directors of
the Company under the insurance laws of the State of Delaware to set aside and
invest assets attributable to the Contracts; and
WHEREAS, the Company has registered each Separate Account as a unit
investment trust under the 1940 Act and has registered (or will register prior
to sale) the securities deemed to be issued by each Separate Account under the
1933 Act to the extent required; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Fund(s) listed in
Schedule B hereto (the "Designated Fund(s)"), on behalf of the Separate Accounts
to fund the Contracts, and the Trust is authorized to sell such shares to unit
investment trusts, such as the Separate Accounts, at net asset value; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Separate Accounts also intend to purchase shares in other
open-end investment companies or series thereof not affiliated with the Trust
("Unaffiliated Funds") to fund the Contracts.
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust, the Adviser and the Distributor agree as follows:
ARTICLE I. - SALE OF FUND SHARES
1.1 The Distributor agrees to sell to the Company those shares of the
Designated Funds that the Company orders on behalf of each Separate
Account, executing such orders on a daily basis at the net asset value
(and with no sales charges) next computed after receipt and acceptance by
the Trust or its designee of the orders for the shares of the Designated
Funds. For purposes of this Section 1.1, the Company will be designee of
the Trust solely for the purpose of receiving such orders from each
Separate Account and receipt by such designee by the earlier of 4:00 p.m.
(Eastern time) or the close of regular trading on the New York Stock
Exchange (or such other time that the Trust determines the NAV as set
forth in the prospectuses for the funds) constitutes receipt by the Trust
on that day, provided that the Company provides the Trust with a purchase
order by 7:30 a.m. Eastern Time on the next following Business Day.
"Business Day" will mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net asset value of
each Fund pursuant to the rules of the SEC, as set forth in each Fund's
prospectus. If a purchase order is received by the Trust after 7:30 a.m.
Eastern Time on a
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Business Day, such redemption request will be considered to be received on
the next following Business Day and payment by the Company for such
purchase order pursuant to Section 1.2 of this Agreement will be made by
the Company on the next following Business Day. The Trust may net the
redemption requests it receives from the Company under Section 1.3 of this
Agreement against purchase orders it receives from the Company under this
Section 1.1. The Trust and the Company will be responsible for assuring
their compliance with the Purchase and Redemption Order Procedures set
forth in Schedule D.
1.2 The Company will transmit payment for shares of any Designated Fund
purchased by 3:00 p.m. Eastern Time on the same Business Day an order to
purchase such shares is provided to the Trust, in accordance with Section
1.1. Payment will be made in federal funds transmitted by wire. Upon
receipt by the Trust of the purchase payment, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of
the Trust.
1.3 The Trust agrees to redeem, upon the Company's request, any full or
fractional shares of a Designated Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt and acceptance by the Trust or its designee. For purposes of this
Section 1.3, the Company will be the designee of the Trust solely for the
purpose of receiving request for redemption from each Separate Account and
receipt by such designee will constitute receipt by the Trust, provided
that the Company provides the Trust with a redemption request by 7:30 a.m.
Eastern Time on the next following Business Day. Payment for shares of any
Designated Fund redeemed will be made in federal funds transmitted by wire
to the Company's account as designated by the Company in writing from time
to time, by 3:00 p.m. Eastern Time on the Business Day the Trust receives
notice of the redemption request for such shares from the Company. The
Trust reserves the right to delay payment of redemption proceeds, but in
no event may such payment be delayed longer than the period permitted
under Section 22(e) of the 0000 Xxx. The Trust will not bear any
responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds to individual Contract holders, the Company alone will
be responsible for such action. If a redemption request is received by the
Trust after 7:30 a.m. Eastern Time on a Business Day, such redemption
request will be considered to be received on the next following Business
Day and payment for redeemed shares will be made by the Trust on the next
following Business Day. The Trust may net purchase orders it receives from
the Company under Section 1.1 of this Agreement against the redemption
requests it receives from the Company under this Section 1.3. The Trust
and the Company will be responsible for assuring their compliance with the
Purchase and Redemption Order Procedures set forth in Schedule D.
1.4 The Trust agrees to make shares of the Designated Funds available
indefinitely for purchase at the applicable net asset value per share by
the Company on behalf of the Separate Accounts on those days on which the
Trust calculates the net asset value of each Designated Fund pursuant to
rules of the SEC; provided, however, that the Board of Trustees of the
Trust (the "Trustees") may refuse to sell shares of any Designated Fund to
any person, or suspend or terminate the offering of shares of any
Designated Fund if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole
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discretion of the Trustees acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Designated Fund.
1.5 The Trust and the Distributor agree that shares of the Designated Funds on
Schedule B will be sold only to Participating Insurance Companies and
their separate accounts, Qualified Plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code), and regulations promulgated thereunder, that
represent and warrant to the Trust and Distributor that they qualify to
purchase shares of the Fund under Section 817(h) of the Code, the sale of
which will not impair the tax treatment currently afforded the Contracts.
No shares of any Designated Fund on Schedule B will be sold directly to
the general public.
1.6 The Trust will not sell shares of any Designated Fund to any insurance
company or separate account unless an agreement containing provisions
substantially similar to those in Sections 2.1, 2.2 and 2.4 of Article II,
Section 3.4 of Article III, Sections 4.4 and 4.5 of Article IV, Section
6.1 of Article VI and Article VII of this Agreement are in effect to
govern such sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Funds offered by the then current prospectus of the relevant Designated
Fund in accordance with the provisions of such prospectus including
specifically, and without in any way limiting other provisions of the
prospectus, that the Company will only send to the Trust to receive a
given Business Day's net asset value those orders it received from
Contract holders prior to the time the applicable Series determines its
net asset value.
1.8 Issuance and transfer of the shares of the Designated Funds will be by
book entry only. Share certificates will not be issued to the Company or
to any Separate Account. Purchase and redemption orders for shares of the
Designated Funds will be recorded in an appropriate title for each
Separate Account or the appropriate sub-account of each Separate Account.
The Trust shall furnish to Company the CUSIP number assigned to each Fund.
1.9 The Trust will furnish notice (by wire, telephone or facsimile) to the
Company as soon as reasonably practicable of the declaration of any
income, dividends or capital gain distributions payable on each Designated
Fund's shares, and will use its best efforts to furnish such notice by
6:00 p.m. on the payable date. The Company, on its behalf and on behalf of
each Separate Account, hereby elects to receive all such income, dividends
and distributions as are payable on a Designated Fund's shares in the form
of additional shares of that Designated Fund at the ex-dividend date net
asset values. The Company reserves the right to revoke this election upon
prior reasonable written notice to the Trust and to receive all such
dividends and distributions in cash. The Trust will notify the Company
promptly of the number of shares so issued as payment of such dividends
and distributions.
1.10 The Trust will make the net asset value per share for each Designated Fund
available to the Company via electronic means on a daily basis as soon as
reasonably practical after
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the net asset value per share is calculated and will use its best efforts
to make such net asset value per share available by 6:30 p.m., Eastern
Time, each Business Day. In the event that the Trust is unable to meet the
6:30 p.m. time stated herein, the Trust shall work with the Company to
provide such additional time for the Company to place orders for the
purchase and redemption of shares as is customary in the investment
company industry. If the Trust provides the Company materially incorrect
net asset value per share information (as determined under SEC
guidelines), the Company and the Trust shall be entitled to an adjustment
to the number of shares purchased or redeemed to reflect the correct net
asset value per share.
In the event of an error in the calculation or reporting of net asset
value per share, dividend or capital gain (each, a "pricing error"), to
the Trust shall notify the Company upon discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing in
accordance with Article 11 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 Fund's NAV at the time of the error, then the Trust shall take
all steps necessary to obtain reimbursement for any loss from any Party
responsible for the pricing error ("Responsible Party"), after taking into
consideration any positive effect of such error; however, no adjustments
to Contract 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 Fund's NAV at the time of the
error, then the Trust shall take all steps necessary to obtain
reimbursement for any loss from any Responsible Party (without taking into
consideration any positive effect of such error) and shall reimburse the
Company for documented and agreed upon administrative and/or systems costs
of adjustments made to correct Contract owner accounts. For any money
market fund, the correction of pricing errors shall be determined in a
manner consistent with Rule 2a-7 under the 1940 Act. With respect to (c)
above, if an adjustment to Contract owner accounts is necessary to correct
a pricing error which has caused Contract owners to receive less than the
amount to which they are entitled, the number of shares of the appropriate
designated Fund(s) attributable to the accounts of the Contract owners
will be adjusted and the amount of any underpayments shall be credited by
the Trust to the Company for crediting of such amounts to the applicable
Contract owner accounts. Upon notification by the Trust of any overpayment
due to a pricing error, the Company shall promptly remit to the Trust any
overpayment that has not been paid to Contract owners; however, the Trust
acknowledges that the Company does not intend to seek additional payments
from any Contract owner who, because of a pricing error, may have
underpaid for units of interest credited to his/her account. In no event
shall the Company be liable to Contract owners for any such adjustments or
underpayment amounts, nor shall the Trust be liable for material errors in
calculating or reporting net asset values where such errors are the result
of information supplied by the Company or persons under its control. 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 superceded by SEC of judicial interpretation, the Parties
shall amend the
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foregoing provisions of this Agreement to comport with the appropriate
applicable standards, on terms mutually satisfactory to all Parties.
With respect to the pricing errors described above, this Section shall
control over other indemnification provisions in this Agreement.
ARTICLE II. - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the securities deemed to be
issued by the Separate Accounts under the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are
exempt from registration thereunder, and that the Contracts will be issued
and sold in compliance with all applicable federal and state laws, rules
and regulations (collectively, "laws"). The Company further represents and
warrants that: (i) it is an insurance company duly organized and in good
standing under applicable law; (ii) it has legally and validly established
each Separate Account as a segregated asset account under the laws of the
State of Delaware; (iii) each Separate Account is or will be registered 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 is
excluded from registration thereunder, and will comply in all material
respects with the provisions of the 1940 Act, to the extent applicable;
and (iv) it will maintain the registration contemplated by the preceding
clause (iii) for so long as any Contracts are outstanding. The Company
will amend each registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the
Separate Accounts from time to time as required under applicable law in
order to effect the continuous offering of the Contracts or as may
otherwise be required by applicable law. The Company will register and
qualify the Contracts for sale in accordance with the securities laws of
the various states as applicable.
2.2 Subject to the Trust's representations in Article III, the Company
represents and warrants that the Contracts are currently and at all times
will be treated as annuity contracts and/or life insurance policies (as
applicable) under applicable provisions of the Code, and that it will
maintain such treatment and that it will notify the Trust, the Adviser and
the Distributor immediately upon having a reasonable basis for believing
that the Contracts have ceased to be so treated or that they might not be
so treated in the future. In addition, the Company represents and warrants
that each Separate Account is a "segregated asset account" and that
interests in the Separate Account 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 regulations thereunder. The
Company will cause such definitional requirements to be met at all times
and it will notify the Trust, the Adviser 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. The Company
agrees that any prospectus offering a Contract that is a "modified
endowment contract" as that term is defined in Section 7702A of the Code
(or any successor or replacement provision) will identify such Contract as
a modified endowment contract.
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2.3 The Company represents and warrants that it will not purchase shares of
the Designated Fund(s) with assets derived from tax-qualified retirement
plans except, indirectly, through Contracts purchased in connection with
such plans.
2.4. The Company represents and warrants that it will maintain policies and
procedures reasonably designed to identify and prevent its Contract
holders from engaging in market timing transactions to the detriment of
long-term investors in the Series, including providing to the Trust such
customer account information as will enable the Trust to determine if one
or more of its Contract holders is market timing a Series.
2.5 The Trust represents and warrants that shares for the Designated Funds(s)
sold pursuant to this Agreement will be registered under the 1933 Act and
duly authorized for issuance in accordance with applicable law and that
the Trust is and will remain registered as an open-end, management
investment company under the 1940 Act for as long as such shares of the
Designated Fund(s) are sold. The Trust will amend the registration
statement for its shares under the 1933 Act and itself under the 1940 Act
from time to time as required under applicable law in order to effect the
continuous offering of its shares.
2.6 The Trust and the Adviser each represents and warrants that it will use
its best efforts to comply with any applicable state insurance laws or
regulations as they may apply to the investment objectives, policies and
restrictions of the Designated Funds. The Trust and the Distributor each
represents and warrants that it will use its best efforts to ensure that
the Designated Funds' shares will be sold in compliance with the insurance
laws of the State of New York and Delaware and all applicable state
insurance and securities laws. The Company and the Trust will endeavor to
mutually cooperate with respect to the implementation of any modifications
necessitated by any change in state insurance laws, regulations or
interpretations of the foregoing that affect the Designated Funds (a "Law
Change") and to keep each other informed of any Law Change that becomes
known to such party. In the event of a Law Change, the Trust agrees that,
except in those circumstances where the Trust has advised the Company that
implementation of a Law Change is not in the best interests of all of the
Trust's shareholders with an explanation regarding why such action is
lawful, any action required by a Law Change will be taken. The Trust makes
no other 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 any state.
The Company represents that it will use its best efforts to notify the
Trust of any restrictions imposed by state insurance laws that may become
applicable to the Trust as a result of the Separate Accounts' investments
therein. The Trust and the Adviser agree that they will furnish the
information reasonably required by state insurance laws to assist the
Company in obtaining the authority needed to issue the Contracts in
various states. The Company reserves the right to immediately terminate
this Agreement if the Trust is in material noncompliance with any
applicable state insurance laws or regulations.
2.7 The Trust has disclosed or made available, in writing, all information
relating to the Trust operations requested by the Company and such
information is true and accurate in all material respects as of the
effective date of this Agreement. The Trust will notify the
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Company of any fundamental changes in its investment policies, any sub
advisers, or advisory fees at such time and in such manner as is
permissible under applicable law.
2.8 The Trust reserves the right to adopt a plan pursuant to Rule 12b-1 under
the 1940 Act and to impose asset-based or other sales charges to finance
distribution expenses as permitted by applicable laws. The Trust
represents and warrants that, to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Trust
undertakes to have the Trustees, a majority of whom are not "interested"
persons of the Trust, formulate and approve any plan under Rule 12b-1 to
finance distribution expenses. The Trust shall notify the Company
immediately upon determining to finance distribution expenses pursuant to
a plan adopted in accordance with Rule 12b-1 under the 0000 Xxx.
2.9 The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply
in all material respects with applicable provisions of the 0000 Xxx.
2.10 The Trust represents and warrants that all of is trustees, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Trust are and will continue
to be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Trust in an amount not less than the minimal
coverage as required currently by Rule 17g-1 of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a
reputable bonding company.
2.11 The Company represents and warrants that all of its directors, officers,
and employees, dealing with the money and/or securities of the Separate
Accounts are covered by a blanket fidelity bond or similar coverage in an
amount not less than $5 million. The aforesaid bond includes coverage for
dishonest or fraudulent acts of the employees and is issued by a reputable
bonding company. The Company agrees to pay to the Trust any amounts lost
by the Trust from dishonest or fraudulent acts of the Company's employees
or other events covered under the aforesaid bond to the extent such
amounts derive from activities described in 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 in the event that such coverage no longer applies.
2.12 The Adviser represents and warrants that: (i) it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended,
and will remain duly registered under all applicable federal and state
securities laws; and (ii) it will perform its obligations for the Trust in
accordance in all material respects with the laws of the State of Delaware
and any applicable state and federal securities laws.
2.13 The Distributor represents and warrants that it: (i) is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws; (ii) is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD"); (iii)
serves as principal underwriter/distributor of the Trust; and (iv) will
perform its
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obligations for the Trust in accordance in all material respects with the
laws of the State of Delaware and any applicable state and federal
securities laws.
2.14 Each Party represents and warrants that:
A. It shall comply with anti-money laundering laws and applicable
regulations, including the relevant provisions of the USA PATRIOT Act
(Pub. L. No. 107-56 (2001)) and the regulations issued thereunder.
B. It shall comply with privacy and notice provisions of 15 U.S.C.
Sections 6801-6827 and any regulations promulgated thereunder (including
but not limited to 17 C.F.R. Part 248) applicable to it as they may be
amended from time to time.
C. It has full power and authority to enter into and perform its
obligations under this Agreement; it has duly taken all necessary steps to
authorize the person signing this Agreement on its behalf to do so and to
authorize the performance of its obligations under this Agreement and
assuming the accuracy of and compliance with this representation and
warranty by all other Parties, this Agreement will be valid, binding on,
and enforceable against such Party in accordance with its terms, subject
only to such limitations as apply generally to the rights of creditors,
such as, but not limited to, bankruptcy law, laws governing the insolvency
of insurance companies and other entities, and principles of equity.
D. It shall comply with Rule 38a-1 under the 1940 Act.
ARTICLE III. - FUND COMPLIANCE
3.1 Subject to the Company's representations and warranties in Sections 2.1
and 2.2 hereof, the Trust, the Distributor and the Adviser each represents
and warrants that the Trust will at all times sell its shares and invest
its assets in such a manner as to ensure that the Contracts will be
treated as annuity contracts under the Code, and the regulations issued
thereunder. Specifically for further clarification of the foregoing, the
Trust and Adviser each represents and warrants that the Trust and each
Designated Fund thereof will at all times comply with Section 817(h) of
the Code and Treasury Regulation Section 1.817-5, as amended from time to
time, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and with Section 817(d) of the Code, relating to the
definition of a "variable contract" and any amendments or other
modifications or successor provisions to such Sections or Regulations or
any other applicable Code requirements. In the event of a breach of this
Article III by the Trust, the Trust, Distributor, and Adviser will take
all steps necessary to: (a) notify the Company of such breach, and (b)
adequately diversify the Trust or Designated Fund so as to achieve
compliance within the 30-day grace period afforded by Regulation 1.817-5.
3.2 The Trust and the Distributor each represents and warrants that shares of
the Designated Funds will be sold only to Participating Insurance
Companies, their separate accounts,
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Qualified Plans, and any other persons eligible to purchase the Designated
Fund; provided, that the purchase of shares by such persons would not
preclude the Company from "looking through" to the investments of each
Designated Fund in which it invests, pursuant to the "look through" rules
set forth in Treasury Regulation 1.817-5. No shares of any Designated Fund
will be sold to the general public.
3.3 The Trust represents and warrants that each Designated Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the
Code, and that the Trust will maintain such qualification (under
Subchapter M or any successor or similar provision) and that the Trust
will notify the Company immediately upon having a reasonable basis for
believing that any Designated Fund has ceased to so qualify of that it
might not so qualify or that it might not so qualify in the future.
3.4 Without in any way limiting the effect of Sections 8.2 and 8.3 hereof, and
without in any way limiting or restricting any other remedies available to
the Company, the Distributor and/or Adviser will pay all costs associated
with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of the Trust or any Designated Fund to comply with
Section 3.1, 3.2 or 3.3 hereof, including all costs associated with
reasonable and appropriate corrections or responses to any such failure;
such costs may include, but are not limited to, the costs involved in
creating, organizing and registering a new investment company as a funding
medium for the Contracts and/or the costs of obtaining whatever regulatory
authorizations are required to substitute shares or another investment
company for those of the failed Designated Fund (including but not limited
to an order pursuant to Section 26(b) of the 1940 Act); such costs are to
include, but are not limited to, reasonable fees and expenses of legal
counsel and other advisers to the Company and any federal income taxes or
tax penalties and interest thereon (or "toll charges" or exactments or
amounts paid in settlement) incurred by the Company with respect to itself
or its Contract owners in connection with any such failure or anticipated
or reasonably foreseeable failure.
3.5 The Trust agrees to provide the Company with a certificate or statement
indicating compliance by each Fund of the Trust with Section 817(h) of the
Code, such certificate or statement to be sent to the Company no later
than thirty (30) days following the end of each calendar quarter.
ARTICLE IV. - PROSPECTUS AND PROXY STATEMENTS; VOTING
4.1 The Trust or the Distributor will provide the Company with as many copies
of the current Trust prospectus and any supplements thereto for the
Designated Funds as the Company may reasonably request for distribution to
Contract owners at the time of Contract fulfillment and confirmation. To
the extent that the Designated Funds are one or more of several funds or
series of the Trust, the Trust is obligated to provide the Company only
with disclosure related to the Designated Funds. The Trust will provide
the copies of said prospectus to the Company or to its mailing agent. If
requested by the Company, in lieu thereof, the Trust or the Distributor
will provide such documentation, including a final
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copy of a current prospectus set in type or "camera ready" or electronic
copy of the documents in a format suitable for posting on the company's
website, and other assistance as is reasonably necessary in order for the
Company at least annually (or more frequently if the Trust prospectus is
amended more frequently) to have the new prospectus for the Contracts and
the Trust's new prospectus printed together. The Trust or the Distributor
will, upon request, provide the Company with a copy of the Trust's
prospectus through electronic means to facilitate the Company's efforts to
provide Trust prospectuses via electronic delivery. Expenses associated
with providing such documentation shall be allocated in accordance with
Article VI of this Agreement. For purposes of the Company's yearly May 1
product and fund prospectus updates, the Trust or the Distributor, as the
case may be, will use its best efforts to provide the annual revised
prospectus for the Designated Funds on or before April 20th of each year.
4.2 The Trust's prospectus will state that a Statement of Additional
Information ("SAI") for the Trust is available, and will disclose how
investors may obtain the SAI.
4.3 The Trust will provide the Company with as much notice as is reasonably
practicable of any proxy solicitation, and of any material change in the
Trust's registration statement, particularly any change that could result
in a change to the registration statement or prospectus for any Separate
Account or a Contract. The Trust will work with the Company so as to
enable the Company to solicit proxies from Contract owners, or to make
changes to its prospectus or registration statement, in an orderly manner.
4.4 The Trust, the Distributor or the Adviser will provide the Company or its
mailing agent with copies of its proxy material, if any, with respect to
the Designated Funds, reports to shareholders/Contract owners and other
communications to shareholders/Contract owners in such quantity as the
Company will reasonably require with expenses to be borne in accordance
with Article V of this Agreement. The Company will distribute this proxy
material, reports and other communications to existing Contract owners. If
requested by the Company, the Trust, the Distributor or the Adviser shall
provide an electronic copy of such documentation in a format suitable to
posting on a website maintained by or on behalf of the Company.
4.5 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of Designated Funds held in the Separate Accounts in
accordance with instructions received from Contract owners; and
(c) vote shares of Designated Funds held in the Separate Accounts for
which no timely instructions have been received from the Company's
Contract owners, as well as shares it owns, in the same proportion
as shares of the Designated Funds for which instructions have been
received from contract owners,
so long as and to the extent that the SEC continues to interpret the 1940
Act to require pass-through voting privileges for Contract owners. The
Company reserves the right to vote shares of the Designated Funds held in
any segregated asset account in its own right,
11
to the extent permitted by law. The Company will be responsible for
assuring that the Separate Accounts calculate voting privileges in a
manner consistent with all legal requirements, including the Proxy Voting
Procedures set forth in Schedule C and the Mixed and Shared Funding Order,
as described in Section 7.1.
4.6 The Trust will comply with all provisions of the 1940 Act requiring voting
by shareholders and, in particular, the Trust will either provide for
annual meetings (except insofar as the SEC may interpret Section 16 of the
1940 Act not to require such meetings) or, as the Trust currently intends,
comply with Section 16(c) of the 1940 Act (although the Trust is not one
of the Trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if an when applicable, 16(b). Further, the Trust will
act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of directors or trustees
and with whatever rules the SEC may promulgate with respect thereto.
4.7 Notwithstanding anything herein to the contrary, the Adviser or its
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 Funds where due to the acts of the
Trust or the Adviser, the Fund either offers its shares at public sale,
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 Contracts.
ARTICLE V. - SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Trust or
its designee, each piece of sales literature or other promotional material
in which the Trust, the Adviser or the Distributor is named. No such
material will be used if the Trust or the Distributor objects to its use
within ten (10) Business Days following receipt by the Trust or its
designee. The Trust or its designee reserves the right to object to the
continued use of any such sales literature or other promotional material
in which the Trust (or any Designated Fund), the Adviser, any sub-adviser
or the Distributor is named, and no such material shall continue to be
used by the Company if the Trust or its designee so objects.
5.2 The Company will not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust or any
Designated Fund in connection with the sale of the Contracts other than
the information or representations contained in the registration
statement, prospectus or SAI for shares of the Designated Funds, as such
registration statement, prospectus and SAI may be amended or supplemented
from time to time, or in reports or proxy statements for the Designated
Funds, or in sales literature or other material provided by the Trust, the
Adviser or the Distributor, except with permission of the Trust, the
Adviser or the Distributor. The Trust, the Adviser or the Distributor
agree to respond to any request for approval on a prompt and timely basis.
12
5.3 The Trust, the Adviser or the Distributor, or a designee, will furnish, or
will cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the Company or any
Separate Account is named or described, prior to its use. No such material
will be used until approved by the Company or its designee.
5.4 The Trust, the Adviser or the Distributor will not give any information or
make any representations or statements on behalf of the Company or
concerning the Company, any Separate Account, or the Contracts other than
the information or representations contained in a registration statement,
prospectus or SAI for the Contracts, as such registration statement,
prospectus and SAI may be amended or supplemented from time to time, or in
published reports for each Separate Account or the Contracts which are in
the public domain or approved by the Company for distribution to Contract
owners, or in sales literature or other material provided by the Company,
except with permission of the Company. The Company agrees to respond to
any request for approval on a prompt and timely basis. The Fund and the
Adviser and the Distributor shall comply with all applicable federal and
state laws and regulations in connection with any efforts they make,
directly, or indirectly, to promote sales of the Fund's shares.
5.5 The Trust will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports to stockholders,
proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Trust or shares of the
Designated Funds, within a reasonable time after filing of such document
with the SEC or the NASD or contemporaneously with the first use or public
availability of such documents.
5.6 The Company will provide to the Trust at least one complete copy of all
definitive prospectuses, definitive 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 any Contract or any
Separate Account (collectively, "Contract Materials"), contemporaneously
with the filing of each such document with the SEC or the NASD (except
that with respect to post-effective amendments to such prospectuses and
SAIs and sales literature and promotional material, only those
prospectuses and SAIs and sales literature and promotional material that
relate to or refer to the Trust or any Designated Fund will be provided).
In addition, the Company will provide to the Trust at least one complete
copy of (i) a registration statement that relates to the Contracts or any
Separate Account, containing representative and relevant disclosure
concerning the Trust; and (ii) any post-effective amendments to any
registration statements relating to the Contracts or such Separate Account
that refer to or relate to the Trust or any Designated Fund. The Company
shall provide to the Trust and the Distributor copies of any complaints
received from Contract owners pertaining to the Trust or any Designated
Fund.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape
13
recording, videotape display, signs or billboards, motion pictures, or
other public media, (i.e., on-line networks such as the Internet or other
electronic messages)), sales literature (i.e., any written communication
distributed or made generally available to customers or the public,
including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials
or other communications distributed or made generally available to some or
all agents or employees, registration statements, prospectuses, SAIs,
shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under the NASD Conduct Rules,
the 1933 Act or the 0000 Xxx.
5.8 The Trust, the Adviser and the Distributor hereby consent to the Company's
use of their respective names as well as the names of the Designated Funds
in connection with marketing the Contracts, subject to the terms of
Sections 5.1 or 5.2 of this Agreement. The Trust, the Adviser and the
Distributor hereby consent to the use of any trademark, trade name,
service xxxx or logo used by the Trust, the Adviser and the Distributor,
subject to the Trust's, the Adviser's and/or the Distributor's approval of
such use and in accordance with reasonable requirements of the Trust, the
Adviser or the Distributor. Such consent will terminate with the
termination of this Agreement. The Company agrees and acknowledges that
the Trust, the Adviser or the Distributor is the owner of the name,
trademark, trade name, service xxxx and logo and that all use of any
designation comprised in whole or in part of the name, trademark, trade
name, service xxxx and logo under this Agreement shall inure to the
benefit of the Trust, Adviser and/or Distributor.
5.9 The Trust, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information
concerning the Company, the Trust, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is intended
for use only by brokers or agents selling the Contracts (i.e., information
that is not intended for distribution to Contract owners or prospective
Contract owners) and is properly marked as "Not For Use With The Public"
or "For Broker-Dealer Use Only" and that such information is only so used.
ARTICLE VI. - FEES, COSTS AND EXPENSES
6.1 Each Party shall bear, or cause its agents to bear, the costs associated
with its obligations specified in this Agreement, in accordance with
Schedule E attached hereto and incorporated herein by reference, as the
Parties may mutually agree in writing to amend from time to time
("Schedule E").
6.2 The Fund, Distributor and Adviser shall pay no fee or other compensation
to the Company under this Agreement and the Company shall pay no fee or
other compensation to the Fund, Distributor or Adviser under this
Agreement, although the Parties hereto will bear certain expenses in
accordance with this Agreement.
6.3 Each Party shall, in accordance with the allocation of expenses specified
in this Agreement, reimburse other Parties for expenses initially paid by
one Party but allocated to another Party. In addition, nothing herein
shall prevent the Parties hereto from
14
otherwise agreeing to perform and arranging for appropriate compensation
for (i) for distribution and shareholder-related services under a plan
adopted in accordance with Rule 12b-1 under the 1940 Act and (ii) other
services that are not primarily intended to result in the sale of shares
of the Designated Funds, which are provided to Contract owners relating to
the Designated Funds.
6.4 All expenses incident to performance by the Trust of this Agreement will
be paid by the Trust or the Distributor to the extent permitted by law.
All shares of the Designated Funds will be duly authorized for issuance
and registered in accordance with applicable federal law and, to the
extent deemed advisable by the Trust, in accordance with applicable state
law, prior to sale. The Trust will bear the expenses for the cost of
registration and qualification of the Trust's shares, including without
limitation, the preparation of and filing with the SEC of Forms N-1A and
Rule 24f-2 Notices on behalf of the Trust and payment of all applicable
registration or filing fees (if applicable) with respect to shares of the
Trust; preparation and filing of the Trust's prospectus, SAI and
registration statement, proxy materials and reports; typesetting the
Trust's prospectus; typesetting and printing proxy materials and reports
to Contract owners (including the costs of printing a Trust prospectus
that constitutes an annual report); the preparation of all statements and
notices required by any federal or state law; all taxes on the issuance or
transfer of shares of the Designated Funds; any expenses permitted to be
paid or assumed by the Trust with respect to the Designated Funds pursuant
to a plan, if any, under Rule 12b-1 under the 1940 Act; and other costs
associated with preparation of prospectuses and SAIs regarding the
Designated Funds in electronic or typeset format for distribution to
existing Contract owners.
6.5 The Company shall bear all expenses associated with the registration,
qualification, and filing of the Contracts under applicable federal
securities and state insurance laws; the cost of preparing, printing, and
distributing the Contracts' prospectus and SAI; the cost of printing the
Trust's prospectus for use in connection with offering the Contracts; the
costs of printing and distributing to Contract owners the Trust's
prospectus and the Trust's proxy materials and reports; and the cost of
printing and distributing such annual individual account statements for
Contract owners as are required by state laws.
ARTICLE VII. - MIXED AND SHARED FUNDING RELIEF
7.1 The Trust represents and warrants that it has received an order from the
SEC granting Participating Insurance Companies and variable annuity
separate accounts and variable life insurance separate accounts relief
from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940
Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
necessary to permit shares of the Designated Funds to be sold to and held
by variable annuity separate accounts and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance
Companies and qualified pension and retirement plans outside of the
separate account context (the "Mixed and Shares Funding Order"). The
Parties to this Agreement agree that the conditions or undertakings
required by the Mixed and Shared Funding Order that may be imposed on the
Company, the Trust and/or the Adviser by virtue of the receipt of such
order by the SEC will: (i) apply only upon the sale of shares of the
Designated Fund to a variable life insurance separate
15
account (and then only to the extent required under the 1940 Act); (ii) be
incorporated herein by reference; and (iii) such Parties agree to comply
with such conditions and undertakings to the extent applicable to each
such Party notwithstanding any provision of the agreement to the contrary.
7.2 The Trust represents and warrants that the Trustees will monitor the Trust
for the existence of any material irreconcilable conflict among the
interests of the Contract owners of all Separate Accounts investing in the
Designated Funds. A material irreconcilable conflict may arise for a
variety of reasons, including, but not limited to: (1) 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 Designated Fund are being managed;
(e) a difference in voting instructions given by Participating Insurance
Companies or by variable annuity and variable life insurance Contract
owners; or (f) a decision by an insurer to disregard the voting
instructions of Contract owners. The Trustees will promptly inform the
Company if it determines that a material irreconcilable conflict exists
and explain the implications thereof.
7.3 The Company will promptly report any potential or existing conflicts of
which it is aware to the Trustees. The Company agrees to assist the
Trustees in carrying out their responsibilities under the relevant
provisions of the federal securities laws, including the Mixed and Shared
Funding Order, Rule 6e-3(T)(b)(15), and the conditions set forth in the
Shared Funding Order, by promptly providing the Trustees with all
information reasonably necessary for the Trustees to consider any issues
raised. This includes, but is not limited to, an obligation by the Company
to promptly inform the Trustees whenever Contract owner voting
instructions are to be disregarded. Such responsibilities will be carried
out by the Company with a view only to the interests of its Contract
owners.
7.4 If it is determined by a majority of the Trustees constituting the Trust's
Board of Trustees, or a majority of the disinterested Trustees of the
Board, that a material irreconcilable conflict exists, the Company and
other Participating Insurance Companies will, 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 material irreconcilable conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the Separate Accounts
from the Trust or any Designated Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another
Designated 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.,
variable annuity Contract owners or variable life insurance Contract
owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contract owners the
option of making such a change; or (b) establishing a new registered
management investment company or managed separate account. The
responsibility to take such remedial action shall be carried out with a
view only to the interests of the Contract owners.
16
7.5 If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
Contract owner voting instructions, and the Company's judgment represents
a minority position or would preclude a majority vote, the Company may be
required, at the Trust's election, to withdraw the investment of the
affected sub-account of the Separate Account in the Designated Fund and
terminate this Agreement with respect to such sub-account; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees of the Trust. No
charge or penalty will be imposed as a result of such withdrawal. Any such
withdrawal and termination must take place within six (6) months after the
Trust gives written notice to the Company that this provision is being
implemented. Until the end of such six-month period, the Distributor and
the Adviser will, to the extent permitted by law and the Mixed and Shared
Funding Order, continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Trust.
7.6 If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the decisions of the majority of other state insurance regulators, then
the Company will withdraw the investment of the affected sub-account of
the Separate Account in the Designated Fund and terminate this Agreement
with respect to such sub-account; provided, however, that such withdrawal
and termination will be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal and termination must take place
within six (6) months after the Trust gives written notice to the Company
that this provision is being implemented. Until the end of such six-month
period the Trust will, to the extent permitted by law and the Mixed and
Shared Funding Order, continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Designated
Funds.
7.7 For purposes of Section 7.4 through 7.7 of this Agreement, a majority of
the disinterested Trustees of the Trust will determine whether any
proposed action adequately remedies any material irreconcilable conflict,
but in no event will the Trust be required to establish a new funding
medium for the Contracts. The Company will not be required by Section 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 affected by the
material irreconcilable conflict. In the event that the Board determines
that any proposed action does not adversely remedy any material
irreconcilable conflict, then the Company will withdraw the investment of
the affected sub-account of the Separate Account in the Designated Fund
and terminate this Agreement within six (6) months after the Board informs
the Company in writing of the foregoing determination; provided, however,
that such withdrawal and termination will be limited to the extent
required by any such material irreconcilable conflict as determined by a
majority of the disinterested Trustees of the Trust.
7.8 The Company will at least annually submit to the Trustees such reports,
materials or data as the Trustees of the Trust may reasonably request so
that the Trustees may fully carry
17
out the duties imposed upon it as delineated in the Mixed and Shared
Funding Order, and said reports, materials and data will be submitted more
frequently if deemed appropriate by the Trustees. All reports received by
the Board of potential or existing conflicts, and all Board action with
regard to determining the existence 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 make advisable to the SEC upon
request.
7.9 If and to the extent any mixed and shared funding order or any amendment
thereto contains terms and conditions different from Article VII of this
Agreement, then the Fund and/or the Company, as appropriate, shall take
such steps as may be necessary to comply with the mixed and shared funding
exemptive order, and this Article VII shall be deemed to incorporate such
new terms and conditions, and any term or condition of this Article VII
that is inconsistent there with shall be deemed to be succeeded thereby.
7.10 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Order, then: (a) the Trust and/or the Participating Insurance Companies,
as appropriate, will 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 4.3, 4.4, 4.5, 7.1,
7.2, 7.3, 7.4, 7.5 and 7.6 of this Agreement will 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.
18
ARTICLE VIII. - INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY
(a) The Company agrees to indemnify and hold harmless the Trust, the
Adviser, the Distributor, and each of the Trust's or the Adviser's
or the Distributor's directors, trustees, officers, employees or
agents and each person, if any , who controls or is associated with
the Trust, the Adviser or the Distributor within the meaning of such
terms under the federal securities laws (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any
and all losses, claims, damages, investigations, liabilities
(including amounts paid in settlement with the written consent of
the Company, which consent shall not be unreasonably withheld) or
actions in respect thereof (including reasonable legal and other
expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or litigation in
respect thereof) or settlements are related to the sale or
acquisition of the Contracts or the purchase or redemption of Fund
shares in connection with the Contracts and:
(1) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the registration statement, prospectus 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 or necessary to
make such statements not misleading in light of the
circumstances in which they were made; provided, that this
agreement to indemnify will not apply as to any Indemnified
Party if such statement or omission of such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the
Trust, the Adviser, of the Distributor for use in the
registration statement, prospectus or SAI 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 shares of the Designated Funds; or
(2) arise out of or as a result of wrongful or inaccurate
statements or representations by or on behalf of the Company
(other than statements or representations contained in the
Trust registration statement, prospectus, SAI or sales
literature or other promotional material of the Trust, or any
amendment or supplement to the foregoing, not supplied by the
Company or persons under its control) or wrongful conduct of
the Company or persons under its control, with respect to the
sale or distribution of the Contracts or shares of the
Designated Funds; or
(3) arise as a result of the Company transmitting orders to the
Trust for a given Business Day that were received by the
Company after the time the
19
applicable series calculates its net asset value or as a
result of the Company's failure to maintain, monitor, or
enforce policies and procedures reasonably designed to prevent
market timing in a Series; or
(4) arise out of untrue statement or alleged untrue statement of a
material fact contained in the Trust registration statement,
prospectus, SAI or sales literature or other promotional
material of the Trust (or any amendment or supplement thereto)
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make such statements not misleading in light of the
circumstances in which they were made, if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Trust by or on behalf of the
Company or persons under its control; or
(5) 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
(6) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of
or result from any other material breach by the Company of
this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof.
This indemnification will be in addition to any liability that the
Company otherwise may have.
(b) No Party will be entitled to indemnification under Section 8.1(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such Party's duties and obligations
under this Agreement.
(c) The Indemnified Parties promptly will notify in writing the Company
of the commencement of any litigation, proceedings, complaints or
litigation by regulatory authorities against them in connection with
the issuance or sale of the shares of the Designated Funds or the
Contracts or the operation of the Trust.
8.2 INDEMNIFICATION BY THE ADVISER AND DISTRIBUTOR
(a) The Adviser and Distributor each agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees
or agents and each person, if any, who controls or is associated
with the Company within the meaning of such terms under the federal
securities (collectively, the "Indemnified Parties" for purposes of
this Section 8.2) against any and all losses, claims, damages,
investigations, liabilities (including amounts paid in settlement
with the written consent of the Adviser and Distributor, which
consent shall not be unreasonably withheld) or litigation in respect
thereof (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages,
20
liabilities or expenses (or litigation in respect thereof) are
related to the sale or acquisition of the shares of the Funds or the
Contracts and:
(1) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement, prospectus or SAI for the Trust or
sales literature or other promotional material generated or
approved by the Adviser or the Distributor on behalf 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 or necessary to make such statements not
misleading, in light of the circumstances in which they were
made, (i) if such statement or omission was made in reliance
upon and accurately derived from written information furnished
by the Distributor or (ii) if such Trust Document (other than
information contained therein provided by any person other
than the Adviser) was prepared by the Distributor; provided
that this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission of such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Adviser, the
Distributor or the Trust by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the
Trust or in sales literature generated or approved by the
Adviser or the Distributor on behalf of the Trust (or any
amendment or supplement thereto) or otherwise for use in
connection with the sale of the Contracts or shares of the
Designated Funds; or
(2) arise out of or as a result of wrongful or inaccurate
statements or representations (other than statements or
representations contained in the Contracts or in the Contract
or Trust registration statements, prospectuses or statements
of additional information or sales literature or other
promotional material for the Contracts or of the Trust, or any
amendment or supplement to the foregoing, not supplied by the
Adviser or the Distributor or persons under the control of the
Adviser or the Distributor respectively) or wrongful conduct
of the Adviser or the Distributor or persons under the control
of the Adviser or the Distributor respectively, with respect
to the sale or distribution of the Contracts or shares of the
Designated Funds; or
(3) 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 or
supplement thereto), or the omission or alleged omission to
state therein a material fact required to be stated or
necessary to make such statement or statements not misleading
in light of the circumstances in which they were made, if such
statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on
behalf of the Adviser or the Distributor or persons under the
control of the Adviser or the Distributor; or
21
(4) arise as a result of any failure by the Adviser or the
Distributor to provide the services and furnish the materials
under the terms of this Agreement; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Distributor in this Agreement, or arise out of or result from
any other material breach of this Agreement by the Adviser or
the Distributor (including a failure, whether intentional or
in good faith or otherwise, to comply with the requirements of
Subchapter M of the Code specified in Article III, Section 3.3
of this Agreement, as described more fully in Section 8.5
below);
except to the extent provided in Sections 8.2(b) and 8.4 hereof.
This indemnification will be in addition to any liability that the
Adviser or Distributor otherwise may have.
(b) No Party will be entitled to indemnification under Section 8.2(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such Party's duties and obligations
under this Agreement.
(c) In no event shall the Adviser or the Distributor be liable under the
indemnification provisions contained in this Agreement to any
individual or entity, including without limitation, the Company, or
any Contract owner, with respect to any losses, claims, damages,
liabilities or expenses that arise out of or result from the failure
by the Company to maintain its segregated asset account(s) under
applicable state law and as a duly registered unit investment trust
under the provisions of the 1940 Act (unless exempt therefrom) or,
subject to compliance by the Designated Funds with the
diversification requirements specified in Article III, the failure
by the Company to maintain its Contracts (with respect to which any
Designated Fund serves as an underlying funding vehicle) as life
insurance, endowment or annuity contracts under applicable
provisions of the Code.
(d) The Indemnified Parties promptly will notify in writing the Adviser
and the Distributor of the commencement of any litigation,
proceedings, complaints or litigation by regulatory authorities
against them in connection with the issuance or sale of the
Contracts or the operation of the Separate Account.
8.3 INDEMNIFICATION BY THE TRUST
(a) The Trust agrees to indemnify and hold harmless the Company and each
of its directors, officers, employees or agents and each person, if
any, who controls or is associated with the Company within the
meaning of such terms under the federal securities laws
(collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written
consent of the Trust) or litigation in
22
respect thereof (including reasonable legal and other expenses) to
which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or litigation in respect
thereof) or settlements, are related to the operations of the Trust
and:
(1) arise as a result of any failure by the Trust to provide the
services and furnish the materials under the terms of this
Agreement; or
(2) 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 (including a failure,
whether intentional or in good faith or otherwise, to comply
with the requirements of Subchapter M of the Code specified in
Article III, Section 3.3 of this Agreement as described more
fully in Section 8.5 below); or
(3) arise out of or result from the materially incorrect or
untimely calculation or reporting of daily net asset value per
share of a Designated Fund or dividend or capital gain
distribution on shares of a Designated Fund;
except to the extent provided in Sections 8.3(b) and 8.4 hereof. This
indemnification will be in addition to any liability that the Trust
otherwise may have.
(b) No Party will be entitled to indemnification under Section 8.3(a) if
such loss, claim, damage, liability or litigation is due to the
willful misfeasance, bad faith, gross negligence, or reckless
disregard in the performance of such Party's duties and obligations
under this Agreement.
(c) In no event shall the Trust be liable under the indemnification
provisions contained in this Agreement to any individual or entity,
including without limitation, the Company, or any Contract owner,
with respect to any losses, claims, damages, liabilities or expenses
that arise out of or result from the failure by the Company to
maintain its segregated asset account(s) under applicable state law
and as a duly registered unit investment trust under the provisions
of the 1940 Act (unless exempt therefrom) or, subject to compliance
by the Designated Funds with the diversification requirements
specified in Article III, the failure by the Company to maintain its
Contracts (with respect to which any Designated Fund serves as an
underlying funding vehicle) as life insurance, endowment or annuity
contracts under applicable provisions of the Code.
(d) The Indemnified Parties each agree to promptly notify in writing the
Trust of the commencement of any litigation, proceedings, complaints
or actions by regulatory authorities against itself or any of its
respective officers or directors in connection with the Agreement,
the issuance or sale of the Contracts, the operation of the Separate
Account(s), or the sale or acquisition of shares of the Trust.
23
(e) Company acknowledges and agrees that the obligations of the Trust
under this Section 8.3 are to be construed as the obligation
individually of each Fund, and under no circumstances shall any
right or remedy of Company with respect to indemnification by a Fund
be deemed an obligation or responsibility of any other Fund.
8.4 INDEMNIFICATION PROCEDURE
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a Party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) if such Indemnified Party has failed to notify 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
the Indemnifying Party in accordance with its obligations under Sections
8.1(c), 8.2(c) or 8.3(d), as applicable, but failure to notify the
Indemnifying Party or any such claim will not relieve the Indemnifying
Party from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of the
indemnification provision of this Article VIII, except to the extent that
the failure to notify results in the failure of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged solely as a
result of failure to give such notice. In case any such action is brought
against the Indemnified Party, the Indemnifying Party will be entitled to
participate, at its own expense, in the defense thereof. The Indemnifying
Party also will be entitled to assume the defense thereof, with counsel
satisfactory to the Party named in the action. After notice from the
Indemnifying Party to the Indemnified Party of the Indemnifying Party's
election to assume the defense thereof, the Indemnified Party will not be
liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the
defense thereof other than reasonable costs of investigation, unless: (a)
the Indemnifying Party and the Indemnified Party will have mutually agreed
to the retention of such counsel; or (b) the named Parties to any such
proceeding (including any impleaded Parties) include both the Indemnifying
Party and the Indemnified Party and representation of both Parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. The Indemnifying Party will not be liable for any
settlement of any proceeding effected without its written consent but if
settled with such consent or if there is a final judgment for the
plaintiff, the Indemnifying Party agrees to indemnify the Indemnified
Party from and against any loss or liability by reason of such settlement
or judgment. A successor by law of the Parties to this Agreement will be
entitled to the benefits of the indemnification contained in this Article
VIII. The indemnification provisions contained in this Article VIII will
survive any termination of this Agreement.
With respect to any claim, the Parties each shall give the others
reasonable access during normal business hours to its books, records, and
employees and those books, with one another in the defense of any claim.
Regardless of which Party defends a particular claim, the defending Party
shall give the other Parties written notice of any significant development
in the case as soon as practicable,
24
If a Party is defending a claim and indemnifying another Party hereto,
and: (i) a settlement proposal is made by the claimant, or (ii) the
defending Party presents a settlement proposal to the claimant that is
accepted by the claimant (subject to acceptance by the indemnified Party),
then the defending Party promptly shall provide written notice to the
indemnified Party of such settlement proposal together with its counsel's
recommendation. If the defending Party desires to enter into the
settlement and the indemnified Party fails to consent to such settlement
within thirty (30) business days after receipt of such notice (unless such
period is extended, in writing, by mutual agreement of such Parties), then
the indemnified Party, commencing on the earlier of the date the
indemnified Party declined to accept the settlement or the expiration of
the thirty (30) day period, shall defend the claim (at the defending
Party's expense) and shall relieve the defending Party of any obligation
hereunder to indemnify it and hold it harmless for all losses associated
with the claim that are in excess of the proposed settlement amount. The
defending Party, however, shall remain obligated hereunder to indemnify
and hold harmless the indemnified Party for any losses up to and including
the amount of the proposed settlement.
Regardless of which Party is defending the claim: (i) if a settlement
requires an admission of liability by the non-defending Party or (ii)
would require the non-defending Party to either take action (other than
purely ministerial action) or refrain from taking action (due to an
injunction or otherwise) (a "Specific Performance Settlement"), the
defending Party may agree to such settlement only after obtaining the
express, written consent of the non-defending Party. If a non-defending
Party fails to consent to a Specific Performance Settlement, the
consequences described in the last sentence of the first paragraph of
Section 7.6 shall not apply.
The Parties shall use good faith efforts to resolve any dispute concerning
this indemnification obligation. Should those efforts fail to resolve the
dispute, the ultimate resolution shall be determined in a de novo
proceeding, separate and apart from the underlying matter complained of,
before a court of competent jurisdiction. Either Party may initiate such
proceedings with a court of competent jurisdiction at any time following
the termination of the efforts by such Parties to resolve the dispute
(termination of such efforts shall be deemed to have occurred thirty (30)
days from the commencement of the same unless such time period is extended
by the written agreement of the Parties). The prevailing Party in such a
proceeding shall be entitled to recover reasonable attorneys' fees, costs,
and expenses.
A successor by law of the Parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
provisions of this Article VIII shall survive termination of this
Agreement.
8.5 INDEMNIFICATION FOR FAILURE TO COMPLY WITH DIVERSIFICATION REQUIREMENTS
The Trust and the Adviser acknowledge that if a Designated Fund fails
(whether intentionally or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of this
Agreement, the Contracts consequently may not be treated as variable
contracts for federal income tax purposes,
25
which would have adverse tax consequences for Contract owners and could
also adversely affect the Company's corporate tax liability. Accordingly,
without in any way limiting the effects of Sections 8.2(a) and 8.3(a)
hereof and without in any way limiting or restricting any other remedies
available to the Company, the Trust, the Adviser and the Distributor will
pay on a joint and several basis all costs associated with or arising out
of any failure, or any anticipated or reasonably foreseeable failure, of
any Designated Fund to comply with Section 3.3 of this Agreement,
including all costs associated with correcting or responding to any such
failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment company
as a funding medium for the Contracts and/or the costs of obtaining
whatever regulatory authorizations are required to substitute shares of
another investment company for those of the failed Designated Fund
(including but not limited to an order pursuant to Section 26(b) of the
1940 Act); reasonable fees and expenses of legal counsel and other
advisers of the Company and any federal income taxes or tax penalties (or
"toll charges" or exactments or amounts paid in settlement) reasonably
incurred by the Company in connection with any such failure or anticipated
or reasonably foreseeable failure. Such indemnification and reimbursement
obligation shall be in addition to any other indemnification and
reimbursement obligations of the Trust, the Adviser and/or the Distributor
under this Agreement.
8.6 INDEMNIFICATION FOR FAILURE TO COMPLY WITH CODE PROVISIONS
The Company acknowledges that if a Separate Account fails (whether
intentionally or in good faith or otherwise) to comply with the Code
provisions specified in Article II, Section 2.2 of this Agreement or other
Code provisions related to the maintenance of the contracts as variable
contracts for federal income tax purposes the failure of the contracts to
be treated as variable contracts for federal income tax purposes would
have adverse consequences for the Designated Funds serving as funding
vehicles for Participating Insurance Companies. Accordingly, without in
any way limiting the effects of Sections 8.1(a) hereof and without in any
way limiting or restricting any other remedies available to the Trust, the
Adviser and the Distributor, the Company will pay all costs associated
with or arising out of any failure, or any anticipated or reasonably
foreseeable failure, of any Separate Account to comply with Section 2.2 of
this Agreement or Code provisions related to the maintenance of the
contracts as variable contracts for federal income tax purposes, including
all costs associated with correcting or responding to any such failure;
such costs may include, but are not limited to, reasonable fees and
expenses of legal counsel and other advisers of the Trust, the Adviser and
the Distributor in connection with any such failure or anticipated or
reasonably foreseeable failure. Such indemnification and reimbursement
obligation shall be in addition to any other indemnification and
reimbursement obligations of the Company under this Agreement.
ARTICLE IX. - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware applicable
to contracts entirely entered into and performed in Delaware by Delaware
residents.
26
9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and ruling thereunder,
including such exemptions from those statutes, rules and regulations as
the SEC may grant (including, but not limited to, the Mixed and Shared
Funding Order) and the terms hereof will be interpreted and construed in
accordance therewith. If in the future, the Mixed and Shared Funding Order
should no longer be necessary under applicable laws, then Article VII
shall no longer apply.
9.3 For purposes of this Agreement, a Party's obligations hereunder to comply
with "applicable federal and state laws and regulations" shall be limited
to complying with only those federal and state laws and regulations that
apply to it.
ARTICLE X. - TERMINATION
10.1 This Agreement shall continue in full force and effect until terminated in
accordance with the provisions herein. This Agreement will terminate
automatically in the event of its assignment, unless made with the prior
written consent of each Party, or:
(a) at the option of any Party, with or without cause, with respect to
one, some or all of the Designated Funds, upon ninety (90) days
advance written notice to the other Parties or, if later, upon
receipt of any required exemptive relief or orders from the SEC,
unless otherwise agreed in a separate written agreement among the
Parties; or
(b) at the option of the Company, upon written notice to the other
Parties, with respect to any Designated Fund if shares of the
Designated Fund are not reasonably available to meet the
requirements of the Contracts as determined in good faith by the
Company; or
(c) at the option of the Company, upon written notice to the other
Parties, with respect to any Designated Fund in the event any of the
Designated Fund's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment media
of the Contracts issued or to be issued by the Company; or
(d) at the option of the Trust upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's
duties under this Agreement or related to the sale of the Contracts,
the administration of the Contracts, the operation of any Separate
Account, or the purchase of the Trust shares, provided that the
Trust determines in its reasonable judgment that any such proceeding
would have a material adverse effect on the Company's ability to
perform its obligations under this Agreement; or
(e) at the option of the Company upon institution of formal proceedings
against the Trust, the Adviser or the Distributor by the NASD, the
SEC or any state securities or insurance commission or any other
regulatory body, provided that the Company determines in its
reasonable judgment that any such proceeding would
27
have a material adverse effect on the Trust's, the Adviser's or the
Distributor's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, if the Trust or any Designated Fund
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 any Designated Fund may fail to
so qualify; or
(g) subject to the Company's compliance with Article II, at the option
of the Company, with respect to any Designated Fund, if any
Designated Fund fails to meet the diversification requirements
specified in Section 3.3 hereof or if the Company reasonably
believes any Designated Fund may fail to meet such requirements; or
(h) at the option of any Party to this Agreement, upon another Party's
material breach of any provision of this Agreement. The terminating
Party shall deliver notice of such breach to all other Parties to
this Agreement. The termination shall be effective thirty (30) days
after the notice has been received by all such Parties, but only if
the breaching Party shall not have cured the breach, in all material
respects, by the end of the thirty (30) day period; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith that either the Trust, the Adviser
or the Distributor has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity which is
likely to have a material adverse impact upon the business and
operations of the Company or the Contracts (including the sale
thereof); or
(j) at the option of the Trust, the Adviser or the Distributor, if the
Trust, the Adviser or the Distributor respectively, determines in
its sole judgment exercised in good faith that the Company has
suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of the
Trust, the Adviser or the Distributor, such terminating Party shall
notify the Company in writing of such determination and its intent
to terminate this Agreement. The Agreement shall terminate 30 days
after such notice to the Company; or
(k) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in a Separate Account (or any sub-account)
to substitute the shares of another investment company for the
corresponding Designated Fund's shares in accordance with the terms
of the Contracts for which those Designated Fund shares had been
selected to serve as the underlying portfolio. The Company will give
sixty (60) days' prior written notice to the Trust of the date of
any proposed vote or other action taken to replace the shares of a
Designated Fund or of the filing of any required regulatory
approval(s); or
28
(l) at the option of the Company or the Trust upon a determination by a
majority of the Trust Board, or a majority of the Trust's
disinterested Trustees, that a material irreconcilable conflict
exists among the interests of: (1) all Contract owners of variable
insurance products of all separate accounts; or (2) the interests of
the Participating Insurance Companies investing in the Trust as set
forth in Article VII of this Agreement; or
(m) subject to the Trust' compliance with Article III, at the option of
the Trust in the event any of the Contracts are not issued or sold
in accordance with applicable federal and/or state law, or will not
be treated as annuity contracts, life insurance policies and/or
variable contracts (as applicable) under applicable provisions of
the Code, or in the event any representation or warranty of the
Company in Section 2.1 is no longer true. Termination will be
effective immediately upon such occurrence without notice; or
(n) termination in the event the Distributor ceases to serve as
distributor of a Fund provided the Trust, on behalf of the Fund,
shall promptly notify the other Parties of such an event; or
(o) termination as to a Fund, upon termination of the investment
advisory agreement between the Fund and Adviser or its successors
unless each other Party to this Agreement specifically approves the
selection of a new Fund investment adviser. The terminating Party
shall give notice of such termination to all other Parties, and the
termination shall be effective as of the date specified in the
notice, which shall be not more than thirty (30) days after such
notice has been received by all such Parties. The Trust, on behalf
of such Fund, shall promptly furnish notice of termination of the
Adviser to each other Party to this Agreement; or
(p) termination by the Company, upon any substitution of the shares of
another investment company or series of the Fund in accordance with
the terms of the Contracts, provided that the Company has given at
least sixty (60) days prior written notice to the Fund and the
Adviser of the date of substitution; or
(q) termination upon mutual written agreement of the Parties to this
Agreement.
10.2 NOTICE REQUIREMENT
(a) In the event that any termination of this Agreement is based upon
the provisions of Article VII, such prior written notice will be
given in advance of the effective date of termination as required by
such provisions.
(b) In the event that a Party to this Agreement terminates the Agreement
based upon the provisions of Sections 10.1(b)-(h), prompt written
notice of the election to terminate this Agreement for cause shall
be furnished by the Party terminating the Agreement to the
non-terminating Party(ies). The Agreement shall be terminated
effective upon receipt of such notice by the non-terminating
Party(ies).
29
(c) In the event that a Party to this Agreement terminates the Agreement
based upon the provisions of Sections 10.1(i) or (j), prior written
notice of the election to terminate this Agreement for cause shall
be furnished by the Party terminating the Agreement to the
non-terminating Party(ies). Such prior written notice shall be given
by the Party terminating this Agreement to the non-terminating
Party(ies) at least sixty (60) days before the effective date of
termination.
10.3 EFFECT OF TERMINATION
Notwithstanding any termination of this Agreement, the Trust and the
Distributor will, at the option of the Company, continue to make available
additional shares of the Designated Funds pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"), unless the Distributor requests that the Company
seek an order pursuant to Section 26(b) of the 1940 Act to permit the
substitution of other securities for the shares of the Designated Funds.
The Distributor and the Company each will be responsible for one-half of
the cost of seeking such order and the Company agrees that it will
cooperate with the Distributor and seek such an order upon request.
Specifically, without limitation, the owners of the Existing Contracts
will be permitted to reallocate investments in the Designated Funds (as in
effect on such date), redeem investments in the Designated Funds and/or
invest in the Designated Funds upon the making of additional purchase
payments under the Existing Contracts. The Parties agree that this Section
10.3 will not apply to any terminations under Article VII and the effect
of such Article VII terminations will be governed by Article VII of this
Agreement. The Parties further agree that this Section 10.3 will not apply
to any termination under 10.1(m) of this Agreement.
10.4 SURVIVING PROVISIONS
Notwithstanding any termination of this Agreement, each Party's
obligations under Article VIII to indemnify other Parties will survive and
not be affected by any termination of this Agreement. In addition, with
respect to Existing Contracts, all provisions of this Agreement also will
survive and not be affected by any termination of this Agreement.
ARTICLE XI. -- NOTICES
Any notice will be deemed duly given when sent by registered or certified mail,
return receipt requested, to the other Party at the address of such Party set
forth below or at such other address as such Party may from time to time specify
in writing to the other Parties. All notices will be deemed given three (3)
business days after the date received or rejected by the address:
If to the Company:
New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
30
Attn: Xxxxxx X. Xxxxxx, Senior Vice President, with a copy to the Office
of the General Counsel/Variable Product Attorney
If to the Trust:
Delaware VIP Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
If to the Adviser:
Delaware Management Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
If to the Distributor:
Delaware Distributors, L.P.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: General Counsel
ARTICLE XII. -- MISCELLANEOUS
12.1 All persons dealing with the Trust must look solely to the property of the
Trust or, in the event of a claim relating to a particular Designated
Fund, the relevant Designated Fund for the enforcement of any claims
against the Trust or the Designated Fund, as the case may be, as neither
the trustees, officers, agents or shareholders assume any personal
liability solely as a result of their capacities as such, for obligations
entered into on behalf of the Trust or any Designated Funds. It is also
understood that each Fund shall be deemed to be entering into a separate
Agreement with Company so that it is as if each of Fund had signed a
separate Agreement with Company and that a single document is being signed
simply to facilitate the execution and administration of the Agreement.
12.2 The Trust, the Adviser and the Distributor each acknowledges that the
identities of the customers of the Company or any of its affiliates
(collectively the "Protected Parties" for purposes of this Section 12.2),
information maintained regarding Protected Parties, and all computer
programs and procedures developed by the Protected Parties or any of their
employees or agents in connection with the Company's performance of its
duties under
31
this Agreement are the valuable property of the Protected Parties. The
Trust, the Adviser and the Distributor agree that if they come into
possession of any list or compilation of the identities of or other
information about the Protected Parties' customers, or any other property
of the Protected Parties, other than such information as may be
independently developed or compiled by the Trust, the Adviser or the
Distributor from information supplied to them by the Protected Parties'
customers who also maintain accounts directly with the Trust, the Adviser
and the Distributor, the Trust, the Adviser and the Distributor will hold
such information or property in confidence and refrain from using,
disclosing or distributing any of such information or other property
except: (a) with the Company's prior written consent; or (b) as required
by law or judicial process. Subject to the requirements of legal process
and regulatory authority, each Party hereto in particular shall treat as
confidential any "non-public personal information" about any "consumer" of
any Party as such terms are defined in the SEC's Regulation S-P and shall
not disclose or use such information without the express consent of such
Party. Such consent shall specify the purposes for which information may
be disclosed or used, which disclosure or use shall be consistent with
Regulation S-P. The Trust and the Adviser each acknowledges that any
breach of the agreements in this Section 12.2 would result in immediate
and irreparable harm to the Protected Parties for which there would be no
adequate remedy at law and agree that in the event of such a breach, the
Protected Parties will be entitled to equitable relief by way of temporary
and permanent injunctions, as well as such other relief as any court of
competent jurisdiction deems appropriate. This Section 12.2 shall survive
the expiration or termination of this Agreement.
12.3 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will
not be affected thereby.
12.6 This Agreement will not be assigned by any Party hereto, without the prior
written consent of all of the Parties.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the Parties hereto are entitled to
under state and federal law.
12.8 The Parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.9 Each Party to this Agreement will cooperate with each other Party and all
appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and will permit each other
and such authorities reasonable access to
32
its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
12.10 Each Party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or trust action, as applicable,
by such Party and when so executed and delivered this Agreement will be
the valid and binding obligation of such Party enforceable in accordance
with its terms.
12.11 This Agreement may be amended by written instrument signed by all Parties
to the Agreement. Notwithstanding the above, the Parties to this Agreement
may amend the schedules to this Agreement from time to time to reflect
changes in or relating to the Contracts, the Separate Accounts or the
Funds of the Trust or other applicable terms of this Agreement.
33
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By:___________________________________
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
DELAWARE VIP TRUST
By:___________________________________
Name: Xxxxxxx X. Xxxxx
Title: President
DELAWARE MANAGEMENT COMPANY
By:___________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
DELAWARE DISTRIBUTORS, L.P.
By:___________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
34
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of New York Life
Insurance and Annuity Corporation are permitted in accordance with the
provisions of the Participation Agreement to invest in the Designated Funds of
the Delaware VIP Trust shown in Schedule B.
NAME OF SEPARATE ACCOUNT:
NYLIAC Corporate Sponsored Variable Universal Life Separate Account - I
May 24, 1996
CONTRACT(S):
Corporate Executive Series Variable Universal Life
Policy #300-40 and #301-43
NAME OF SEPARATE ACCOUNT:
CONTRACT(S):
NAME OF SEPARATE ACCOUNT:
CONTRACT(S):
Date:___________________
A-1
PARTICIPATION AGREEMENT
SCHEDULE B
In accordance with the provisions of the Participation Agreement, the Separate
Account(s) shown on Schedule A may invest in the following Funds of the Trust:
Delaware VIP International Value Equity Series -- Standard Class
Date:___________________
B-1
PARTICIPATION AGREEMENT
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 Delaware VIP Trust
(the "Trust") under the Participation Agreement (the "Agreement"). The defined
terms herein shall have the meanings assigned in the 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 Trust as early as
possible before the date set by the Trust 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 Trust will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally 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. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts 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 Trust, as soon as possible, but no later
than two weeks after the Record Date.
3. The Trust's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting,
instruction solicitation material. The Trust will provide the last Annual
Report to the Company pursuant to the terms of Section 6.2 of the
Agreement.
4. The text and format for the Voting Instruction Cards ("Cards" or Card") is
provided to the Company by the Trust. The Company, at its expense, shall
produce and personalize the Voting Instructions Cards. The Trust 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:
- name (legal name as found on account registration)
- address
- Trust or account number
- coding to state number of units
Date:___________________
C-1
- individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Trust).
(This and related steps may occur later in the chronological process due
to possible uncertainties relating to the proposals.)
5. During this time, the Trust 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
Company). Contents of envelope sent to Customers by the Company will
include:
- Voting Instruction Card(s)
- one proxy notice and statement (one document)
- return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
- "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly as
possible and that their vote is important. One copy will be supplied
by the Trust.)
- cover letter - optional, supplied by Company and reviewed and
approved in advance by the Trust
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Trust.
7. Package mailed by the Company.
* The Trust must allow at least 15-day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no or mixed replies, and to begin data entry.
9. Signature on Card checked against legal name on account registration which
was printed on the Card. NOTE: For Example, if the account registration is
under "Xxxx X. Xxxxx, Trustee," then that is the exact legal name to be
printed on the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g., mutilated,
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illegible) or the procedure are "hand verified," i.e., examined as to
whether they did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Trust receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Trust must
review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Trust
on the morning of the meeting not later than 10:00 a.m. Eastern time. The
Trust may request an earlier deadline if reasonable and if required to
calculate the vote in time for the meeting.
14. 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 Trust will provide a standard form for each Certification.
15. 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 Trust will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
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PARTICIPATION AGREEMENT
SCHEDULE D
PURCHASE AND REDEMPTION ORDER PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
processing of purchase and redemption orders relating to the Delaware VIP Trust
(the "Trust") under the Participation Agreement (the "Agreement"). The defined
terms herein shall have the meanings assigned in the Agreement except that the
term "Company" shall also include the department assigned by the Company to
perform the steps delineated below.
1. The Company shall transmit any purchase or redemption order to the Trust
or its designated affiliate electronically by an automated file in FTP
format in the applicable DST layout format.
2. The Company will place purchase and redemption orders manually by 8:30
a.m. Eastern Time until such time that the Trust directs the Company to
place orders electronically in FTP format. When the Trust converts to FTP
format, the purchase or redemption orders must be received no later than
the times specified in Sections 1.1 and 1.3 of the Agreement.
3. The Trust or its designated affiliate shall send confirmations of the
purchase and redemption orders to the Company on the Business Day that the
purchase or redemption order is deemed to be received pursuant to Sections
1.1 or 1.3 of the Agreement.
4. The Company shall submit any corrections to the purchase or redemption
order to the Trust or its designated affiliate on the same Business Day
that the purchase or redemption order is deemed to be received pursuant to
the Sections 1.1 or 1.3 of the Agreement or as soon thereafter as an error
is discovered.
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PARTICIPATION AGREEMENT
SCHEDULE E
COST ALLOCATION
The COMPANY The TRUST or its Agent (as appropriate)
Preparing and filing the Separate Account registration Preparing and filing the Trust registration statement.
statements.
Text composition and alterations for the Separate Account Text composition and alterations for the Trust
prospectuses, SAIs and any supplements thereto. prospectuses, SAIs and any supplements thereto, including
versions of these documents to accommodate various
combinations of Funds offered under Separate Account
prospectuses.
Printing of the Trust prospectuses, SAIs and supplements Supplying typeset, camera and/or web-ready Trust
thereto for prospective Contract owners. Printing Separate prospectuses, SAIs and supplements. Printing of the
Account prospectuses, SAIs and supplements thereto. Trust prospectuses, SAIs and supplements thereto for
existing Contract owners that invest in the Trust.
Documented and reasonable additional printing costs
incurred by the Company that are directly the result of
the Trust's failure to timely provide the Trust
prospectus as required by Section 4.1 of this Agreement.
Mailing and distributing the Trust prospectuses, SAIs and All or the Trust's pro-rata portion (if combined with
supplements thereto to prospective Contract owners. documents of other funds) of mailing and distributing the
Mailing and distributing Separate Account prospectuses, Trust prospectuses, SAIs and supplements thereto to
SAIs and supplements to prospective and existing Contract existing Contract owners that invest in the Trust. (SAIs
owners. (SAIs are distributed only upon request of the are distributed only upon request of the Contract owner.)
Contract owner.)
Text composition and alterations of the Separate Account Text composition and alterations of the Trust proxy
portion of the annual and semi-annual reports. statements and voting instructions solicitation materials
to Contract owners with respect to proxies related to the
Trust, annual and semi-annual reports for the Trust and
other communications to shareholders that invest in the
Trust.
Printing, mailing and distributing annual and semi-annual Supplying typeset, camera and/or web-ready Trust proxy
reports for prospective Contract owners. statements and voting instructions solicitation
materials, annual and semi-annual reports and other
communications to shareholders. Printing costs for
copies of such materials distributed to Contract owners
that invest in the Trust.
Text composition, alterations, printing, mailing and All or the Trust's pro-rata portion (if combined with
distributing ,and tabulation of proxy statements and voting documents of other funds) of mailing and distributing
instruction solicitation materials to Contract owners with annual and semi-annual reports for the Trust to existing
respect to proxies related to the Separate Account(s). Contract owners that invest in the Trust.
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The COMPANY The TRUST or its Agent (as appropriate)
Preparation, printing and distributing sales material and Mailing and distributing and tabulation of proxy
advertising related to the Trust and contained in Separate statements and voting instruction solicitation materials
Account advertising and sales materials; and filing such to Contract owners with respect to proxies related to the
materials with and obtaining approval from, the SEC, the Trust.
National Association of Securities Dealers, Inc., any state
insurance regulatory authority and any other appropriate
regulatory authority, to the extent required.
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