PARTICIPATION AGREEMENT
AMONG
BARON CAPITAL FUNDS TRUST,
BARON CAPITAL, INC.,
AND
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I. Trust Shares 2
ARTICLE II. Representations and Warranties 5
ARTICLE III. Prospectuses, Reports to Shareholders
and Proxy Statements; Voting 9
ARTICLE IV. Sales Material and Information 11
ARTICLE V. Expenses 12
ARTICLE VI. Potential Conflicts 12
ARTICLE VII. Indemnification 14
ARTICLE VIII. Applicable Law 20
ARTICLE IX. Termination 21
ARTICLE X. Notices 23
ARTICLE XI. Miscellaneous 24
SCHEDULE A Separate Accounts and Contracts 28
SCHEDULE B Participating Fund 29
SCHEDULE C Cost Allocation 30
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT ("AGREEMENT"), made as of this ____ day of
July, 2005, by and among New York Life Insurance and Annuity Corporation (the
"Company"), a life insurance company organized under the laws of the State of
Delaware, on its behalf and on behalf of each segregated asset account set forth
on Schedule A attached hereto as it may be amended from time to time by mutual
written agreement of the Parties hereto (the "Separate Accounts"); Baron Capital
Funds Trust, a Business Trust organized under the laws of the State of Delaware
(the "Trust"), on behalf of each series, individually and not jointly, set forth
on Schedule B attached hereto as may be amended from time to time by mutual
written agreement of the Parties hereto ("Fund"); and Baron Capital, Inc., a New
York corporation (the "Distributor") (each a "Party," and collectively, the
"Parties").
WHEREAS, the Trust engages in business as an open-end management
investment company, is registered with the Securities and Exchange Commission
(the "SEC") under the Investment Company Act of 1940, as amended (the "1940
Act"), and is available to act as the investment vehicle for separate accounts
established by insurance companies for life insurance policies and annuity
contracts; and
WHEREAS, the Trust intends to make available shares of the Fund to the
Separate Accounts of the Company; and
WHEREAS, the shares of the Fund are registered under the Securities Act of
1933, as amended (the "1933 Act") to the extent required thereby; and
WHEREAS, the Distributor is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD") and serves as principal underwriter of the shares of the Fund; and
WHEREAS, the Company is an insurance company which has established or will
establish one or more Separate Accounts to offer variable annuities and/or
variable life insurance policies listed in Schedule A attached hereto as the
Parties may amend from time to time by mutual written agreement (the
"Contracts") issued by the Company and, to the extent permitted by applicable
insurance laws and regulations, the Company intends to purchase, on behalf of
the Separate Accounts, shares of the Trust to fund certain Contracts, and the
Trust is authorized to sell such shares at net asset value. Persons that are
parties to a Contract with Company (or other persons who may exercise rights
under the Contracts) are Contract owners ("Contract owners"); and
WHEREAS, the Trust has obtained an order from the SEC, dated January 12,
1998, (File No. 812-10958), 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 1940 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent
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necessary to permit shares of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Order").
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Trust, and the Distributor agree as follows:
ARTICLE I. TRUST SHARES
Section 1.1. Subject to Article IX and the terms set forth in the Trust's
registration statement, as may be amended from time to time, the Trust agrees to
make shares of the Fund available for purchase by the Company and the Separate
Accounts indefinitely, and the Distributor agrees to sell such shares to the
Company and the Separate Accounts to the extent made available by the Trust, at
the applicable net asset value per share ("NAV") by the Company and the Separate
Accounts on each Business Day pursuant to the rules of the SEC. The Trust will
execute purchase orders placed for each Separate Account on a daily basis at the
NAV of the Fund computed after receipt by the Trust or its designee of such
order. At Company's request, the Trust agrees to redeem for cash any full or
fractional shares of the Fund held by the Company and Separate Accounts, on a
daily basis at the NAV computed after receipt by the Trust or its designee of
the request for redemption.
However, if one or more Fund has determined to settle redemption
transactions for all of its shareholders on a delayed basis (more than one
Business Day, but in no event more than five Business Days, after the date on
which the redemption order is received, and consistent with Section 22(e) of the
1940 Act and any rules or orders of the SEC thereunder), the Trust shall be
permitted to delay sending redemption proceeds to Company by the same number of
days that the Trust is delaying sending redemption proceeds to the other
shareholders of the Fund; provided that in no event may any delay by the Trust
in paying redemption proceeds cause the Company or Separate Accounts to fail to
meet its obligations under Section 22(e) of the 1940 Act, or require the Company
to pay redemption proceeds out of its general account.
For purposes of this Section 1.1, Company shall be the agent of the Trust
for receipt of purchase orders and redemption requests from each Separate
Account and receipt by Company 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 Fund)
constitutes receipt by the Trust on that day, provided the Trust or the Trust's
agent receives notice of net purchase orders or net redemption requests by 11:00
a.m. (Eastern time) on the next following Business Day or such later time as
permitted by Section 1.1. Upon the request of the Trust, Company shall provide
to the Trust, copies of records of purchase orders and redemption requests
placed with Company, including records indicating the time at which such orders
or requests were received by Company.
Company will place net orders to purchase or redeem shares of the Fund.
Each order shall describe the net amount of shares and dollar amount of the Fund
to be purchased or
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redeemed. In the event of net purchases, Company will pay for shares before 3:00
p.m. (Eastern time) on the same day it places the order to purchase shares with
the Fund as set forth in this Section 1.1. Payment shall be in federal funds
transmitted to the Trust by wire to an account designated by the Trust. Upon
receipt by the Trust of the federal funds so wired, such funds shall cease to be
the responsibility of the Company and shall become the responsibility of the
Trust. In the event of net redemptions, the Trust shall pay and transmit
proceeds of redemptions to the Company before 3:00 p.m. (Eastern time) on the
same day the Company places the order to redeem Fund shares with the Fund unless
settlement of redemption transactions is delayed as provided in this Section
1.1. Payment shall be in federal funds transmitted to the Company or its
designee by wire to an account designated by the Company. Upon receipt by the
Company of the federal funds so wired, such funds shall cease to be the
responsibility of the Trust and shall become the responsibility of the Company.
For purposes of this Agreement, "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Trust
calculates the net asset value of the Fund pursuant to the rules of the SEC, as
set forth in the Fund's prospectus.
Section 1.2. The Board of Trustees of the Trust ("Board"), acting in good
faith and in the exercise of its fiduciary responsibilities to Fund shareholders
(including the Company and its Separate Accounts), may refuse to permit the
Trust to sell shares of any Fund to any person, or suspend or terminate the
offering of shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction over the sale of shares, or is
determined by the Board to be in the best interests of the Fund's shareholders.
Section 1.3. The Trust represents and warrants that the insurance shares
class of shares of the Fund have been and will be sold only to life insurance
companies and their separate accounts and to persons or plans (collectively,
"Qualified Persons") that represent and warrant to the Trust that they qualify
to purchase shares of the Fund under Section 817(h) of the Internal Revenue Code
of 1986 ("Code"), and the regulations thereunder without impairing the ability
of the Separate Account to consider the portfolio investments of the Fund as
constituting investments of the Separate Account for the purpose of satisfying
diversification requirements of Section 817(h). The Trust represents and
warrants that no shares of any Fund have been or will be sold to the general
public. The Trust shall not sell Fund shares to any insurance company or
separate account unless an agreement substantially complying with Articles VI
and VII and Sections 1.3, 2.1, 2.3, 2.6, and 3.2 of this Agreement is in effect
to govern such sales, to the extent required. Company hereby represents and
warrants that it and the Separate Accounts are Qualified Persons.
Section 1.4. Issuance and transfer of Fund shares will be by book entry
only. Share certificates will not be issued to Company or any Separate Account.
Shares purchased from the Trust 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 the Fund.
Section 1.5. The Trust shall provide monthly statements of account as of
the end of each quarter for all Company's accounts by the fifteenth (15)
Business Day following quarter end.
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Trust shall direct the transfer agent for the fund to provide daily
confirmations to Company, by facsimile or by other reasonable means, of the
receipt of purchase or redemption orders placed by Company with Trust.
Section 1.6. The Trust or its designee shall notify Company (by wire or
telephone, followed by written confirmation) in advance of any dividends or
capital gain distributions payable on the Fund's shares, but in no case later
than 6:00 p.m. Eastern time on the payable date. Company hereby elects to
reinvest all such dividends and capital gain distributions as are payable on a
Fund's shares in additional shares of that Fund. The Trust shall notify Company
by the end of the next Business Day following the date any dividends or capital
gain distributions are paid of the number of shares issued as payment of such
dividends and distributions. Company reserves the right to revoke this election
and to receive all such dividends and capital gain distributions in cash.
Section 1.7. The Trust or its agent shall make the NAV of the Fund
available to Company on a daily basis as soon as reasonably practical after the
NAV is calculated and reported in a manner required or permitted by applicable
law. The Trust shall use reasonable efforts to make such NAV available by 6:00
p.m. Eastern time on each Business Day. In the event that the Trust is unable to
meet the 6:00 p.m. time stated herein, the Trust shall provide additional time
for the Company to place orders for the purchase and redemption of shares equal
to the additional time it takes the Trust to make the NAVs available to the
Company. However, if the NAVs are not available for inclusion in the next
business cycle and purchase orders/redemptions are not able to be calculated and
available for the Company to execute within the time frame identified in
Sections 1.1 hereof, the Company on behalf of the Separate Account(s), shall be
entitled to an adjustment to the number of shares purchased or redeemed to
reflect the NAV computed as of the close of the prior Business Day. The Trust
shall calculate such NAV in accordance with the Trust's registration statement.
In the event of an error in the computation of a Fund's NAV or any
dividend or capital gain distribution (each, a "pricing error"), the Trust shall
notify the Company as soon as possible after discovery of the error. Such
notification may be verbal, but shall be confirmed promptly in writing in
accordance with Section 10.1 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 reasonable 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
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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.
The standards set forth in this Section 1.7 are based on the Parties'
understanding of the views expressed by the staff of the SEC as of the date of
this Agreement. In the event the views of the SEC staff are later modified or
superseded by SEC or judicial interpretation, the Parties shall amend the
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
Section 2.1. Company represents and warrants that:
A. It is an insurance company duly organized and in good standing under
the laws of Delaware and that it has legally and validly established each
Separate Account as a segregated asset account under such laws,
B. It has registered or, prior to any issuance or sale of the Contracts,
will register each Separate Account as a unit investment trust in accordance
with the provisions of the 1940 Act unless exempt therefrom and cause each
Separate Account to remain so registered to the extent required thereby to serve
as a segregated asset account for the Contracts.
C. The interests under the Contracts are or will be registered under the
1933 Act to the extent required prior to any issuance or sale of the Contracts
and that the Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws and regulations.
D. The Contracts are currently, and at the time of issuance shall be,
treated as annuity contracts or life insurance contracts, under applicable
provisions of the Code, and Company will maintain such treatment, and will
notify the Trust immediately upon having a reasonable basis for believing the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
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Section 2.2. The Trust, on behalf of the Fund, separately and not jointly,
represents and warrants that:
A. The shares of the Fund sold pursuant to this Agreement are registered
under the 1933 Act and the regulations thereunder to the extent required.
B. The shares of the Fund are duly authorized for issuance in accordance
with the laws of each jurisdiction in which shares will be offered, to the
extent required by applicable laws.
C. The shares of the Fund shall be sold in material compliance with this
Agreement and with all applicable federal and state laws and regulations.
D. The Trust is and shall remain lawfully organized and validly existing
under the laws of the State of Delaware, that it is registered and shall remain
registered with the SEC under the 1940 Act and the regulations thereunder to the
extent required.
E. Subject to Section 1.2, the Trust shall amend its registration
statement under the 1933 Act and the 1940 Act, from time to time, as required in
order to effect the continuous offering of the Fund's shares.
F. The Fund is lawfully organized and validly existing in accordance
with the Trust's organization document.
G. The Trust complies and will operate in compliance in all material
respects with all applicable law, including without limitation the 1940 Act and
the regulations thereunder.
H. 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. Without prior notice to the Company, the Trust will not make any
fundamental changes in its investment policies, any sub-advisers or advisory
fees.
I. The Fund is and at all times since its inception has been qualified as
a regulated investment company under Subchapter M of the Code, and will at times
invest money from the Contracts in such a manner and take such other actions as
necessary to qualify as a regulated investment company under Subchapter M or any
successor or similar provision) and that the Fund will make every effort to
maintain such qualification and will notify the Company immediately in writing
upon having a reasonable basis for believing that the Fund has ceased to so
qualify or that it might not so qualify in the future.
J. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder (or any successor
provisions) and at all times since its inception, the Fund has
6
complied, and will continue to comply, with Section 817 of the Code and Treasury
Regulation 1.817-5, and any Treasury interpretations thereof, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
regulations. The Trust will notify Company immediately upon having a reasonable
basis for believing any Fund has ceased to comply or might not so comply, and
will take all steps necessary to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation Section
1.817-5.
K. All of its respective directors, officers, employees, investment
advisers, and other individuals or entities dealing with the money and/or
securities of any Fund in which a Separate Account invests are, and shall
continue to be at all times, covered by one or more blanket fidelity bonds or
similar coverage for the benefit of the Fund in an amount not less than the
minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid bonds shall include
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company.
Section 2.3. The Trust, on behalf of the Fund, separately and not jointly,
and the Distributor, each represents and warrants that no other insurance
company or separate account has purchased or will purchase shares of any Fund
except pursuant to an agreement containing representations, warranties, and
agreements to indemnify substantially similar to those set out in Sections 2.1
and 7.1 hereof. In addition, the Trust and Distributor each shall immediately
notify the Company if it becomes aware of any circumstances that would preclude
the Company from "looking through" to the investments of any Fund in which it
invests, pursuant to the "look-through" rules found in Treasury Regulation
1.817-5.
Section 2.4. The Distributor represents and warrants that:
A. It is lawfully organized and validly existing under the laws of its
state of organization. It is a member in good standing of the NASD and a
broker-dealer registered with the SEC. It is and will remain duly registered and
licensed in all material respects under all applicable federal and state laws
and regulations and that it will perform its obligations under this Agreement in
material compliance with applicable federal and state laws and regulations.
B. The shares of the Fund sold by it shall be sold in material compliance
with all applicable federal and state laws and regulations.
C. The Trust, Company and the Separate Accounts may rely upon the Shared
Funding Order to permit shares of the Trust or its Fund to be sold to and held
by variable insurance product separate accounts of both affiliated and
unaffiliated life insurance companies, including Company.
D. It shall not, either through action or inaction, cause the Trust to
breach any of its representations or warranties set out in Section 2.2 hereof.
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Section 2.5. Each Party represents and warrants that:
A. It shall comply with anti-money laundering laws and regulations
applicable to it, 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 laws, laws governing the insolvency of insurance companies and other
entities, and principles of equity.
ARTICLE III. PROSPECTUSES; REPORTS TO SHAREHOLDERS
AND PROXY STATEMENTS; VOTING
Section 3.1. The Trust shall, or, as appropriate, shall cause its agent
to, print and provide Company with as many printed copies of the Fund's current
prospectus(es) and statement of additional information, proxy materials,
notices, periodic reports, and other materials (which the Fund's provide to its
shareholders) in quantities as Company may reasonably request for delivery by
Company to existing or prospective Contract owners.
Company may elect to print the Fund's prospectus(es) and/or its statement
of additional information in combination with other fund companies' prospectuses
and statements of additional information. At Company's request, the Trust will
provide such documents (including a "camera-ready" copy of such documents as set
in type, a diskette in the form sent to the financial printer, or an electronic
copy of the documents in a format suitable for posting on the Company's website,
all as Company may reasonably request) and such other assistance as is
reasonably necessary in order for Company to have prospectuses, statements of
additional information, supplements, proxy statements, and annual/semi-annual
reports for the Contracts and the Fund printed together in a single document or
posted on Company's website.
Each Party shall bear, or cause its agents to bear, the costs associated
with its obligations with regard to the foregoing and other materials as
described in, and in accordance with, Schedule C attached hereto and
incorporated herein by reference, as the Parties may mutually agree in writing
to amend from time to time ("Schedule C").
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Section 3.2. Voting
A. Company shall provide pass-through voting privileges to all Contract
owners with respect to shares of Trust owned by Company's Separate Accounts that
are registered as investment companies under the 1940 Act so long as and to the
extent the SEC continues to interpret the 1940 Act as requiring pass-through
voting privileges or to the extent otherwise required by law. Accordingly,
Company, where applicable, shall vote shares of a Fund held in each Separate
Account in a manner consistent with voting instructions timely received from its
Contract owners.
B. Company shall be responsible for assuring that the Separate Account
determines voting privileges on matters relating to the Fund in a manner
consistent with other insurance companies that offer variable annuity and/or
variable life insurance contracts and that has entered into an agreement with
Trust for the purpose of making Fund shares available to serve as the underlying
investment medium for such contracts ("Participating Companies"). The obligation
to calculate voting privileges in a manner consistent with all other registered
separate accounts investing in Trust will be a contractual obligation of all
Participating Companies under the agreements governing participation in Trust.
Participating Companies shall vote shares for which it has not received timely
voting instructions, as well as shares it owns, in the same proportion as it
votes those shares for which it has received voting instructions.
C. The Trust shall provide the Company and each Participating Company with
a written copy of the conditions set forth in the notice related to the Shared
Funding Order and such other assistance as may be necessary to facilitate
coordination between Company and other Participating Companies in complying with
such conditions and provided further that Company shall be free to vote Trust
shares attributable to any Separate Account in any manner permitted by
applicable law, to the extent the Shared Funding Order is superseded by SEC or
administrative practice (including no-action relief). Company reserves the right
to vote Trust shares held in its general account and any segregated asset
account in its own right, to the extent permitted by law.
D. If and to the extent Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are
amended, or if Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules thereunder with respect to mixed and
shared funding on terms and conditions materially different from any exemptions
granted in the Shared Funding Order, then Trust, and/or the Participating
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such Rules are applicable and Sections 3.2(b), 3.2(c), 3.3, and 6.1-6.7
of this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such Sections are contained in such
Rule(s) as so amended or adopted.
E. The Trust will comply with all provisions of the 1940 Act, the
regulations thereunder, and applicable SEC staff interpretations regarding
pass-through voting.
Section 3.3. The Fund will comply with all the provisions of the 1940 Act
requiring voting by shareholders, and in particular, the Fund will either
provide for annual meetings or
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comply with Section 16(c) of the 1940 Act (although the Fund is not one of the
trusts described in Section 16(c) of that Act) as well as with Section 16(a) and
if and when applicable Section 16(b). Further, the Fund will act in accordance
with the Commission's interpretation of the requirements of Section 16(b).
Further, the Fund will act in accordance with the Commission's interpretation of
the requirements of Section 16(a) with respect to periodic elections of trustees
and with whatever rules the Commission may promulgate with respect thereto.
Section 3.4. Notwithstanding anything herein to the contrary, the Trust 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 the Fund where due to the acts of the Trust or the Trust's adviser
(i) 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, (ii) there is a material change in a fundamental investment objective
of the Fund requiring shareholder approval which results in the reclassification
of the investment style of the designated Fund by a nationally recognized mutual
fund ranking organization, and the Company furnishes the Trust with written
notice of its objection to such change prior to shareholder approval of such
change, (iii) the Trust has discontinued or intends to discontinue the offering
of its shares to existing or prospective Contract owners, or (iv)the Agreement
is terminated in accordance with Sections 9.1.B, C, D, I, K, L, and M. The costs
of such substitution shall include, without limitation, reasonable legal fees
for obtaining any required SEC order approving such substitution, and expenses
for printing and distributing any Separate Account prospectus or SAI supplement
or other disclosure of the substitution or elimination of the Fund as an
investment vehicle under the Contracts.
ARTICLE IV. SALES MATERIAL AND INFORMATION
Section 4.1. Company shall furnish, or shall cause to be furnished, to the
Distributor prior to use, each piece of sales literature or advertising prepared
by Company in which the Trust or the Fund or the Distributor is described. No
sales literature or advertising will be used if the Trust or the Distributor
reasonably objects to its use within ten (10) Business Days following receipt by
the Trust or the Distributor.
Section 4.2. Company will not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the advertising or sale of the Contracts, other than information
or representations contained in: (a) the registration statement or Fund's
prospectus(es), as may be amended from time to time, (b) reports to
shareholders, (c) proxy statements for the Fund or, (d) sales literature or
other promotional material previously approved by the Distributor, including as
described in Section 4.1 of this Agreement.
Section 4.3. The Fund shall furnish, or shall cause to be furnished, to
Company and the Distributor prior to use, each piece of sales literature or
advertising prepared by or for the Trust
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in which Company, the Contracts or Separate Accounts, are described. No sales
literature or advertising will be used if Company reasonably objects to its use
within ten (10) Business Days following receipt by Company.
Section 4.4. Neither the Trust nor the Distributor will give any
information or make any representations or statements on behalf of Company, the
Contracts, or the Separate Accounts or concerning Company, the Contracts or the
Separate Accounts, in connection with the advertising or sale of the Contracts
or Fund shares, other than the information or representations contained in: (a)
the registration statement or prospectus for the Contracts, as may be amended
from time to time (b) reports to shareholders, or (c) in sales literature or
other promotional material approved by Company under Section 4.3. The Fund 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.
Section 4.5. The Trust will provide to Company, upon Company's request, at
least one complete copy of all registration statements, prospectuses, statements
of additional information, reports to shareholders, proxy statements, sales
literature and other promotional materials, applications for exemptions and
requests for no-action letters, and all amendments, that relate to the Fund
reasonably promptly after the filing of such document with the SEC or other
regulatory authority.
Section 4.6. Company will provide to the Trust, upon the Trust's request,
at least one complete copy of all registration statements, prospectuses,
statements of additional information, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, and requests for no action letters, and all amendments, that relate
to the Company or the Contracts reasonably promptly after the filing of such
document with the SEC or other regulatory authority.
Section 4.7. For purposes of this Section, the terms, "sales literature",
"advertising" or "other promotional material" includes, but is not limited to:
advertisements (such as material published, or designed for use in, newspapers,
magazines, other periodicals, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, electronic
publications, websites, or other public media) (i.e., any written communication
distributed or generally made available to customers or the public including
electronic and website materials, brochures, circulars, research reports, market
letters, e-mail messages, form letters, newsletters, 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, statements of additional information, shareholder reports, and
proxy materials, and any other material constituting sales literature or
advertising under NASD rules, the 1933 Act or the 1940 Act, including electronic
and website materials.
11
ARTICLE V. EXPENSES
Section 5.1. Except as otherwise expressly provided in this Agreement,
each Party agrees to bear all expenses incident to performance by the Party
under this Agreement.
ARTICLE VI. POTENTIAL CONFLICTS
Section 6.1. The Trust represents that the Board will monitor the Fund for
the existence of any material irreconcilable conflict between the interests of
the Contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Fund are being managed; (e) a difference
in voting instructions given by variable annuity contract and variable life
insurance policy owners; or (f) a decision by an insurer to disregard the voting
instructions of Contract owners. The Board shall promptly inform Company in
writing if it determines that an irreconcilable material conflict exists and the
implications thereof.
Section 6.2. Company will report any potential or existing material
irreconcilable conflict of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the relevant
provisions of the federal securities laws, including Rule 6e-3(T)(b)(15), and
the conditions set forth in the Shared Funding Order, by providing the Board
with all information reasonably necessary for it to consider any issues raised.
This includes, but is not limited to, an obligation by the Company to inform the
Board whenever Contract owner voting instructions are disregarded by the
Company. These responsibilities will be carried out with a view only to the
interests of the Contract owners.
Section 6.3. If it is determined by a majority of the Board, or a majority
of its independent Trustees, that a material irreconcilable conflict exists,
affecting the Company, then the Company will, at its expense and to the extent
reasonably practicable, take whatever steps it can which are necessary to remedy
or eliminate the irreconcilable material conflict, up to and including: (a)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Trust or any Fund thereof and reinvesting those assets in a different
investment medium, which may include another Fund of the Trust or another
investment company, or submitting the question as to whether such withdrawal
should be implemented to a vote of all affected Contract owners and, as
appropriate, segregating the assets of any appropriate group or class (i.e.,
Contract owners of one or more participating insurance companies) that votes in
favor of such withdrawal; or (b) establishing a new registered management
investment company or managed separate
12
account. The responsibility to take such remedial action shall be carried out
with a view only to the interests of the Contract owners.
If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Separate
Account's investment in the Trust and terminate this Agreement with respect to
such Separate Account; provided, however, that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the independent Trustees of the Board.
Any such withdrawal and termination must take place within 6 months after the
Trust gives written notice that this provision is being implemented, and until
the end of that 6 month period, the Trust shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
No charge or penalty will be imposed as a result of such withdrawal.
If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the affected
Separate Account's investment in the Fund and terminate this Agreement with
respect to such Fund within 6 months after the Board informs the Company in
writing that it has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and termination shall
be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the independent trustees of the Board.
Until the end of the foregoing 6 month period, the Fund shall continue to accept
and implement orders by the Company for the purchase (and redemption) of shares
of the Fund.
Section 6.4. For the purposes of this Section 6.4, a majority of the
independent Trustees shall determine whether or not 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 any Contract.
Further, the Company shall not be required by this Section 6.4 to establish a
new funding medium for any Contract if an offer to do so has been declined by a
vote of a majority of Contract owners affected in a materially adverse manner by
the irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable material
conflict, then the Company will withdraw the affected Separate Account's
investment in the Fund and terminate this Agreement with respect to the Fund
within 6 months after the Board informs the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the independent Trustees.
Section 6.5. Company, at the request of the Board will, at least annually,
submit to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them.
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
13
recorded in the minutes of the Board or other appropriate records, and such
minutes or other records shall be made available to the SEC upon request.
Section 6.6. If and to the extent any mixed and shared funding order or
any amendment thereto contains terms and conditions different from Article VI 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 VI shall be deemed to incorporate such new
terms and conditions, and any term or condition of this Article VI that is
inconsistent therewith shall be deemed to be succeeded thereby. If and to the
extent that Rule 6e-2 and 6e-3(T) are amended, or Rule 6e-3 under the 1940 Act
is adopted, to provide exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed and shared funding on
terms and conditions materially different from those contained in the Shared
Funding Order, then (a) the Fund and/or the Company as appropriate, shall take
such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and
(b) this Article VI shall be deemed to incorporate such new terms and
conditions, and any term or condition of this Article VI that is inconsistent
therewith, shall be deemed to be succeeded thereby.
Section 6.7. 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. The Trust will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual update for such prospectuses.
ARTICLE VII. INDEMNIFICATION
Section 7.1. Indemnification by Company
A. Company agrees to indemnify and hold harmless the Distributor, the
Trust and each of their directors, Trustees or (if applicable), officers,
employees and agents and each person, if any, who controls the Distributor or
the Trust within the meaning of Section 15 of the 1933 Act (collectively, the
"Fund Indemnified Parties" and individually, a "Fund Indemnified Party") against
any and all losses, claims, damages, liabilities, investigations or litigation
(including amounts paid in settlement with the written consent of Company, which
consent shall not be unreasonably withheld) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which any of the Fund Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of the
Contracts or the purchase or redemption of Fund shares in connection with the
Contracts and:
14
1. Arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in a registration statement for
the Contracts or in the Contracts themselves or in sales literature relating to
the Contracts or Separate Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents"), or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply to a Fund Indemnified
Party to the extent that any Loss arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission that was made in
reliance upon and was accurately derived from written information furnished to
Company by or on behalf of such Fund Indemnified Party for use in Company
Documents or otherwise for use in connection with the sale of the Contracts or
shares of the Fund; or
2. Arise out of or result from wrongful or inaccurate statements or
representations (other than statements or representations contained in and
accurately derived from Trust Documents as defined in Section 7.2A.1) or
wrongful conduct of Company or persons under its control, with respect to the
sale or acquisition of the Contracts or shares of the Fund; or
3. Arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in information furnished in
writing by Company for use in Trust Documents as defined in Section 7.2A.1 or
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon and accurately derived from
written information furnished to the Trust or the Distributor by or on behalf of
Company; or
4. Arise out of or result from any failure by Company to
provide the services or furnish the materials required under the terms of
this Agreement; or
5. Arise out of or result from any material breach by the Company of
any representation and/or warranty made by Company in this Agreement or arise
out of or result from any other material breach of this Agreement by Company; as
limited by and in accordance with, Sections 7.1B and 7.1C hereof.
B. Company shall not be liable to a Fund Indemnified Party under this
indemnification provision with respect to any Losses which are due to such Fund
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of such Fund Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Trust or the Distributor, whichever is applicable.
C. Company shall not be liable under this indemnification provision with
respect to any claim made against a Fund Indemnified Party unless a Fund
Indemnified Party shall have notified Company in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Fund Indemnified Party (or
after such Fund Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify Company of any such claim shall not
relieve Company from any liability which it may have to the Fund Indemnified
Party against
15
whom such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against any of the Fund
Indemnified Parties, Company shall be entitled to participate, at its own
expense, in the defense of such action. Company also shall be entitled to assume
the defense thereof, with counsel satisfactory to the Party named in the action.
After notice from Company to such Party of Company's election to assume the
defense thereof, as long as Company is performing its obligations under this
Article, the Fund Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and Company will not be liable to such Party
under this Agreement for any legal or other expenses subsequently incurred by
such Party independently in connection with the defense thereof other than
reasonable costs of investigation.
D. The Fund Indemnified Party will promptly notify Company of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the shares of the Fund
or the Contracts or the operation of the Trust.
Section 7.2. Indemnification by the Distributor
A. The Distributor agrees to indemnify and hold harmless Company and each
of its directors, officers, employees and agents and each person, if any, who
controls Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Company Indemnified Parties" and individually, a "Company Indemnified
Party") against any and all losses, claims, damages, liabilities, investigations
or litigation (including amounts paid in settlement with the written consent of
the Distributor, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith)(collectively, "Losses"), to which the Company
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses are related to the sale or
acquisition of the shares of the Fund 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, statement of additional information or sales literature of the Trust
applicable to the Fund (or any amendment or supplement to any of the foregoing)
(collectively, "Trust Documents") or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (i) if such
statement of omission was made in reliance upon and accurately derived from
written information furnished by the Distributor or (ii) if such Trust Document
was prepared by the Distributor, provided in either of the foregoing cases, that
this indemnity shall not apply as to any Company Indemnified Party to the extent
that any Loss arises out of or is based upon any untrue statement or omission or
alleged untrue statement or omission that was made in reliance upon and was
accurately derived from written information furnished to the Trust or the
Distributor by or on behalf of Company for use in Trust Documents or otherwise
for use in connection with the sale of the Contracts or shares of the Fund; or
16
2. Arise out of or result from wrongful or inaccurate statements or
representations (other than statements or representations contained in and
accurately derived from Company Documents) or wrongful conduct of the
Distributor or persons under its control, with respect to the sale or
distribution of the Contracts or shares of the Fund; or
3. Arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in information furnished by the
Distributor for use in Company Documents, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information (including
information about the Trust or the Fund) furnished to Company by the Distributor
on its own behalf or by another party on behalf of the Distributor; or
4. Arise out of or result from any failure by the Distributor
to provide the services or furnish the materials required under the terms of
this Agreement; or
5. Arise out of or result from any material breach by the
Distributor of any representation and/or warranty made by the Distributor in
this Agreement or arise out of or result from any other material breach of this
Agreement by the Distributor; as limited by, and in accordance with, Sections
7.2.B and 7.2.C hereof.
B. The Distributor shall not be liable under this indemnification
provision with respect to any Losses which are due to an Company Indemnified
Party's willful misfeasance, bad faith, or negligence in the performance of such
Company Indemnified Party's duties or by reason of such Company Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
Company or the Separate Account, whichever is applicable.
C. The Distributor shall not be liable under this indemnification
provision with respect to any claim made against a Company Indemnified Party
unless such Company Indemnified Party shall have notified the Distributor in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Company Indemnified Party (or after such Company Indemnified Party shall have
received notice of such service on any designated agent), but failure to notify
the Distributor of any such claim shall not relieve the Distributor from any
liability which it may have to the Company Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Company Indemnified Parties, the
Distributor shall be entitled to participate, at its own expense, in the defense
thereof. The Distributor also shall be entitled to assume the defense thereof,
with counsel satisfactory to the Company Indemnified Party named in the action.
After notice from the Distributor to such Company Indemnified Party of its
election to assume the defense thereof, as long as the Distributor is performing
its obligations under this Article, the Company Indemnified Party shall bear the
expenses of any additional counsel retained by it, and the Distributor will not
be liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
17
D. The Company Indemnified Parties shall promptly notify the Distributor
of the commencement of any litigation or proceedings against them or any of
their officers or directors in connection with the issuance or sale of the
Contracts or the operation of a Separate Account.
Section 7.3. Indemnification by the Trust
A. The Trust agrees to indemnify and hold harmless the Company Indemnified
Parties against any and all losses, claims, damages, liabilities,
investigations or litigation (including amounts paid in settlement with the
written consent of the Trust, which consent shall not be unreasonably withheld)
or expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Company Indemnified Parties may become subject under any statute or regulation,
or at common law or otherwise, insofar as such Losses are related to the sale
or acquisition of the shares of the Fund 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 any Trust Documents generated
or approved by the Trust or arise out of or are based upon the Trust's omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided
that this indemnity shall not apply as to any Company Indemnified Party to the
extent that any Loss arises out of or is based upon any untrue statement or
omission or alleged untrue statement or omission that was made in reliance upon
and was accurately derived from written information furnished to the Trust or
the Distributor by or on behalf of Company for use in Trust Documents or
otherwise for use in connection with the sale of the Contracts or shares of the
Fund; or
2. Arise out of or result from wrongful or inaccurate statements or
representations (other than statements or representations contained in and
accurately derived from Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or distribution of the
Contracts or shares of the Fund; or
3. Arise out of or result from any untrue statement or alleged
untrue statement of a material fact contained in information furnished in
writing by the Company for use in Company Documents, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such statement or
omission was made in reliance upon and accurately derived from written
information furnished to Company by or on behalf of the Trust or the Fund; or
4. Arise out of or result from any failure by the Trust to
provide the services or furnish the materials required 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 Trust in this Agreement or arise out
of or result from any other
18
material breach of this Agreement by the Trust; as limited by, and in accordance
with, Sections 7.4B and 7.4C hereof.
B. The Trust shall not be liable under this indemnification provision with
respect to any Losses which are due to a Company Indemnified Party's willful
misfeasance, bad faith, or negligence in the performance of such Company
Indemnified Party's duties or by reason of such Company Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to Company
or the Separate Account, whichever is applicable.
C. The Trust shall not be liable under this indemnification provision with
respect to any claim made against a Company Indemnified Party unless such
Company Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such Company
Indemnified Party (or after such Company Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the Trust
of any such claim shall not relieve the Trust from any liability which it may
have to the Company Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision In case any such
action is brought against the Company Indemnified Parties, the Trust shall be
entitled to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the Company Indemnified Party named in the action. After notice from the
Trust to such Company Indemnified Party of its election to assume the defense
thereof, as long as the Trust is performing its obligations under this Article,
the Company Indemnified Party shall bear the expenses of any additional counsel
retained by it, and the Trust will not be liable to such Party under this
Agreement for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
D. The Company Indemnified Parties shall promptly notify the Trust of the
commencement of any litigation or proceedings against them or any of their
officers or directors in connection with the issuance or sale of the Contracts
or the operation of a Separate Account.
E. Company acknowledges and agrees that the obligations of the Trust under
this Section 7.4 are to be construed as the obligation individually of the 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.
Section 7.5. 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, records, and employees within its control pertaining
to such claim, and shall otherwise cooperate 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,
Section 7.6. 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
19
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.
Section 7.7. 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.
Section 7.8. A successor by law of the Parties to this Agreement shall be
entitled to the benefits of the indemnification contained in this Article VII.
The provisions of this Article VII shall survive termination of this Agreement.
ARTICLE VIII. APPLICABLE LAW
Section 8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
Section 8.2. This Agreement, its terms and definitions, shall be subject
to the provisions of the 1933 Act, the 1934 Act, and the 1940 Act, and the rules
and regulations and rulings
20
thereunder, including such exemptions from those statutes, rules and regulations
as the SEC may grant.
Section 8.3. 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 IX. TERMINATION
Section 9.1. This Agreement shall continue in full force and effect until
terminated in accordance with the provisions herein. This Agreement shall
terminate in its entirety or with respect to a particular Fund, as specified
below, without penalty upon the first to occur of:
A. Termination as to any Fund by any Party for any reason upon ninety (90)
days advance written notice delivered to the other Parties, unless a shorter
time is agreed to by all the Parties; or
B. Termination by Company by written notice to the Trust and the
Distributor with respect to any Fund in the event (i) any of the shares of the
Fund are not registered, issued or sold in accordance with applicable federal
and/or state law, or such law precludes the use of such shares as the underlying
investment medium of the Contracts issued or to be issued by Company or (ii)
shares of that Fund are not reasonably available to meet the requirements of the
Contracts as determined by Company; or
C. Termination by Company upon written notice to the Trust with respect to
any Fund in the event that such Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any successor or similar
provision; or
D. Termination by Company upon written notice to the Trust and the
Distributor with respect to any Fund in the event that such Fund fails to meet
the diversification requirements specified in Sections 1.3 and 2.3 of this
Agreement; or
E. Termination by the Trust upon written notice to Company in the event
that the Contracts fail to meet the qualifications specified in Section 2.1B
hereof; or
F. Termination by any Party in the event that the Trust's Board of
Trustees determines that a material irreconcilable conflict exists as provided
in Article VI hereof; or
G. 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
H. Termination as to a Fund, upon termination of the investment advisory
agreement between the Fund and its adviser or its successors unless each other
Party to this Agreement
21
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 its adviser to each other Party to this
Agreement;
I. Termination by the Company, upon any substitution of the shares of
another investment company or series thereof for shares of the Fund in
accordance with the terms of the Contracts, provided that the Company has given
at least forty-five (45) days prior written notice to the Fund of the date of
substitution;
J. Termination by any Party, upon another Party's breach of any material
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;
K. Termination by any Party to this Agreement, if that Party shall
determine, in its sole judgment reasonably exercised in good faith, that any
other Party to this Agreement (or any affiliate of such Party) has suffered a
material adverse change in its business or financial condition or is the subject
of material adverse publicity and such material adverse change or material
adverse publicity is likely to have a material adverse impact upon the business
and operation of the terminating Party, such terminating Party shall notify each
other Party in writing of such determination and its intent to terminate this
Agreement, and, if, after considering the actions taken by the entity suffering
the adverse change or adverse publicity and any other changes in circumstances
since the giving of such notice, such determination of the terminating Party
shall continue to apply on the thirtieth (30th) day after such notice has been
received by all other Parties, such thirtieth (30th) day shall be the effective
date of termination;
L. As to a Fund, at the option of any Party to this Agreement, upon the
institution of formal proceedings against any other Party to this Agreement by
the SEC, NASD or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the terminating Party's reasonable
judgment, materially impair that other Party's ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to terminate shall
be furnished by the terminating Party to all other Parties, with said
termination to be effective upon receipt of notice by all such Parties;
M. Termination upon mutual written agreement of the Parties to this
Agreement.
Section 9.2. Effect of Termination.
Notwithstanding any termination of this Agreement pursuant to Section 9.1,
the Trust and the Distributor shall, at the option of Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (the "Existing Contracts") unless such further sale
22
of any Fund's shares is proscribed by law, regulation or applicable regulatory
body, or unless the Trust requests that Company seek an order pursuant to
Section 26(c) of the 1940 Act to permit the substitution of other securities for
the shares of the Fund. The Trust shall bear the cost of any such substitution
in the above described event. Specifically, without limitation, the owners of
the Existing Contracts or Company, whichever shall have legal authority to do
so, will be permitted to direct allocation and reallocation of investments in
the Trust, redeem investments in the Fund and invest in the Fund through
additional purchase payments. If such Fund shares continue to be made available
after such termination, the provision of this Agreement shall remain in effect.
Section 9.3. Articles I, II, III, IV, V, VI, and VII shall survive any
termination of this Agreement to the extent necessary to carry out the
provisions of Section 9.2. Articles II and VII shall survive any termination of
this Agreement.
Section 9.4. The Parties agree to cooperate and give reasonable assistance
to one another in taking all necessary and appropriate steps for the purpose of
ensuring that the Separate Account owns no shares of a Fund after the effective
date of this Agreement's termination with respect to such shares, or, if such
ownership following termination cannot be avoided, that the duration thereof is
as brief as reasonably practicable.
ARTICLE X. NOTICES
Section 10.1. Any notice shall be sufficiently given when sent by
registered or certified mail to the other Party at the address of such Party set
forth below or at such other address as such Party may from time to time specify
in writing to the other Party.
If to the Trust:
Baron Capital Funds Trust
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxx
If to the Distributor:
Baron Capital, Inc.
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
23
If to the Company:
New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Senior Vice President, with a copy to the
Office of the General Counsel, variable products attorney
ARTICLE XI. MISCELLANEOUS
Section 11.1. Subject to the requirements of legal process and regulatory
authority, each Party will treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other Parties and, except as permitted by this
Agreement or as required by any governmental agency, regulator or other
authority, shall not without the express written consent of the affected Party
disclose, disseminate or utilize such names and addresses and other confidential
information until such time as it may come into the public domain.
Section 11.2. 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.
Section 11.3. This Agreement may be executed in counterparts, each of
which taken together shall constitute one and the same instrument.
Section 11.4. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
Section 11.5. Each Party shall:
A. Cooperate with each other Party and all governmental authorities having
jurisdiction over such other Party (including, without limitation, the Federal
Reserve Board, the SEC, the NASD and state insurance regulators) and shall
permit such authorities (and other Parties) reasonable access to its relevant
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
B. At the request of any Party to this Agreement, make available to the
requesting Party's independent auditors and/or representatives of the
appropriate regulatory agencies, all records, data, and access to operating
procedures that may be reasonably requested in connection with compliance and
regulatory requirements related to this Agreement or any Party's obligations
under this Agreement.
C. Notify the other Parties in writing of reasonable concerns or issues it
may have from time to time concerning market-timing, excessive trading, or other
potentially detrimental
24
trading activities that affect or may affect a Separate Account or a Fund, and
shall consult with each other Party and work cooperatively to reach a mutually
satisfactory solution or action plan to address such Party's concerns or issues,
it being understood and agreed to by all Parties (i) that there is no
universally accepted understanding of what may constitute market timing,
excessive trading, or other detrimental trading activity, (ii) that the state of
the law regarding such trading activities is currently uncertain, and (iii) that
Congress, the SEC and other regulatory bodies may adopt new laws or regulations
that may require the Parties to revise the terms and conditions of this
Agreement.
Section 11.6. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the Parties hereto are entitled to under
state and federal laws.
Section 11.7. This Agreement or any of the rights and obligations
hereunder may not be assigned by any Party without the prior written consent of
all Parties.
Section 11.8. This Agreement may not be amended or modified except by
written agreement executed by each of the Parties.
Section 11.9. Acknowledgements:
A. Company acknowledges that the identity of the Trust's and Distributor's
(and their affiliates' and/or subsidiaries') customers and all information
maintained about those customers constitute the valuable property of the Trust
and Distributor, respectively. Company agrees that, should it come into contact
or possession of any such information (including, but not limited to, lists or
compilations of the identity of such customers), Company shall hold such
information or property in confidence and shall not use, disclose or distribute
any such information or property except with prior written consent of the Trust
and Distributor or as required by law or judicial process or to perform its
obligations under this Agreement.
B. The Trust Distributor acknowledge that the identity of Company's (and
its affiliates' and/or subsidiaries') customers and all information maintained
about those customers constitute the valuable property of Company. The Trust and
Distributor agree that, should they come into contact or possession of any such
information (including, but not limited to, lists or compilations of the
identity of such customers), they shall hold such information or property in
confidence and shall not use, disclose or distribute any such information or
property except with Company's prior written consent or as required by law or
judicial process or to perform its obligations under this Agreement.
This Section 11.9 shall survive the expiration or termination of this
Agreement.
Section 11.10. It is understood and expressly stipulated that neither the
shareholders of shares of any Fund nor the Trustees or officers of the Trust
shall be personally liable hereunder solely as a result of their capacities as
such. No Fund shall be liable for the obligations or liabilities of any other
Fund. All persons dealing with a particular Fund must look solely to the
25
property of that Fund for enforcement of any claims against that Fund. It is
also understood that the 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.
Section 11.11. Nothing contained in this Agreement shall supercede the
terms of the distribution agreement between the Trust and the Distributor; it
being understood and agreed to by the Parties that such distribution agreement
does not and shall not affect or govern in any way the rights and obligations of
any Party under this Agreement.
26
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed in as name and on its behalf by its duly authorized representative as
of the date specified above.
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
On its behalf and each Separate Account named in
Schedule A, as may be amended from time to time
By:______________________________________
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
BARON CAPITAL FUNDS TRUST
on behalf of the Fund set forth on Exhibit B hereto individually and not
jointly
By:______________________________________
Name:
Title:
BARON CAPITAL, INC.
By:______________________________________
Name:
Title:
27
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
--------------------------------------------------------------------------------
NAME OF SEPARATE ACCOUNT AND DATE ESTABLISHED CONTRACT FORM NUMBERS
--------------------------------------------------------------------------------
NYLIAC Corporate Sponsored Variable Universal Corporate Executive Series
Life Separate Account - I Variable Universal Life
May 24, 1996 Policy #300-40 and #301-43
--------------------------------------------------------------------------------
NYLIAC Private Placement Variable Universal CorpExec Private Placement
Life Separate Account - I Variable Universal Life
December 10, 2001 Policy #304-46C (Group)
Policy #304-47 (Individual)
--------------------------------------------------------------------------------
NYLIAC Private Placement Variable Universal CorpExec Private Placement
Life Separate Account-II Variable Universal Life
December 10, 2001 Policy #304-46C (Group)
Policy #304-47 (Individual)
--------------------------------------------------------------------------------
28
SCHEDULE B
PARTICIPATING FUND
Baron Capital Asset Fund -- Insurance Shares
29
SCHEDULE C
COST ALLOCATION
--------------------------------------------------------------------------------------
The COMPANY The TRUST or its Agent (as appropriate)
--------------------------------------------------------------------------------------
Preparing and filing the Separate Preparing and filing the Trust
Account registration statements. registration statement.
--------------------------------------------------------------------------------------
Text composition and alterations for the Text composition and alterations for the
Separate Account prospectuses, SAIs and Trust prospectuses, SAIs and any
any supplements thereto. supplements thereto, including versions
of these documents to accommodate
various combinations of Funds offered
under Separate Account prospectuses.
--------------------------------------------------------------------------------------
Printing of the Trust prospectuses, SAIs Supplying typeset, camera and/or
and supplements thereto for prospective web-ready Trust prospectuses, SAIs and
Contract owners. Printing Separate supplements. Printing of the Trust
Account prospectuses, SAIs and prospectuses, SAIs and supplements
supplements thereto. thereto for existing Contract owners
that invest in the Trust.
--------------------------------------------------------------------------------------
Mailing and distributing the Trust All or the Trust's pro-rata portion (if
prospectuses, SAIs and supplements combined with documents of other funds)
thereto to prospective Contract owners. of mailing and distributing the Trust
Mailing and distributing Separate prospectuses, SAIs and supplements
Account prospectuses, SAIs and thereto to existing Contract owners.
supplements to prospective and existing (SAIs are distributed only upon request
Contract owners. (SAIs are distributed of the Contract owner.)
only upon request of the Contract owner.)
--------------------------------------------------------------------------------------
Text composition and alterations of the Text composition and alterations of the
Separate Account portion of the annual Trust proxy statements and voting
and semi-annual reports. 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.
--------------------------------------------------------------------------------------
Printing, mailing and distributing Supplying typeset, camera and/or
annual and semi-annual reports for web-ready Trust proxy statements and
prospective Contract owners. 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.
--------------------------------------------------------------------------------------
Text composition, alterations, printing, All or the Trust's pro-rata portion (if
mailing and distributing ,and tabulation combined with documents of other funds)
of proxy statements and voting of mailing and distributing annual and
instruction solicitation materials to semi-annual reports for the Trust to
Contract owners with respect to proxies existing Contract owners that invest in
related to the Separate Account(s). the Trust.
--------------------------------------------------------------------------------------
Preparation, printing and distributing Mailing and distributing and tabulation
sales material and advertising related of proxy statements and voting
to the Trust and contained in Separate instruction solicitation materials to
Account advertising and sales materials; Contract owners with respect to proxies
and filing such materials with and related to the Trust.
obtaining approval from, the SEC, the
National Association of Securities
Dealers, Inc., any state insurance
regulatory authority and any other
appropriate regulatory authority, to the
extent required.
--------------------------------------------------------------------------------------
30
