FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 24th day of June, 2004, by and
among New York Life Insurance and Annuity Corporation ("Insurance Company"), a
life insurance company organized under the laws of the State of Delaware, LAZARD
RETIREMENT SERIES, INC. ("Fund"), with respect to Fund's Portfolios named on
Schedule 1 (each a "Portfolio"), as it may be amended from time to time by
mutual written agreement of the Parties (as defined below), LAZARD ASSET
MANAGEMENT LLC ("XXX") and XXXXXX ASSET MANAGEMENT SECURITIES LLC ("Fund
Distributor").
ARTICLE I.
DEFINITIONS
The following terms used in this Agreement shall have the meanings set
forth below:
1.1 "1933 Act" shall mean the Securities Act of 1933, as amended.
1.2 "1940 Act" shall mean the Investment Company Act of 1940, as amended.
1.3 "Board" shall mean Fund's Board of Directors.
1.4 "Business Day" shall mean any day for which the New York Stock Exchange is
open for business and on which the Portfolios calculate net asset value
per share as described in the Portfolio Prospectuses and pursuant to
applicable law and the rules of the Commission.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6 "Commission" shall mean the Securities and Exchange Commission.
1.7 "Contract" shall mean a variable annuity or variable life insurance
contract that uses a Portfolio as an underlying investment medium and is
named on Schedule 1, as such Schedule may be amended from time to time by
mutual written agreement of the Parties.
1.8 "Contract Prospectus" shall mean the currently effective prospectus and
statement of additional information ("SAI") with respect to a Contract,
including any supplements or amendments thereto.
1.9 "Contractholder" shall mean any person that is a party to a Contract with
Insurance Company.
1.10 "Disinterested Board Members" shall mean those members of the Board that
are not deemed to be "interested persons" of Fund, as defined in the 0000
Xxx.
1.11 "General Account" shall mean the general account of Insurance Company.
1.12 "IRS" shall mean the Internal Revenue Service.
1.13 "NASD" shall mean the National Association of Securities Dealers, Inc.
1.14 "Notice" shall mean the notice related to the Order.
1.15 "Order" shall mean Fund's mixed and shared funding exemptive order of the
Commission pursuant to Section 6(c) of the 0000 Xxx.
1.16 "Participant" shall mean an individual who participates under a group
Contract.
1.17 "Participating Company" shall mean any insurance company, including
Insurance Company, that offers variable annuity and/or variable life
insurance contracts and that has entered into an agreement with Fund for
the purpose of making Fund shares available to serve as the underlying
investment medium for Variable Contracts.
1.18 "Parties" shall mean collectively Insurance Company, Fund, on behalf of
itself and each Portfolio, XXX and Fund Distributor; "Party" shall mean
any one of the foregoing.
1.19 "Portfolio Prospectus" shall mean the currently effective prospectus and
SAI with respect to a Portfolio, including any supplements or amendments
thereto.
1.20 "Separate Account" shall mean a separate account duly established by
Insurance Company that invests in a Portfolio and is named on Schedule 1.
1.21 "Variable Contract" shall mean variable annuity and/or variable life
insurance contracts that use the Fund's shares as an underlying investment
medium.
1.22 "Variable Contractholder" shall mean any person that is a party to a
Variable Contract with a Participating Company.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1 Insurance Company represents and warrants that at all times during the
term of this Agreement and until neither Insurance Company nor any
Separate Account no longer holds any Portfolio shares acquired pursuant to
this Agreement:
(a) it is and shall remain an insurance company duly organized, in good
standing under applicable law, and taxed as an insurance company
under Subchapter L of the Code;
(b) it has legally and validly established and shall maintain each
Separate Account pursuant to applicable insurance laws and
regulations;
(c) it has registered, or prior to any issuance or sale of the Contracts
will register, and shall maintain the registration of each Separate
Account as a unit investment trust under the 1940 Act, to the extent
required thereby, to serve as a segregated investment account for
the Contracts, or, alternatively, it has not so registered the
Separate Accounts in proper reliance upon an exclusion from such
registration (which exclusion shall be communicated to Fund);
(d) each Separate Account is and at all times shall be eligible to
invest in shares of a Portfolio without such investment
disqualifying Portfolio as an investment medium for
2
insurance company separate accounts supporting variable annuity
and/or variable life insurance contracts;
(e) each Separate Account is a "segregated asset account" and interests
in each Separate Account shall be issued exclusively through the
purchase of a Contract that is and shall be a "variable contract,"
in each case within the meaning of such terms under Section 817 of
the Code and the regulations thereunder; Insurance Company agrees to
notify Fund and Fund 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;
(f) the Contracts are and, assuming compliance by Fund, on behalf of
each Portfolio, together with Fund Distributor, with the terms and
conditions of this Agreement, shall be treated as life insurance,
endowment or annuity contracts under applicable provisions of the
Code, and it shall notify Fund 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; and
(g) all of its employees and agents who deal with money and/or
securities of Fund are and shall continue to be covered by a blanket
fidelity bond or similar coverage, which shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding
company, in an amount not less than $5 million.
2.2 Insurance Company represents and warrants that: (a) units of interest in
each Separate Account available through the purchase of Contracts are
registered under the 1933 Act, or are not so registered in proper reliance
upon an exclusion from such registration; (b) the Contracts shall be
issued and sold in compliance in all material respects with all applicable
federal and state laws; and (c) Insurance Company will otherwise comply in
all material respects with all applicable federal and state laws,
including state insurance laws and regulations, in the performance of this
Agreement.
2.3 Insurance Company (a) will cooperate with Fund to deter and detect what
the Parties mutually agree in writing to be the use of market timing or
excessive trading strategies by Contractholders, including, if permitted
by the federal securities laws or regulations, providing identity
information (solely for the purpose of deterring and detecting the use of
market timing or excessive trading strategies by Contractholders) and
other information Fund reasonably requests and (b) will implement
reasonable procedures to monitor such activities.
2.4 Fund, on behalf of each Portfolio where indicated, and XXX represent and
warrant that at all times during the term of this Agreement and until
neither Insurance Company nor any Separate Account no longer holds any
Portfolio shares acquired pursuant to this Agreement:
(a) (i) Fund is and will be lawfully organized and validly existing
under the laws of the state of Maryland; (ii) each Portfolio has
been duly designated as a series of Fund in accordance with the laws
of the state of Maryland and Fund's charter and by-laws; (iii) Fund
is and will be registered with the Commission as an open-end
management investment company under the 1940 Act to the extent
required thereby; (iv) Fund and each Portfolio are in material
compliance with applicable federal and state laws; and (v) Fund and
each Portfolio are in possession and shall maintain all legal and
regulatory licenses, approvals, consents and/or exemptions required
for such Fund or Portfolio to operate and offer its shares as an
underlying investment medium for the Contracts;
3
(b) each Portfolio is and at all times since its inception has been, and
will be, qualified as a regulated investment company under
Subchapter M of the Code (or any successor or similar provision),
and Fund shall notify Insurance Company promptly upon having a
reasonable basis for believing that any Portfolio invested in by a
Separate Account has ceased to so qualify or that it might not so
qualify in the future; and
(c) all of Fund's directors, officers, employees, investment advisers,
and other individuals/entities who deal with the money and/or
securities of Fund are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of
Fund or the Portfolio, as the case may be, which shall include
coverage for larceny and embezzlement and shall be issued by a
reputable bonding company, for the benefit of Fund in an amount not
less than that required by Rule 17g-1 under the 1940 Act, and Fund
and XXX shall make all reasonable efforts to see that such bond or
another bond containing these same provisions is in effect, and Fund
agrees to notify Insurance Company in the event such coverage no
longer applies.
2.5 Fund and XXX represent and warrant that each Portfolio complies and will
continue to comply (provided, however, that Fund shall not have breached
this provision if a failure to comply is subsequently cured within the
grace period afforded by Treasury Regulation Section 1.817-5(c)(1)), with
the requirements of Section 817(h) of the Code (or any successor or
similar provision), and the rules and regulations thereunder and Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment or life insurance contracts, and any
amendments or other modifications or successor provisions to such Section
or Regulations. Fund or XXX will notify Insurance Company immediately upon
either Fund or XXX having a reasonable basis for believing any Portfolio
has ceased to comply or might not so comply, and will immediately take all
reasonable steps to adequately diversify the Portfolio so as to achieve
compliance within the grace period afforded by Treasury Regulation
Section 1.817-5. In addition, Fund or XXX shall immediately notify
Insurance Company if either Fund or XXX becomes aware that Insurance
Company may be precluded from "looking through" to the investments of any
Portfolio, pursuant to the "look through" rules found in Treasury
Regulation 1.817-5. In the event the IRS asserts in writing in connection
with any governmental audit or review of Insurance Company or, to
Insurance Company's knowledge, of any Contractholder, that any Portfolio
has failed or allegedly failed to comply with the diversification
requirements of Section 817(h) of the Code or the regulations thereunder
or Insurance Company otherwise becomes aware of any facts that could give
rise to any claim against Fund or its affiliates as a result of such a
failure or alleged failure, Insurance Company shall promptly notify Fund
and Fund Distributor of such assertion or potential claim and shall permit
Fund and Fund Distributor and its affiliates and their legal and
accounting advisers to participate in any conferences, discussions or
proceedings with the IRS, any Contractholder or any other claimant
regarding such claims.
2.6 Fund and Fund Distributor each represent and warrant that Portfolio shares
sold pursuant to this Agreement shall be registered under the 1933 Act to
the extent required thereby, duly authorized for issuance and sold in
compliance with the Agreement and, in all material respects, with all
applicable federal and state laws. Fund shall amend the registration
statement of Portfolio shares under the 1933 Act and Fund's registration
statement under the 1940 Act from time to time as required in order to
effect the continuous offering of Portfolio shares.
2.7 XXX represents and warrants that (a) it is lawfully organized and validly
existing under the laws of its state of organization; (b) it is registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended; and (c) it is and will remain duly registered and licensed
4
under all applicable federal and state laws and shall perform its
obligations under this Agreement in compliance in all material respects
with all applicable federal and state laws.
2.8 Fund Distributor represents and warrants that (a) it is lawfully organized
and validly existing under the laws of its state of organization; (b) it
is registered as a broker-dealer under the Securities Exchange Act of
1934, as amended, and is a member of the NASD; and (c) it is and will
remain duly registered and licensed under all applicable federal and state
laws and shall perform its obligations hereunder in compliance in all
material respects with all applicable federal and state laws.
2.9 Each Party to this Agreement represents and warrants that (a) it has full
power and authority to enter into and perform its obligations under this
Agreement; (b) 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 (c) 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.
2.10 Each Party agrees that it will comply with all applicable laws and
regulations relating to consumer privacy ("Privacy Law") and that it is
prohibited from using or disclosing any nonpublic personal information (as
defined in Regulation S-P, or any similar term or terms as defined in
other applicable Privacy Law, "Customer Information") received from
another Party other than (a) as required by law, regulation or rule; (b)
as permitted in writing by the disclosing Party; (c) to its affiliates; or
(d) as necessary to perform this Agreement or to service Contractholders,
in each case in compliance with the reuse and redisclosure provisions of
Privacy Law. Each Party shall use its best efforts to (i) cause its
employees and agents to be informed of and to agree to be bound by Privacy
Law and the provisions of this Agreement and (ii) maintain physical,
electronic and procedural safeguards reasonably designed to protect the
security, confidentiality and integrity of, and to prevent unauthorized
access to or use of, Customer Information.
2.11 Insurance Company has adopted and implemented policies and procedures to
ensure compliance with any applicable anti-money laundering and currency
transaction reporting laws and regulations, including any relating to
Contractholder identification and verification; monitoring for Specially
Designated Nationals and Blocked Persons named on the U.S. Treasury
Department's Office of Foreign Assets Control list or other similar
governmental lists; suspicious activity reporting; and recordkeeping
requirements (collectively, "AML Requirements"). Insurance Company will,
upon reasonable request, provide Fund with an annual certification with
respect to the foregoing. Insurance Company will notify Fund if any of
Insurance Company's representations with respect to compliance with AML
Requirements ceases to be true.
ARTICLE III.
PORTFOLIO SHARES
3.1 Fund agrees to make the shares of each Portfolio available for purchase by
Insurance Company and each Separate Account at net asset value on each
Business Day, subject to the terms and conditions of this Agreement and
the Portfolio Prospectus, provided that Fund may refuse to sell the shares
of any Portfolio to any person, or suspend or terminate the offering of
the shares of any
5
Portfolio, as permitted by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Board acting in good
faith and in light of its fiduciary duties under federal and any
applicable state laws, suspension or termination is necessary and in the
best interests of the shareholders of such Portfolio, including Insurance
Company and the Separate Accounts.
3.2 Fund agrees that it shall sell shares of the Portfolios only to persons
eligible to invest in the Portfolios in accordance with Section 817(h) of
the Code and the regulations thereunder, to the extent such Section and
regulations are applicable.
3.3 Subject to the provisions of this Agreement, Fund agrees to sell to
Insurance Company those shares of the Portfolios that Insurance Company,
on behalf of the Separate Account(s), orders, and agrees to redeem for
cash, on Insurance Company's request, any full or fractional shares of
Portfolio held by Insurance Company on behalf of the Separate Account(s),
executing such orders and requests in the manner set out in Schedule 2
hereto.
3.4 Except as noted in this Article III, Fund and Insurance Company agree that
orders and related payments to purchase and redeem Portfolio shares shall
be processed in the manner set out in Schedule 2 hereto.
(a) Insurance Company represents that it has adopted, and will at all
times during the term of this Agreement maintain, reasonable and
appropriate procedures designed to ensure compliance with Rule 22c-1
under the 1940 Act ("Late Trading Procedures"). Each transmission of
share orders by Insurance Company shall constitute a representation
by Insurance Company that such orders comply with the Late Trading
Procedures and with paragraph 3 of Schedule 2 attached hereto as
applicable to Insurance Company.
(b) Insurance Company will provide Fund with (A) a copy of the Late
Trading Procedures (including promptly providing any material
amendments thereto) by October 5, 2004 and (B) such certifications
and representations regarding the Late Trading Procedures as Fund
may reasonably request. Fund and Fund Distributor or their agents
may reasonably inspect the records and facilities of Insurance
Company regarding compliance with the Late Trading Procedures.
3.5 Fund shall confirm each purchase or redemption order made by Insurance
Company. Transfer of Portfolio shares shall be by book entry only. No
share certificates shall be issued to Insurance Company. Shares ordered
from Fund shall be recorded in an appropriate title for Insurance Company,
on behalf of each Separate Account or the General Account.
3.6 Fund shall furnish by e-mail or facsimile to Insurance Company of the
amount of dividend and capital gain, if any, per share of each Portfolio
to which each Separate Account is entitled. Insurance Company hereby
elects to reinvest all dividends and capital gains of any Portfolio in
additional shares of that Portfolio at the applicable net asset value per
share, until Insurance Company otherwise notifies Fund in writing. Fund
shall make available to Insurance Company by the end of the next following
Business Day the number of shares so issued as payment of such dividends
and distributions. Insurance Company reserves the right, on its behalf and
on behalf of its Separate Account(s), to revoke this election and to
receive all dividends and capital gain distributions in cash.
3.7 Fund will not sell shares of the Portfolio(s) to any other Participating
Company separate account unless an agreement addressing the matters
covered in Sections 2.1(a)-(g), 2.2, 6.2-6.6, 6.8, 7.1,
6
7.2 and 7.4 of this Agreement, in a substantially similar manner to the
provisions in such Sections, is in effect to govern such sales.
ARTICLE IV.
STATEMENTS AND REPORTS
4.1 Fund shall provide Insurance Company with quarterly statements of account
for each Separate Account's Portfolio accounts as of the end of each
calendar quarter by the fifteenth (15th) Business Day of the following
quarter.
4.2 (a) At least annually, Fund or its designee shall provide Insurance
Company with as many copies of Portfolio Prospectuses as Insurance
Company may reasonably request for distribution by Insurance Company
to existing Contractholders and Participants with respect to
Separate Accounts invested in the relevant Portfolios.
(b) If requested by Insurance Company, Fund or its designee shall
provide Portfolio Prospectuses in "camera ready" and/or web-ready
copy or, at the request of Insurance Company, in the electronic
format sent to the financial printer and other assistance as is
reasonably necessary in order for the Parties once a year (or more
frequently if the Portfolio Prospectuses are supplemented or
updated) to have the Contract Prospectuses and the Portfolio
Prospectuses printed together in one document or a document
combining Portfolio Prospectuses with prospectuses of other funds in
which the Contracts may invest.
(c) The form of the Portfolio Prospectuses provided to Insurance Company
shall be the final form of Portfolio Prospectus as filed with the
Commission, which form shall include only those Portfolios
identified on Schedule 1.
4.3 Fund shall provide Insurance Company with at least one complete copy of
all registration statements, periodic reports and proxy statements and all
applications for exemptive orders and requests for no-action letters and
all amendments of any of such documents promptly after the filing of such
document with the Commission or other regulatory authorities or, if such
materials are not filed, contemporaneously with first use.
4.4 Fund shall provide Insurance Company with copies of each Portfolio's
periodic reports, proxy statements and other printed materials (which the
Portfolio customarily provides to its shareholders) in quantities as
Insurance Company may reasonably request for distribution by Insurance
Company to each Contractholder and Participant with respect to Separate
Accounts invested in that Portfolio. If requested by Insurance Company in
lieu thereof, Fund shall provide at Fund's expense such documentation
(including a final copy of Fund's proxy statements, periodic reports to
shareholders, and other communications to shareholders, as set in type or
in camera-ready and/or web-ready copy) and other assistance as reasonably
necessary for Insurance Company to print such shareholder communications
for distribution to Contractholders and Participants.
4.5 Insurance Company shall provide Fund with at least one complete copy of
all registration statements, periodic reports, proxy statements,
applications for exemptive orders, requests for no-action letters, and all
amendments to any of the above, that are material to a Portfolio promptly
after the filing of such document with the Commission or other regulatory
authorities or, if such materials are not filed, contemporaneously with
first use.
7
4.6 Insurance Company shall provide to Fund and Fund Distributor any
complaints received from Contractholders pertaining to Fund or a
Portfolio.
4.7 Notwithstanding anything herein to the contrary, Fund or XXX or their
respective designees shall reimburse Insurance Company, up to $25,000 as
adjusted for inflation based on the Consumer Price Index, for the
reasonable costs associated with substituting one or more different
portfolios of a registered investment company for one or more Portfolios
where due to the acts of Fund or XXX a Portfolio 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 requirements
of Section 817(h) of the Code (or any successor or similar provision), and
as a result the Portfolio(s) no longer qualify to serve as a funding
vehicle for the Contracts. The costs of such substitution shall include,
without limitation, reasonable fees and expenses for obtaining any
required Commission order approving such substitution and for printing and
distributing any Separate Account prospectus or SAI supplement or other
necessary disclosure of the substitution or elimination of the affected
Portfolio(s) as an investment vehicle under the Contracts.
ARTICLE V.
EXPENSES
5.1 Except as otherwise specifically provided herein, each Party will bear all
expenses incident to its performance under this Agreement. Expenses
associated with preparing, filing and distributing registration
statements, prospectuses, supplements, periodic reports to shareholders,
proxy statements and voting instructions, and specified sales material and
other materials listed in Schedule 3 shall be paid for in accordance with
the cost allocations set forth in Schedule 3.
5.2 Fund Distributor may pay Insurance Company for distribution and/or other
services relating to Portfolio shares pursuant to any distribution plan
adopted by Fund in accordance with Rule 12b-1 under the 1940 Act, subject
to the terms of an agreement between Insurance Company and Fund
Distributor related to such plan.
ARTICLE VI.
EXEMPTIVE RELIEF
6.1 Fund represents that Fund Board will monitor Fund for the existence of any
material irreconcilable conflict between the interests of the Variable
Contractholders of Participating Company separate accounts investing in
Fund, including material irreconcilable conflicts arising by reason of:
(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
interpretive letter, or any similar action by insurance, tax, or
securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by Variable Contractholders of different Participating
Companies; or (f) a decision by a Participating Company to disregard
voting instructions of Variable Contractholders.
6.2 Insurance Company acknowledges that it has reviewed a copy of the Order
and, in particular, has reviewed the conditions to the relief set forth in
the Notice. As required by the conditions set forth in the Notice,
Insurance Company shall report any potential or existing conflicts of
which it is aware promptly to the Board.
8
6.3 Insurance Company shall be responsible for assisting the Board in carrying
out its responsibilities under the Order by providing the Board with all
information necessary for the Board to consider any issues raised
including, without limitation, information whenever Contractholder voting
instructions are disregarded. Insurance Company, at least annually (but
more frequently if requested by Fund), shall submit to the Board such
reports, materials, or data as the Board may reasonably request so that
the Board may carry out fully the obligations imposed upon it by the
Order. Insurance Company agrees to carry out such responsibilities with a
view only to the interests of Contractholders.
6.4 If a majority of the Board, or a majority of Disinterested Board Members,
determines that a material irreconcilable conflict exists with regard to
Variable Contractholder investments in Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that
Insurance Company is a Participating Company for whom the conflict is
relevant, Insurance Company shall at its sole cost and expense, and to the
extent reasonably practicable (as determined by a majority of the
Disinterested Board Members), take such action as is necessary to remedy
or eliminate the irreconcilable material conflict, up to and including,
without limitation:
(a) withdrawing the assets allocable to some or all Separate Accounts
from Fund or any Portfolio and reinvesting such assets in a
different investment medium (which may include another Portfolio);
(b) submitting the question of whether such segregation should be
implemented to a vote of all affected Contractholders and, as
appropriate, segregating the assets of any appropriate group (i.e.
variable annuity or variable life insurance Contractholders) that
votes in favor of such segregation; and/or
(c) 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 Variable Contractholders that use a
Portfolio as an underlying investment medium.
6.5 If a material irreconcilable conflict arises as a result of a decision by
Insurance Company to disregard Contractholder voting instructions and that
decision represents a minority position or would preclude a majority vote,
Insurance Company may be required, at the Board's election, to withdraw
the investments of its Separate Accounts in Fund.
6.6 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether any proposed action adequately remedies
any material irreconcilable conflict, but in no event shall Fund or Fund
Distributor or any investment adviser of Fund be required to establish a
new funding medium for any Contract. Insurance Company shall not be
required by this Article to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority of
the Contractholders materially and adversely affected by the material
irreconcilable conflict. In the event that the Board determines that any
proposed action does not adequately remedy any irreconcilable material
conflict, then Insurance Company will withdraw the affected Separate
Account's investment in Fund and terminate this Agreement within six
months after the Board informs Insurance Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required
9
by any such material irreconcilable conflict as determined by a majority
of the Disinterested Board Members.
6.7 The Board's determination of the existence of a material irreconcilable
conflict and its implications shall be made known promptly and in writing
to Insurance Company.
6.8 No action by Fund or Fund Distributor taken or omitted as a result of any
act or failure to act by Insurance Company pursuant to this Article VI
shall relieve Insurance Company of its obligations under, or otherwise
affect the operations of, this Article VI.
ARTICLE VII.
VOTING OF PORTFOLIO SHARES
7.1 Insurance Company shall provide pass-through voting privileges to all
Contractholders and Participants so long as and to the extent the
Commission continues to interpret the 1940 Act as requiring pass-through
voting privileges on matters relating to the Portfolios or to the extent
otherwise required by law. Accordingly, Insurance Company, where
applicable, shall vote shares of a Portfolio held in each Separate Account
in a manner consistent with voting instructions timely received from its
Contractholders and Participants. Insurance Company shall be responsible
for assuring that the Separate Account determines voting privileges in a
manner consistent with other Participating Companies. Insurance Company
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. The
obligation to calculate voting privileges in a manner consistent with all
other separate accounts investing in Fund will be a contractual obligation
of all Participating Companies under the agreements governing
participation in Fund.
7.2 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 Order, then Fund, 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. Article VI of this
Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to Article VI are contained in such
Rule(s) as so amended or adopted or Fund is otherwise required to continue
to comply with the conditions of the Order.
7.3 Fund and Insurance Company each agree that it will comply with all
applicable provisions of the 1940 Act, the regulations thereunder,
Commission orders and Commission staff interpretations regarding
pass-through voting.
7.4 Insurance Company agrees that it shall not, without prior written notice
to Fund and Fund Distributor, solicit, introduce or encourage
Contractholders or Participants to change or supplement Fund's investment
adviser.
10
ARTICLE VIII.
MARKETING
8.1 Fund or its designee shall periodically furnish Insurance Company with
sales literature or other promotional materials for each Portfolio, in
quantities as Insurance Company may reasonably request, for distribution
to prospective purchasers of Contracts. Expenses for the printing and
distribution of such documents shall be borne by Insurance Company.
8.2 Insurance Company shall designate certain persons or entities that shall
have the requisite licenses to solicit applications for the sale of
Contracts.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to Fund
each piece of Insurance Company's sales literature or other promotional
material in which Fund, Fund Distributor or XXX or Fund's administrator is
named, at least ten (10) Business Days prior to its use. No such material
shall be used unless Fund and Fund Distributor or their respective
designees approve such material in writing. Such approval shall not be
unreasonably withheld.
8.4 Fund shall furnish, or shall cause to be furnished, to Insurance Company
each piece of Fund's or Fund Distributor's sales literature or other
promotional material in which Insurance Company or a Separate Account is
named, at least ten (10) Business Days prior to its use. No such material
shall be used unless Insurance Company approves such material in writing.
Such approval shall not be unreasonably withheld.
8.5 Insurance Company shall not give any information or make any
representations or statements on behalf of Fund, XXX or Fund Distributor
or concerning Fund or any Portfolio other than the information or
representations contained in a Portfolio Prospectus, periodic reports,
proxy statements or in sales literature or other promotional material
approved by Fund or Fund Distributor or their designees.
8.6 Fund, XXX and Fund Distributor and their affiliates and agents shall not
give any information or make any representations on behalf of Insurance
Company or concerning Insurance Company, a Separate Account, or the
Contracts other than the information or representations contained in a
Contract Prospectus, in published reports for each Separate Account that
are approved by Insurance Company for distribution to Contractholders or
Participants, or in sales literature or other promotional material
approved by Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for
use, in a newspaper, magazine or other periodical, radio, television,
telephone or tape recording, videotape display, signs or billboards,
motion pictures or other public media), sales literature (such as any
written communication distributed or made generally available to customers
or the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, or 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, prospectuses, SAIs,
shareholder reports and proxy materials, and any other material
constituting sales literature or advertising under the rules of the NASD,
the 1940 Act or the 1933 Act.
11
ARTICLE IX.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless Fund, XXX and Fund
Distributor and each of their respective directors, trustees, general
members, officers, employees, agents and each person, if any, who controls
Fund, XXX or Fund Distributor within the meaning of the 1940 Act
(collectively, the "Indemnified Parties" for purposes of this Section
9.1), against any and all losses, claims, damages or liabilities, joint or
several (including any reasonable investigative, legal and other expenses
reasonably incurred in connection with or any amounts paid in settlement
of, any action, suit or proceeding or any claim asserted and any income
taxes, penalties or toll charges) (collectively, "Losses") for which the
Indemnified Parties may become subject insofar as such Losses (or actions
in respect thereof):
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement, Contract Prospectus, Contract or sales literature or
other promotional material relating to a Separate Account or the
Contracts (collectively, "Account documents") or arise out of or are
based upon the omission or the alleged omission to state in any
Account documents a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that Insurance Company shall not be liable in any such case
to the extent that any such Loss arises out of or is based upon any
such materially untrue statement or material omission, or alleged
materially untrue statement or alleged material omission, made in
any Account document which materially untrue statement or material
omission, or alleged materially untrue statement or alleged material
omission, was made in reliance upon and in conformity with written
information furnished by or on behalf of such Indemnified Party
specifically for use therein or otherwise for use in connection with
the sale of the Contracts or Portfolio shares;
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement, Portfolio Prospectus or sales literature or other
promotional material relating to Fund or a Portfolio (collectively,
"Portfolio documents") or arise out of or are based upon the
omission or the alleged omission to state in any Portfolio documents
a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they
were made, not misleading, provided such materially untrue statement
or material omission, or alleged materially untrue statement or
alleged material omission, was made in reliance upon and in
conformity with written information furnished to Fund or Fund
Distributor by or on behalf of Insurance Company specifically for
use therein;
(c) arise out of or as a result of statements or representations (other
than statements or representations contained in any Portfolio
document not made in reliance upon and in conformity with
information furnished to Fund or Fund Distributor by or on behalf of
Insurance Company specifically for use therein and on which
Insurance Company has reasonably relied) or wrongful conduct of
Insurance Company or its respective agents and persons under its
control with respect to the sale and distribution of Contracts or
Portfolio shares;
(d) arise out of any material breach of any representation, warranty
and/or covenant made by Insurance Company in this Agreement, or
arise out of or result from any other material breach of this
Agreement by Insurance Company; or
12
(e) arise out of or are related to any tax liability under Section 851
of the Code arising from purchases or redemptions by the General
Account or the accounts of Insurance Company's affiliates.
9.2 Fund, XXX and Fund Distributor each agree, separately and not jointly, to
indemnify and hold harmless Insurance Company and each of its directors,
trustees, general members, officers, employees, agents and each person, if
any, who controls Insurance Company within the meaning of the 1940 Act
(collectively, the "Indemnified Parties" for purposes of this Section
9.2), against any and all Losses for which Indemnified Parties may become
subject insofar as such Losses (or actions in respect thereof):
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Portfolio
documents or arise out of or are based upon the omission or the
alleged omission to state in any Portfolio documents a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that neither Fund, XXX nor Fund
Distributor shall be liable in any such case to the extent that any
such Loss arises out of or is based upon any such materially untrue
statement or material omission, or alleged materially untrue
statement or alleged material omission, made in any Portfolio
document which materially untrue statement or material omission, or
alleged materially untrue statement or alleged material omission,
was made in reliance upon and in conformity with information
furnished by or on behalf of such Indemnified Party specifically for
use therein or otherwise for use in connection with the sale of the
Contracts or Portfolio shares;
(b) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in Account documents
or arise out of or are based upon the omission or the alleged
omission to state in any Account documents a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading,
provided such materially untrue statement or material omission, or
alleged materially untrue statement or alleged material omission,
was made in reliance upon and in conformity with written information
furnished to Insurance Company by or on behalf of Fund, XXX or Fund
Distributor specifically for use therein;
(c) arise out of or as a result of statements or representations (other
than statements or representations contained in any Account document
not made in reliance upon and in conformity with information
furnished to Insurance Company by or on behalf of Fund, XXX or Fund
Distributor specifically for use therein and on which Fund, XXX or
Fund Distributor have reasonably relied) or wrongful conduct of
Fund, XXX or Fund Distributor or their respective agents and persons
under their respective control with respect to the sale and
distribution of Contracts or Portfolio shares;
(d) arise out of any material breach of any representation, warranty
and/or covenant made by Fund, XXX or Fund Distributor in this
Agreement, or arise out of or result from any other material breach
of this Agreement by Fund, XXX or Fund Distributor; or
(e) arise out of incorrect or untimely calculation and/or reporting of a
Portfolio's daily net asset value, dividend rate or capital gain
distribution rate of a Portfolio, provided that Losses arising out
of incorrect calculation of daily net asset value shall be
determined in accordance with paragraph 7 of Schedule 2.
13
9.3 In no event shall any Party be liable for any consequential, incidental,
special or indirect damages.
9.4 (a) Promptly after receipt by a Party that may be entitled to
indemnification under this Article ("Indemnified Party" for purposes
of this Section) of notice of the commencement of any action which
may result in Losses, such Indemnified Party shall, if a claim in
respect thereof is to be made against the indemnifying party under
this Article ("Indemnifying Party" for purposes of this Section),
notify Indemnifying Party of the commencement thereof. The failure
to so notify shall not relieve Indemnifying Party from any liability
under this Article IX, except to the extent that Indemnifying Party
is damaged as a result of the failure to give such notice. If
Indemnified Party notifies Indemnifying Party of the commencement of
any such action, Indemnifying Party shall be entitled to participate
therein and, to the extent that it may wish, assume the defense
thereof, with counsel reasonably satisfactory to Indemnified Party,
and to the extent that Indemnifying Party has given notice to such
effect and is performing its obligations under this Article,
Indemnifying Party shall not be liable for any legal or other
expenses subsequently incurred by Indemnified Party in connection
with the defense thereof, other than reasonable costs of
investigation. Notwithstanding the foregoing, in any such
proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at
its expense unless (a) Indemnifying Party and Indemnified Party
shall have mutually agreed to the retention of such counsel or (b)
the named parties to any such proceeding (including any impleaded
parties) include both Indemnifying Party and Indemnified Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. Indemnifying Party shall not be liable for any settlement of
any proceeding effected without its written consent.
(b) No Party shall be liable under any of the foregoing indemnification
provisions with respect to any Losses or litigation to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement.
9.6 A successor by law of any Party to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article IX.
ARTICLE X.
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date first written above and
shall continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty as to one or more
Portfolios:
(a) at any time from the date hereof upon ninety (90) days' written
notice to the other Parties;
(b) at the option of Insurance Company if it determines that shares of
any Portfolio are not reasonably available to meet the requirements
of the Contracts; Insurance Company shall furnish prompt written
notice of election to terminate and termination shall be effective
upon receipt of written notice by the other Parties;
14
(c) at the option of any Party other than Fund, in the event that (i)
the Portfolio ceases, after the passage of any applicable grace
period, to qualify as a regulated investment company under
Subchapter M of the Code or any successor provision or fails to
comply with the diversification requirements of Section 817(h) of
the Code specified in Section 2.5 of this Agreement, or if such
terminating Party reasonably believes that the Portfolio may fail to
so qualify or comply or (ii) the Portfolio's shares are not
registered, issued or sold in accordance with applicable federal
law, or such law precludes the use of such shares as the underlying
investment medium of Contracts issued or to be issued by Insurance
Company; notice of termination shall be delivered by the terminating
Party to all other Parties and shall specify the effective date of
termination, which shall in no event be earlier than when all of
such notices shall have been received by all other Parties;
(d) at the option of Insurance Company upon the institution of formal
proceedings against Fund or Fund Distributor or their respective
affiliates by the Commission or the NASD or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in Insurance Company's reasonable judgment, materially
impair the other's ability to meet and perform its obligations and
duties hereunder; prompt written notice of election to terminate
shall be furnished with termination to be effective as specified
therein;
(e) at the option of Fund upon the institution of formal proceedings
against Insurance Company or its affiliates by the Commission, the
NASD or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in Fund's reasonable
judgment, materially impair the other's ability to meet and perform
its obligations and duties hereunder; prompt written notice of
election to terminate shall be furnished with termination to be
effective as specified therein;
(f) upon termination of the Investment Management Agreement (the
"Management Agreement") between Fund, on behalf of its Portfolios,
and XXX or its successors unless Insurance Company specifically
approves the selection of a new investment adviser for the
Portfolios; notice of termination shall be delivered by the
terminating Party to all other Parties and shall specify the
effective date of termination, which shall in no event be more than
180 days after such notices shall have been received by all other
Parties; Fund shall promptly furnish notice of termination of the
Management Agreement to each other Party;
(g) at the option of any Party, 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 day shall be the
effective date of termination;
(h) at the option of Fund upon a determination by the Board in good
faith and in light of its fiduciary duties to the Portfolios'
shareholders (including, without limitation, Insurance
15
Company and the Separate Accounts) under federal and any applicable
state laws that it is no longer advisable and in the best interests
of shareholders for Fund to continue to operate pursuant to this
Agreement; notice of termination shall be delivered by Fund to all
other Parties and shall specify the effective date of termination,
which shall in no event be earlier than when all of such notices
shall have been received by all other Parties;
(i) at the option of Insurance Company, upon any substitution of the
shares of another investment company or series thereof for shares of
Fund in accordance with the terms of the Contracts, provided that
Insurance Company has given at least forty-five (45) days prior
written notice to Fund and Fund Distributor of the date of
substitution;
(j) at the option of any Party, upon another's breach of any material
representation, warranty or other provision of this Agreement;
notice of termination shall be delivered by the terminating Party to
all other Parties and shall be effective thirty (30) days after the
notice has been receive by all other Parties, but only if the
breaching Party shall not have cured the breach, in all material
respects, by the end of that thirty (30) day period specify the
effective date of termination, which shall in no event be earlier
than when all of such notices shall have been received by all other
Parties; or
(k) upon assignment (as defined in the 0000 Xxx) of this Agreement,
unless made with the written consent of the non-assigning Parties.
Any such termination pursuant to this Article X shall not affect the
operation of Articles V or IX of this Agreement, and such expense and
indemnification provisions shall survive any termination of this
Agreement. The Parties agree that any termination pursuant to Article VI
shall be governed by that Article.
10.3 Notwithstanding any termination of this Agreement, Fund and Fund
Distributor shall, at the option of Insurance Company, continue to make
available additional Portfolio shares for so long as Insurance Company
desires pursuant to the terms and conditions of this Agreement as provided
below, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as the "Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts or
Insurance Company, whichever shall have legal authority to do so, shall be
permitted to reallocate investments among the Portfolios, redeem
investments in the Portfolios and/or invest in the Portfolios upon the
making of additional purchase payments under the Existing Contracts. If
Portfolio shares continue to be made available after such termination, the
provisions of this Agreement as to such Portfolio(s) shall remain in
effect and thereafter either Fund or Insurance Company may terminate the
Agreement, as so continued pursuant to this Section 10.3, upon prior
written notice to the other Parties, such notice to be for a period that
is reasonable under the circumstances but, if given by Fund, need not be
for more than six months.
10.4 In the event of any termination of this Agreement, 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 a
Separate Account owns no shares of a Portfolio beyond six months from the
date of termination. Such steps may include, without limitation,
substituting other investment company shares for those of the affected
Portfolio.
16
ARTICLE XI.
AMENDMENTS
11.1 Any changes in the terms of this Agreement shall be made by agreement in
writing by the Parties hereto, except as otherwise specified herein. The
Parties shall, from time to time, review this Agreement to determine the
extent to which an amendment thereto may be necessary or appropriate to
reflect changes in applicable law or regulation, and shall cooperate in
implementing any such amendment in a timely manner, it being understood
and agreed to that no such amendment shall take effect except upon mutual
written agreement of all Parties as stated above.
ARTICLE XII.
NOTICE
12.1 Each notice required by this Agreement shall be given by certified mail,
return receipt requested, to the appropriate Parties at the following
addresses:
Insurance Company: New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
with a copy to: New York Life Insurance and Annuity Corporation
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: the Office of General Counsel
Fund: Lazard Retirement Series, Inc.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx
with a copy to: Stroock & Stroock & Xxxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
XXX: Lazard Asset Management LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Fund Distributor: Lazard Asset Management Securities LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Notice shall be deemed to be given on the date of receipt by the addresses
as evidenced by the return receipt.
17
ARTICLE XIII.
MISCELLANEOUS
13.1 If any provision of this Agreement is held or made invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement
will not be affected thereby.
13.2 The rights, remedies, indemnities and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies, indemnities and obligations, at law or in equity, to which the
Parties are entitled.
13.3 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
ARTICLE XIV.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws of
the State of New York, without giving effect to principles of conflict of
laws.
IN WITNESS WHEREOF, this Agreement has been executed and attested on behalf of
the Parties as of the date first above written.
18
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION, on its behalf and each
Separate Account named on Schedule 1, as
may be amended from time to time
By:___________________________
Attest:_____________________
LAZARD RETIREMENT SERIES, INC.
By:___________________________
Attest:_____________________
LAZARD ASSET MANAGEMENT LLC
By:___________________________
Attest:______________________
Lazard ASSET MANAGEMENT SECURITIES LLC
By:___________________________
Attest:______________________
19
SCHEDULE 1
Portfolios
Lazard Retirement International Equity Portfolio
Separate Accounts and Contracts
Separate Account: NYLIAC Corporate Sponsored Variable Universal Life
Separate Account - I
Contracts: CorpExec VUL: Corporate Executive Series Variable Universal
Life
SCHEDULE 2
PORTFOLIO SHARE ORDER PROCESSING
PRICING
1. (a) Each Business Day, Fund shall use its best efforts to make each
Portfolio's closing net asset value per share ("NAV") available to
Insurance Company by 6:30 p.m. Eastern time on such Business Day.
(b) If on any given Business Day Fund is unable to make the applicable NAV
available to Insurance Company until after 7:00 p.m., Fund shall provide
additional time for Insurance Company to place orders for the purchase and
redemption of shares equal to the additional time (measured from 7:00
p.m.) it takes Fund to make that Business Day's NAVs available to
Insurance Company. So long as Insurance Company submits its purchase or
redemption orders within the additional time provided, Fund shall treat
such orders as though received on the Business Day to which such NAV
relates for purposes of receiving that Business Day's NAV.
2. At the end of each Business Day, Insurance Company shall use the
information described above to calculate each Separate Account's unit
values. Using this unit value, Insurance Company shall process that
Business Day's Contract and Separate Account transactions to determine the
net dollar amount of each Portfolio's shares to be purchased or redeemed.
3. Fund hereby appoints Insurance Company as its agent for the limited
purpose of receiving orders for the purchase and redemption of Portfolio
shares for the Separate Accounts. Orders that Insurance Company receives
from Contractholders by the close of regular trading (the "Close of
Trading") on the New York Stock Exchange (the "NYSE") (usually 4:00 p.m.
Eastern time) on each Business Day shall be treated by Fund and Insurance
Company as though received on that Business Day (the "effective trade
date") for purposes of receiving that Business Day's NAV. Orders that
Insurance Company receives after the Close of Trading on any given
Business Day shall be treated by Fund and Insurance Company as received on
the next Business Day and shall receive that Business Day's NAV. All
orders are subject to acceptance or rejection in the sole discretion of
Fund Distributor or Fund or its agent, and orders shall be effective only
upon receipt in proper form.
4. (a) Insurance Company shall transmit net purchase or redemption orders to
Fund or its designee by 9:30 a.m. Eastern time on the Business Day next
following the effective trade date (or such later time as may be provided
for in paragraph 1(b) above).
(b) For informational purposes only, Insurance Company shall separately
describe the amount of shares of each Portfolio that are being purchased,
redeemed, or exchanged from one Portfolio to the other. Insurance Company
shall transmit information each Business Day whether or not any Portfolio
shares are to be purchased or redeemed. In addition, Insurance Company
shall use its best efforts to notify Fund in advance of any unusually
large purchase or redemption orders.
5. Fund shall execute purchase and redemption orders for a Portfolio's shares
that relate to Insurance Company's General Account, or that do not relate
to Contract transactions, at that Portfolio's NAV next determined after
Fund (not Insurance Company) receives the order and any related purchase
payments. Fund shall execute purchase or redemption orders for a
Portfolio's shares on
A-1
behalf of the Separate Accounts that do not satisfy the conditions
specified in this Schedule at the Portfolio's NAV next determined after
such conditions have been satisfied.
6. Fund shall execute purchase and redemption orders for a Portfolio's shares
that relate to Contracts funded by Separate Accounts either registered
under the 1940 Act or not so registered in the same manner, but only to
the extent that Insurance Company represents and warrants that it is
legally or contractually obligated to treat such orders in the same
manner. Each order for Portfolio shares placed by Insurance Company that
is attributable, in whole or in part, to Contracts funded by an
unregistered Separate Account shall be deemed to constitute such
representation and warranty by Insurance Company unless the order
specifically states to the contrary. Otherwise, Fund shall treat orders
attributable to unregistered Separate Account Contracts in the same manner
as orders for the General Account.
7. (a) An error in the computation of a Portfolio's NAV or any dividend or
capital gain distribution shall be referred to herein as a "pricing
error". In the event of a pricing error described in (ii) or (iii) below,
Fund or XXX shall immediately notify Insurance Company as soon as possible
after discovery of the error. Such notification may be verbal, but shall
be confirmed promptly in writing in accordance with Article XII of this
Agreement. A pricing error shall, at a minimum, be corrected as follows:
(i) 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; (ii) 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 Portfolio's NAV at the
time of the error, then XXX shall reimburse or cause the responsible party
to reimburse the Portfolio for any loss, after taking into consideration
any positive effect of such error; however, no adjustments to
Contractholder accounts need be made; and (iii) 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 Portfolio's NAV at the time of
the error, then
(A) XXX shall reimburse or cause the responsible party to
reimburse the Portfolio for any loss (without taking into
consideration any positive effect of such error), and
(B) if (I) any loss to a Contractholder resulting from the pricing
error equals or exceeds $25, or (II) XXX arranges for
reimbursement of Contractholders of any other Participating
Company, XXX shall reimburse Insurance Company for reasonable
administrative and/or systems costs of adjustments made to
correct Contractholder accounts pursuant to this provision
(iii) of this paragraph 7(a) of Schedule 2.
For any Portfolio that is a 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 (iii) above, if an adjustment to a
Contractholder account is necessary to correct a material error which has
caused Contractholders to receive less than the amount to which they are
entitled, the number of shares of the appropriate Portfolio(s)
attributable to the accounts of the Contractholders will be adjusted and
the amount of any underpayments shall be credited by XXX to Insurance
Company for crediting of such amounts to the applicable Contractholders
accounts. Upon notification by XXX of any overpayment due to a material
error, Insurance Company shall promptly remit to XXX any overpayment that
has not been paid to Contractholders; however, XXX acknowledges that
Insurance Company does not intend to seek additional payments from any
Contractholder who, because of a pricing error, may have underpaid for
units of interest credited to his/her account. In no event shall Insurance
Company be liable to Contractholders for any such adjustments or
underpayment amounts.
A-2
(b) The standards set forth in this paragraph 7 of Schedule 2 are based on
the Parties' understanding of the views expressed by the staff of the
Commission as of the date of this Agreement. In the event the views of the
Commission staff are later modified or superseded by Commission 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.
PAYMENT
8. (a) Insurance Company shall pay for any net purchase order by wiring
federal funds to Fund or its designated custodial account by 4:00 p.m.
Eastern time on the same Business Day it transmits the order to Fund. Upon
receipt by Fund of the federal funds so wired, such funds shall cease to
be the responsibility of Insurance Company. If Fund does not receive such
payment by 4:00 p.m. Eastern time on a given Business Day, Insurance
Company shall promptly, upon Fund's request, reimburse Fund for any
charges, costs, fees, interest or other expenses incurred by Fund in
connection with any advances to, or borrowings or overdrafts by, Fund, or
any similar expenses (collectively, "advance transaction expenses")
incurred by Fund, as a result of portfolio transactions effected by Fund
based upon such purchase request, but only to the extent such advance
transaction expenses result from Insurance Company's failure to wire
federal funds to Fund or its designated custodial account by 4:00 p.m.
Eastern time on the same Business Day it transmits such purchase request
to Fund.
(b) If Fund is unable to make a Portfolio's NAV available to Insurance
Company until after 12:00 p.m. on the Business Day next following the
Business Day to which such NAV relates, Fund shall provide additional time
for Insurance Company to wire federal funds equal to the additional time
(measured from 12:00 p.m.) it takes Fund to make the NAV available to
Insurance Company. If the Insurance Company wires federal funds within the
time afforded by any such extension, Insurance Company shall not be
required to reimburse Fund for any advance transaction expenses.
9. If the dollar amount of federal funds wired to Fund pursuant to paragraph
8 above is inconsistent with any corresponding purchase order placed by
Insurance Company pursuant to paragraph 4 above ("order discrepancy"),
Fund or its agent shall immediately notify Insurance Company of the order
discrepancy and Insurance Company shall either wire additional federal
funds within the time frame provided in paragraph 8, or shall inform Fund
to rely on the dollar amount of federal funds wired. If Fund or its agent
is not able to contact Insurance Company by 4:00 p.m. Eastern time that
Business Day, Fund shall be entitled to rely on the dollar amount of
federal funds wired in determining the appropriate number of shares of the
Portfolio(s) to credit to Insurance Company and its Separate Account. In
the event of an order discrepancy, Insurance Company shall reimburse Fund
for any advance transaction expenses incurred by Fund in connection with
any advances to, or borrowings or overdrafts by, Fund, or any similar
expenses incurred by Fund, as a result of portfolio transactions effected
by Fund based upon the placement of such purchase orders, but only to the
extent such expenses result from the order discrepancy, and only until
such portfolio transaction is cancelled or reversed. Fund shall use
reasonable efforts to effect such cancellation or reversal as soon as
practical after the earlier of (a) Insurance Company informing Fund to
rely on the dollar amount of federal funds wired or (b) 4:00 p.m. Eastern
time that Business Day, but in any event, Fund shall cancel or reverse
such portfolio transaction no later than 12:00 p.m. Eastern time on the
Business Day following the order discrepancy. If Fund does not cancel or
reverse such portfolio transaction by 12:00 p.m. Eastern time on such
Business Day, Insurance Company shall only be liable for such advance
transaction expenses through 12:00 p.m. Eastern time on such Business Day.
A-3
10. Fund shall pay for any net redemption order by wiring the redemption
proceeds to Insurance Company, except as provided below, on the same
Business Day after Insurance Company transmits such order to Fund or, upon
notice to Insurance Company, such longer period as permitted by the 1940
Act or the rules, orders or regulations thereunder; provided, however,
that in no event may any delay by Fund in paying redemption proceeds cause
Insurance Company or any Separate Account to fail to meet its obligations
under Section 22(e) of the 1940 Act so long as Insurance Company had
complied with paragraph 4(a) of this Schedule 2 in connection with such
order. Payment shall be in federal funds transmitted to Insurance Company
or its designee by wire to an account designated by Insurance Company.
Upon receipt by Insurance Company of the federal funds so wired, such
funds shall cease to be the responsibility of Fund. In the case of any net
redemption order requesting the application of proceeds from the
redemption of one Portfolio's shares to the purchase of another
Portfolio's shares, Fund shall so apply such proceeds the same Business
Day that Insurance Company transmits such order to Fund.
A-4
Schedule 3
DIVISION OF FILINGS AND DISTRIBUTIONS OF MATERIALS; COST ALLOCATIONS
Insurance Company Fund
----------------- ----
Preparing and filing the Separate Account Preparing and filing Fund registration statement.
registration statements.
Text composition and alterations for the Text composition and alterations for Portfolio
Contract Prospectuses. Prospectuses, including versions of these
documents to accommodate various combinations of
Portfolios offered under Contract Prospectuses.
Printing of Portfolio Prospectuses for Supplying typeset, camera and/or web-ready
prospective Contractholders. Printing Portfolio Prospectuses. Printing of Portfolio
Contract Prospectuses. Prospectuses, SAIs for existing Contractholders
that invest in Portfolios.
Mailing and distributing Portfolio All or the Portfolios' pro-rata portion (if
Prospectuses to prospective combined with documents of other funds) of
Contractholders. Mailing and distributing mailing and distributing Portfolio Prospectuses
Contract Prospectuses to prospective and to existing Contractholders. (SAIs are
existing Contractholders. (SAIs are distributed only upon request of the
distributed only upon request of the Contractholder.)
Contractholder.)
Text composition and alterations of the Text composition and alterations of periodic
Separate Account portion of the periodic reports for Fund and other communications to
reports to Contractholders to whom shareholders.
Portfolio shares are attributable.
Printing, mailing and distributing All or the Portfolios' pro-rata portion (if
periodic reports for Fund to prospective combined with documents of other funds) of
Contractholders (distributed only upon printing, mailing and distributing periodic
request of Contractholder at Insurance reports for Fund and communications to
Company's discretion). shareholders to existing Contractholders that
invest in Fund.
Text composition and alterations of proxy Text composition and alterations of Portfolio
statements related to the Separate proxy statements and voting instructions
Account(s). solicitation materials to Contractholders with
respect to proxies related to the Portfolios.
Supplying typeset, camera and/or web-ready
Portfolio proxy statements and voting
instructions solicitation materials, periodic
reports and other communications to shareholders.
Printing, mailing, distributing and Printing, mailing, distributing and tabulation of
tabulation of proxy statements and voting proxy statements and voting instruction
instruction solicitation materials to solicitation materials to Contractholders with
Contractholders with respect to proxies respect to proxies related to the Portfolios.
related to the Separate Account(s).
Preparation, printing and distributing
sales material and advertising related to
Fund and contained in Separate Account
advertising and sales materials; and
filing such materials with and obtaining
approval from, the Commission, the NASD,
any state insurance regulatory authority
and any other appropriate regulatory
authority, to the extent required.
A-1
