FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the ___ day of ___________, 2002 by and
between NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. (the "Fund"), a Maryland
Corporation, NAVELLIER & ASSOCIATES, INC. (the "Adviser"), a Nevada corporation,
and THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK (the "Life Company"), a life
insurance company organized under the laws of the State of New York.
WHEREAS, the Fund is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"'40 Act"), as an open-end, diversified management investment company; and
WHEREAS, the Fund is organized as a series fund comprised of several
Portfolios ("Portfolios") to act as the funding vehicle for certain variable
life insurance and/or variable annuity contracts ("Variable Contracts") offered
by life insurance companies through separate accounts ("Separate Accounts") of
such life insurance companies ("Participating Insurance Companies"); and
WHEREAS, the Fund may also offer its shares to certain qualified
pension and retirement plans ("Qualified Plans"); and
WHEREAS, the Fund has obtained an order from the SEC dated January 26,
1999 (File No. 812-11370), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the '40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Portfolios of the Fund to be
sold to and held by Variable Contract separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and Qualified Plans ("Exemptive
Order"); and
WHEREAS, the Life Company has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having the Fund as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, the Adviser is registered with the SEC as an investment
Adviser under the Investment Advisers Act of 1940 and acts as the Fund's
investment Adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Life Company intends to purchase shares of the Fund to fund the
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aforementioned Variable Contracts and the Fund is authorized to sell such shares
to the Life Company at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Life
Company, the Fund, and the Adviser agree as follows:
Article I. SALE OF THE FUND SHARES
1.1 The Fund agrees to make available to the Separate Accounts of the
Life Company shares of the selected Portfolios as listed on Schedule A for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in the Fund's Prospectus and Statement
of Additional Information. For purposes of this Section 1.1, the Life Company
shall be the designee of the Fund for receipt of such orders from each Separate
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:00 a.m. Eastern time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Fund calculates
the net asset value pursuant to the rules of the SEC, as set forth in the Fund's
Prospectus and Statement of Additional Information. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to permit the Fund to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.2. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their Separate Accounts and to certain
Qualified Plans all in accordance with the requirements of Section 817(h)(4) of
the Internal Revenue Code of 1986, as amended ( the "Code") and Treasury
Regulation 1.817-5. No shares of any Portfolio will be sold to the general
public.
1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 2.6, 6.1, 6.2 and Article VII of this
Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Life Company's request,
any full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.4, the Life
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Company shall be the designee of the Fund for receipt of requests for
redemption from each Separate Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of
such request for redemption on the next following Business Day in accordance
with the timing rules described in Section 1.1.
1.5. The Life Company agrees that purchases and redemptions of
Portfolio shares offered by the then current prospectus of the Fund shall be
made in accordance with the provisions of such prospectus. The Separate Accounts
of the Life Company, under which amounts may be invested in the Fund, are listed
on Schedule A attached hereto and incorporated herein by reference, as such
Schedule A may be amended from time to time by mutual written agreement of all
of the parties hereto. The Life Company will give the Fund and the Adviser sixty
(60) days written notice of its intention to make available in the future, as a
funding vehicle under the Variable Contracts, any other investment company.
1.6. The Life Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of shares and
dollar amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Life Company shall pay for Portfolio shares on the next Business
Day after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall pay the redemption
proceeds in federal funds transmitted by wire on the next Business Day after an
order to redeem a Portfolio's shares is made in accordance with the provision of
Section 1.4 hereof. Notwithstanding the foregoing, if the payment of redemption
proceeds on the next Business Day would require the Portfolio to dispose of
securities or otherwise incur substantial additional costs, and if the Portfolio
has determined to settle redemption transactions for all shareholders on a
delayed basis, proceeds shall be wired to the Life Company within seven (7) days
and the Portfolio shall notify in writing the person designated by the Life
Company as the recipient for such notice of such delay by 3:00 p.m. Eastern time
on the same Business Day that the Life Company transmits the redemption order to
the Portfolio.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Life Company or any Separate
Account. Shares ordered from the Fund will be recorded in an appropriate title
for each Separate Account or the appropriate subaccount of each Separate
Account.
1.8. The Fund shall make the dividends or capital gain distributions
payable on the Fund's shares available to the Life Company as soon as reasonably
practical after the dividends or capital gains are calculated (normally by 6:30
p.m. Eastern time) and
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shall use its best efforts to furnish same day notice by 7:00 p.m. Eastern
time (by wire or telephone, followed by written confirmation) to the Life
Company of any dividends or capital gain distributions payable on the Fund's
shares. The Life Company hereby elects to receive all such dividends and
capital gain distributions as are payable on the Portfolio shares in
additional shares of that Portfolio. The Life Company reserves the right to
revoke this election and to receive all such dividends and capital gain
distributions in cash. The Fund shall notify the Life Company of the number
of shares so issued as payment of such dividends and distributions.
1.9. The Fund shall make the net asset value per share for each
Portfolio available to the Life Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by 6:30
p.m. Eastern time) and shall use its best efforts to make such net asset value
per share available by 7:00 p.m. Eastern time. In the event that the Fund is
unable to meet the 7:00 p.m. time stated immediately above, then the Fund shall
provide the Life Company with additional time to notify the Fund of purchase or
redemption orders pursuant to Sections 1.1 and 1.4, respectively, above. Such
additional time shall be equal to the additional time that the Fund takes to
make the net asset values available to the Life Company; provided, however, that
notification must be made by 10:15 a.m. Eastern time on the Business Day such
order is to be executed regardless of when the net asset value is made
available.
1.10. If the Fund provides materially incorrect share net asset value
information through no fault of the Life Company, the Life Company shall be
entitled to an adjustment with respect to the Fund shares purchased or redeemed
to reflect the correct net asset value per share. The determination of the
materiality of any net asset value pricing error shall be based on the SEC's
recommended guidelines regarding such errors. The correction of any such errors
shall be made at the Life Company level and shall be made pursuant to the SEC's
recommended guidelines. Any material error in the calculation or reporting of
net asset value per share, dividend or capital gain information shall be
reported promptly upon discovery to the Life Company.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 The Life Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of New York and that
it has legally and validly established each Separate Account as a segregated
asset account under such laws, and that Inviva Securities Corporation, the
principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "'34 Act").
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2.2 The Life Company represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 The Life Company represents and warrants that the Variable
Contracts will be registered under the Securities Act of 1933 (the "'33 Act")
unless an exemption from registration is available prior to any issuance or sale
of the Variable Contracts and that the Variable Contracts will be issued and
sold in compliance in all material respects with all applicable federal and
state laws and further that the sale of the Variable Contracts shall comply in
all material respects with applicable state insurance law suitability
requirements.
2.4 The Life Company represents and warrants that each Separate Account
is and will continue to be a "segregated account" under applicable provisions of
the Code and that the Variable Contracts are currently and at the time of
issuance will be treated as life insurance, endowment or annuity contracts under
applicable provisions of the Code, that it will maintain such treatment and that
it will notify the Fund immediately upon having a reasonable basis for believing
that the Variable Contracts have ceased to be so treated or that they might not
be so treated in the future.
2.5 The Life Company represents and warrants that it has reserved the
right to suspend or limit the rights of Variable Contract owners to transfer
Contract values between Portfolios. The Life Company will not waive such right
without prior notice to the Fund. The Life Company agrees that it will consult
with the Fund at the Fund's request from time to time on problems arising from
frequent or rapid transfer among Portfolios and that the Life Company will
impose reasonable restrictions on transferees to or from the Portfolios as
reasonably requested by the Fund.
2.6 The Life Company represents and warrants that all of its trustees,
officers, employees, investment adviser, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount equal to the greater of $5 million or any
amount required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement issued by a reputable bonding
company. The Life Company agrees to make all reasonable efforts to see that this
bond or another bond containing these provisions is always in effect and agrees
to notify the Fund and the Underwriter in the event that such coverage no longer
applies.
2.7 The Fund represents and warrants that the Fund shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance
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with all applicable federal and state laws, and the Fund shall be registered
under the '40 Act prior to and at the time of any issuance or sale of such
shares. The Fund, subject to Section 1.9 above, shall amend its registration
statement under the '33 Act and the '40 Act from time to time as required in
order to effect the continuous offering of its shares. The Fund shall
register and qualify its shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by the Fund.
2.8 The Fund represents and warrants that each Portfolio will comply
with the diversification requirements set forth in Section 817(h) of the Code,
and the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the Life Company immediately upon 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 to achieve compliance.
2.9 The Fund represents and warrants that each Portfolio invested in by
the Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify the Life Company immediately upon
having a reasonable basis for believing it has ceased to so qualify or might not
so qualify in the future.
2.10 The Adviser represents and warrants that it is and will remain
duly registered and licensed in all material respects under all applicable
federal and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 The Fund shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Fund.
The Fund shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 The Fund or its designee shall provide the Life Company with copies
in pdf format of the current prospectus, prospectus supplements, statement of
additional information, Fund proxy materials and annual and semi-annual reports
for the shares of the Portfolio's which are invested in by the Variable
Contracts. The Life Company shall bear the costs of printing (if necessary) and
distributing proxy materials (or similar materials such as voting solicitation
instructions), prospectuses, prospectus supplements, statements of additional
information and annual and semi-annual reports
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to Variable Contract owners in accordance with applicable federal and state
securities laws.
3.3 The Fund will provide the Life Company with at least one complete
copy of all prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, exemptive applications and all amendments
or supplements to any of the above that relate to the Portfolios promptly after
the filing of each such document with the SEC or other regulatory authority. The
Life Company will provide the Fund with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly after
the filing of each such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 The Life Company will furnish, or will cause to be furnished, to
the Fund and the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if the
Fund or the Adviser objects to its use in writing within ten (10) Business Days
after receipt of such material.
4.2 The Fund and the Adviser will furnish, or will cause to be
furnished, to the Life Company, each piece of sales literature or other
promotional material in which the Life Company or its Separate Accounts are
named, at least fifteen (15) Business Days prior to its intended use. No such
material will be used if the Life Company objects to its use in writing within
ten (10) Business Days after receipt of such material.
4.3 The Fund and its affiliates and agents shall not give any
information or make any representations on behalf of the Life Company or
concerning the Life Company, the Separate Accounts, or the Variable Contracts
issued by the Life Company, other than the information or representations
contained in a registration statement or prospectus for such Variable Contracts,
as such registration statement and prospectus may be amended or supplemented
from time to time, or in reports of the Separate Accounts or reports prepared
for distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the Life Company or its designee, except
with the written permission of the Life Company.
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4.4 The Life Company and its affiliates and agents shall not give any
information or make any representations on behalf of the Fund or concerning the
Fund other than the information or representations contained in a registration
statement or prospectus for the Fund, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by the Fund or its designee,
except with the written permission of the Fund.
4.5 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, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers, Inc.
("NASD") rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between and among the interests of Variable Contract
owners of all separate accounts and of plan participants and Qualified Plans
investing in the Fund and determine what actions, if any, shall be taken in
response to such conflicts. An irreconcilable material conflict may arise for a
variety of reasons, which may include: (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 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 the Fund are being
managed; (e) a difference in voting instructions given by Variable Contract
owners; (f) a decision by a Participating Insurance Company to disregard the
voting instructions of Variable Contract owners and (g) if applicable, a
decision by a Qualified Plan to disregard the voting instructions of plan
participants.
5.2 The Life Company will report any potential or existing conflicts to
the Board. The Life Company will be responsible for assisting the Board in
carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
The responsibility includes, but is not limited to,
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an obligation by the Life Company to inform the Board whenever it has
determined to disregard Variable Contract owner voting instructions. These
responsibilities of the Life Company will be carried out with a view only to
the interests of the Variable Contract owners.
5.3 If a majority of the Board or majority of its disinterested
Trustees, determines that a material irreconcilable conflict exists affecting
the Life Company, the Life Company, at its expense and to the extent
reasonably practicable (as determined by a majority of the Board's
disinterested Trustees), will take any steps necessary to remedy or eliminate
the irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from the Fund or any
Portfolio thereof and reinvesting those assets in a different investment
medium, which may include another Portfolio of the Fund, or another
investment company; (b) submitting the question as to whether such
segregation should be implemented to a vote of all affected Variable Contract
owners and as appropriate, segregating the assets of any appropriate group
(i.e variable annuity or variable life insurance Contract owners of one or
more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option
of making such a change; and (c) establishing a new registered management
investment company (or series thereof) or managed separate account. If a
material irreconcilable conflict arises because of the Life Company's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote,
the Life Company may be required, at the election of the Fund, to withdraw
the Separate Account's investment in the Fund, and no charge or penalty will
be imposed as a result of such withdrawal. The responsibility to take such
remedial action shall be carried out with a view only to the interests of the
Variable Contract owners.
For the purposes of this Section 5.3, a majority of the
disinterested members of the Board shall determine whether or not any
proposed action adequately remedies any irreconcilable material conflict but
in no event will the Fund or the Adviser (or any other investment Adviser of
the Fund) be required to establish a new funding medium for any Variable
Contract. Further, the Life Company shall not be required by this Section 5.3
to establish a new funding medium for any Variable Contracts if any offer to
do so has been declined by a vote of a majority of Variable Contract owners
materially and adversely affected by the irreconcilable material conflict.
5.4 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the Life Company.
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5.5 No less than annually, the Life Company shall submit to the
Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out its obligations. Such reports, materials,
and data shall be submitted more frequently if deemed appropriate by the
Board.
Article VI. VOTING
6.1 The Life Company will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the Life Company, where applicable, will vote shares of the
Portfolio held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Variable Contract owners. The Life Company
will be responsible for assuring that each of its Separate Accounts that
participates in the Fund calculates voting privileges in a manner consistent
with other Participating Insurance Companies. The Life Company will vote shares
for which it has not received timely voting instructions, as well as shares it
owns, in the same proportion as its votes those shares for which it has received
voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Exemptive
Order, then the Fund, and/or the Participating Insurance 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 VII. INDEMNIFICATION
7.1 Indemnification by the Life Company. The Life Company agrees to
indemnify and hold harmless the Fund, the Adviser and each of their directors,
principals, officers, employees and agents and each person, if any, who controls
the Fund or the Adviser within the meaning of Section 15 of the '33 Act
(collectively, for purposes of Sections 7.1, 7.2 and 7.3, the "Indemnified
Parties") against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Life Company, which
consent shall not be unreasonably withheld) or litigation (including reasonable
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or
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settlements are related to the sale or acquisition of the Fund's shares or
the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or prospectus for the Variable
Contracts or contained in the Variable Contracts (or any
amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Life Company by
or on behalf of the Fund for use in the registration statement
or prospectus for the Variable Contracts or in the Variable
Contracts or sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Variable Contracts or the Fund shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by the Life Company, or persons under its
control) or wrongful conduct of the Life Company or persons
under its control, with respect to the sale or distribution of
the Variable Contracts or the Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature of the Fund or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or on
behalf of the Life Company; or
(d) arise as a result of any failure by the Life Company to
provide substantially the services and furnish the materials
under the terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Life Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Life Company.
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7.2 The Life Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
7.3 The Life Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Life Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Life Company of
any such claim shall not relieve the Life Company from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against an Indemnified Party, the Life Company shall be entitled to
participate at its own expense in the defense of such action. The Life Company
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Life Company to such
party of the Life Company's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Life 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.
7.4 Indemnification by the Adviser. The Adviser agrees to indemnify and
hold harmless the Life Company and each of its directors, officers, employees,
and agents and each person, if any, who controls the Life Company within the
meaning of Section 15 of the '33 Act (collectively, for purposes of Sections
7.4, 7.5 and 7.6, the "Indemnified Parties") against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund which consent shall not be unreasonably withheld) or
litigation (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Fund (or any amendment or
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supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Adviser or the Fund by or on
behalf of the Life Company for use in the registration
statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable
Contracts or the Fund shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by the Adviser or the Fund or
persons under its control) or wrongful conduct of the Adviser
or persons under its control, with respect to the sale or
distribution of the Variable Contracts or the Fund shares; or
(c) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable
Contracts, or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Life Company for inclusion therein by or on behalf of the
Fund; or
(4) arise as a result of (i) a failure by the Fund or Adviser
to provide substantially the services and furnish the
materials under the terms of this Agreement; or (ii) a
failure by a Portfolio(s) invested in by the Separate
Account to comply with the diversification requirements
of Section 817(h) of the Code; or (iii) a failure by a
Portfolio(s) invested in by the Separate Account to
qualify as a "regulated investment company" under
Subchapter M of the Code; or
(5) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or
Adviser in this Agreement or arise out of or result from
any other material breach of this Agreement by the Fund
or Adviser.
7.5 The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would
13
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.
7.6 The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser shall be entitled to participate at
its own expense in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the Life Company or the Fund at any time from
the date hereof upon 180 days' notice, unless a shorter time
is agreed to by the parties;
(b) At the option of the Life Company, if the Fund shares are not
reasonably available to meet the requirements of the Variable
Contracts as determined by the Life Company. Prompt notice of
election to terminate shall be furnished by the Life Company,
said termination to be effective ten days after receipt of
notice unless the Fund makes available a sufficient number of
shares to reasonably meet the requirements of the Variable
Contracts within said ten-day period;
(c) At the option of the Life Company, upon the institution of
formal proceedings against the Fund by the SEC, the NASD, or
any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the Life Company's
reasonable judgment, materially impair the Fund's ability to
meet and perform the Fund's obligations and duties hereunder.
Prompt notice of election to
14
terminate shall be furnished by the Life Company with said
termination to be effective upon receipt of notice;
(d) At the option of the Fund, upon the institution of formal
proceedings against the Life Company by the SEC, the NASD, or
any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in the Fund's reasonable
judgment, materially impair the Life Company's ability to meet
and perform its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by the Fund
with said termination to be effective upon receipt of notice;
(e) In the event the Fund's shares are not registered, issued or
sold in accordance with applicable state or federal law, or
such law precludes the use of such shares as the underlying
investment medium of Variable Contracts issued or to be issued
by the Life Company. Termination shall be effective upon such
occurrence without notice;
(f) At the option of the Fund if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if the Fund reasonably believes
that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by the
Life Company;
(g) At the option of the Life Company, upon the Fund's breach of
any material provision of this Agreement, which breach has not
been cured to the satisfaction of the Life Company within ten
days after written notice of such breach is delivered to the
Fund;
(h) At the option of the Fund, upon the Life Company's breach of
any material provision of this Agreement, which breach has not
been cured to the satisfaction of the Fund within ten days
after written notice of such breach is delivered to the Life
Company;
(i) At the option of the Fund, if the Variable Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Termination shall be effective
immediately upon such occurrence without notice;
(j) In the event this Agreement is assigned without the prior
written consent of the Life Company, the Fund, and the
Adviser, termination shall be effective immediately upon such
occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, the Fund at its option may elect to continue to make
available the Fund shares, as provided
15
below, for so long as the Fund desires pursuant to the terms and conditions
of this Agreement, for all Variable Contracts in effect on the effective date
of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, if the Fund so elects to make
additional Fund shares available, the owners of the Existing Contracts or the
Life Company, whichever shall have legal authority to do so, shall be
permitted to reallocate investments in the Fund, redeem investments in the
Fund and/or invest in the Fund upon the payment of additional premiums under
the Existing Contracts. In the event of a termination of this Agreement
pursuant to Section 8.2 hereof, the Fund and the Adviser, as promptly as is
practicable under the circumstances, shall notify the Life Company whether
the Fund elects to continue to make the Fund shares available after such
termination. If the Fund shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either the Fund or the Life Company may terminate the Agreement,
as so continued pursuant to this Section 8.3, upon sixty (60) days prior
written notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, the Life
Company shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to the Life Company's assets held in the
Separate Accounts), and the Life Company shall not prevent Variable Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Variable Contracts until thirty (30) days after the Life Company shall
have notified the Fund of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund:
Navellier Variable Insurance Series Fund, Inc.
Xxx Xxxx Xxxxxxx, Xxxxx Xxxxx
Xxxx, Xxxxxx 00000
Attn: Chief Operating Officer
If to the Adviser:
Navellier & Associates, Inc.
Xxx Xxxx Xxxxxxx, Xxxxx Xxxxx
Xxxx, Xxxxxx 00000
16
Attn: Chief Operating Officer
If to the Life Company:
The American Life Insurance Company of New York
000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the directors or officers of the
Fund or any Portfolio shall be personally liable hereunder. No Portfolio shall
be liable for the liabilities of any other Portfolio. All persons dealing with
the Fund or a Portfolio must look solely to the property of the Fund or that
Portfolio, respectively, for enforcement of any claims against the Fund or that
Portfolio. It is also understood that each of the Portfolios shall be deemed to
be entering into a separate Agreement with the Life Company so that it is as if
each of the Portfolios had signed a separate Agreement with the Life Company and
that a single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
17
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
10.9 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by the
Fund, the Adviser and the Life Company.
10.10 No failure or delay by a party in exercising any right or remedy
under this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
10.11 This Agreement may not be assigned by any party hereto, without
the prior written consent of all of the parties.
10.12 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential any "non-public
personal information" about any "consumer" of another party as such terms are
defined in SEC Regulation S-P, and shall not disclose or use such information
without the express written consent of such party. Such written consent shall
specify the purposes for which such information may be disclosed or used, which
disclosure or use shall be consistent with SEC Regulation S-P.
18
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
NAVELLIER VARIABLE INSURANCE SERIES
FUND, INC.
By: ____________________________________
Name:
Title:
NAVELLIER & ASSOCIATES, INC.
By: _____________________________________
Name:
Title:
THE AMERICAN LIFE INSURANCE
COMPANY OF NEW YORK
By: _____________________________________
Name:
Title:
19
SCHEDULE A
Name and date of formation
of Separate Account and
Variable Contract Form Number Portfolio
The American Separate Account 5 Navellier Growth Portfolio
May 4, 2001
3805-FPA-AX
20
