PARTICIPATION AGREEMENT
AMONG
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.,
XXXXXX XXXXXXX DISTRIBUTION, INC.,
XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC.,
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
DATED AS OF
NOVEMBER 1, 2008
TABLE OF CONTENTS
PAGE
----
ARTICLE I. Purchase and Redemption of Fund Shares 3
ARTICLE II. Representations and Warranties 4
ARTICLE III. Prospectuses, Reports to Shareholders
and Proxy Statements; Voting 6
ARTICLE IV. Sales Material and Information 9
ARTICLE V. Fees and Expenses 10
ARTICLE VI. Diversification 11
ARTICLE VII. Potential Conflicts 11
ARTICLE VIII. Contract Holder Information 13
ARTICLE IX. Anti-Money Laundering 14
ARTICLE X. Indemnification 16
ARTICLE XI. Applicable Law 21
ARTICLE XII. Termination 22
ARTICLE XIII. Notices 23
ARTICLE XIV. Miscellaneous 24
SCHEDULE A Separate Accounts and Associated Contracts A-1
SCHEDULE B Portfolios of The Universal Institutional Funds, Inc.
Available Under this Agreement B-1
SCHEDULE C Proxy Voting Procedures C-1
SCHEDULE D Operating Procedures D-1
1
THIS AGREEMENT is made and entered into as of the 1st day of November 2008
by and among LINCOLN LIFE &ANNUITY COMPANY OF
NEW YORK (the "Company"), a
New
York corporation, on its own behalf and on behalf of each separate account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account referred to as an "Account"), THE UNIVERSAL INSTITUTIONAL
FUNDS, INC. (the "Fund"), a Maryland corporation, XXXXXX XXXXXXX DISTRIBUTION,
INC. (the "Underwriter"), a Delaware corporation, and XXXXXX XXXXXXX INVESTMENT
MANAGEMENT INC. (the "Adviser"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established by insurance companies for individual and group life
insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans ("Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products enter into
participation
agreements with the Fund, the Underwriter and the Adviser (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made available under this
Agreement; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B hereto (each such series referred to as a "Portfolio"), as such
Schedule may be amended from time to time by mutual agreement of the parties
hereto, to the Account(s) of the Company (all references herein to "shares" of a
Portfolio shall mean the class or classes of shares specifically identified on
Schedule B); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC"), dated September 19, 1996 (File No. 812-10118), granting
Participating Insurance Companies and Variable Insurance Product separate
accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a), and
15(b) of the Investment Company Act of 1940, as amended (the "1940 Act"), and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by Variable Insurance Product
separate accounts of both affiliated and unaffiliated life insurance companies
and Qualified Plans (the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
2
WHEREAS, the Adviser manages the Portfolios of the Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), is a member in
good standing of the Financial Industry Regulatory Authority (the "FINRA") and
serves as principal underwriter of the shares of the Fund; and
WHEREAS, the Company offers or proposes to offer certain Variable Insurance
Products that it has registered (or will register) under the 1933 Act (the
"Registered Contracts"), as well as other Variable Insurance Products that are
not registered under the 1933 Act (the "Unregistered Contracts," and together
with the Registered Contracts, the "Contracts"), each as set forth on Schedule A
hereto; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered (or will register) certain Accounts as
unit investment trusts under the 1940 Act that are attributable to the
Registered Contracts (the "Registered Accounts"), while certain other Accounts
that are attributable to the Unregistered Contracts will not be registered under
the 1940 Act (the "Unregistered Accounts," and together with the Registered
Accounts, the "Accounts"), each as set forth on Schedule A hereto; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Portfolios, on behalf
of each Account or sub-Account thereof (together, as applicable, an "Account"),
to fund the Contracts and the Underwriter is authorized to sell such shares to
each such Account at net asset value; and
WHEREAS, the Fund, acting through the Fund's transfer agent, has
established a master account on its mutual fund shareholder account system (the
"T/A Account") reflecting the aggregate ownership of shares of the Fund and all
transactions involving such shares by the Company on behalf of the Accounts; and
WHEREAS, the Company, the Fund, the Underwriter and the Adviser wish to
permit the Fund to receive, and the Company, or its authorized agent, to
transmit, purchase, exchange and redemption orders of Portfolio shares using
either manual procedures or the National Securities Clearing Corporation
("NSCC") Fund/SERV System ("Fund/SERV"), as set forth in the attached Schedule
D; and
WHEREAS, if the Company, the Fund, the Underwriter and the Adviser wish to
receive and transmit Fund shares via Fund/SERV, it is intended that the Fund and
the Company will establish an account using Fund/SERV (the "Fund/SERV Account")
that will reflect corresponding transactions and Fund share balances in the T/A
Account.
3
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Underwriter and the Adviser agree as follows:
ARTICLE I. PURCHASE AND REDEMPTION OF FUND SHARES
1.1. The Fund and the Underwriter agree to make available for purchase by
the Company shares of the Portfolio(s) and shall execute purchase orders placed
for each Account on each Business Day at the net asset value next computed after
receipt by the Fund or its designee of such purchase order. For purposes of this
Section 1.1, and for purposes of Rule 22c-1 under the 1940 Act, the Company
shall be the designee of the Fund and the Underwriter for receipt of such
purchase orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that such purchase orders are received and
transmitted in accordance with the Operating Procedures attached hereto as
Schedule D (the "Operating Procedures"). "Business Day" shall mean any day on
which the
New York Stock Exchange, Inc. is open for trading and on which the
Fund calculates its net asset value pursuant to SEC rules.
1.2. The Fund, so long as this Agreement is in effect, agrees to make
shares of the Portfolios available for purchase at the applicable net asset
value per share by the Company and its Accounts on those days on which the Fund
calculates its net asset value pursuant to SEC rules and the Fund shall use
reasonable efforts to calculate such net asset value on each day that the
New
York Stock Exchange, Inc. is open for trading. Notwithstanding the foregoing,
the Board of Trustees of the Fund (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 its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts and
to certain qualified plans. No shares of a Portfolio will be sold to the general
public.
1.4. The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Portfolio(s) held by the
Company, executing such redemption requests for each Account on each Business
Day at the net asset value next computed after receipt by the Fund or its
designee of the request for redemption. Subject to and in accordance with
applicable laws and regulations, however, the Fund reserves the right to redeem
shares of the Portfolios for assets other than cash. For purposes of this
Section 1.4, and for purposes of Rule 22c-1 under the 1940 Act, the Company
shall be the designee of the Fund and the Underwriter for receipt of requests
for redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that such redemption requests are received and
transmitted in accordance with the Operating Procedures.
1.5. The 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
4
such prospectus. The Company reserves the right to make available in the future
any other investment company as a funding vehicle under the Contracts without
notice to the Fund, the Underwriter, or the Advisor.
1.6. The Fund and the Company will settle all purchase and redemption
orders transmitted pursuant to Sections 1.1 and 1.4 of this Agreement,
respectively, in accordance with the Operating Procedures.
1.7. Issuance and transfer of the Fund's shares will be by book entry only.
Share certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate sub-account of each Account.
1.8. The Company shall not redeem Fund shares attributable to the Contracts
(as distinct from Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(c) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund the opinion of counsel
for the Company (which shall be General Counsel to the Company or such other
counsel reasonably satisfactory to the Fund) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund ninety
(90) days prior written notice of its intention to do so.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that: (i) it is an insurance
company duly organized and in good standing under applicable law; (ii) it is a
member in good standing of the NSCC, or is otherwise entitled to use Fund/SERV;
(iii) it will abide by the rules and regulations of the NSCC; (iv) it has
legally and validly established each Account prior to any issuance or sale
thereof as a segregated asset account under applicable laws and regulations; (v)
it has registered or, prior to any issuance or sale of the Registered Contracts,
will register and will thereafter maintain the registration of each Registered
Account as a unit investment trust in accordance with, and to the extent
required by, the provisions of the 1940 Act to serve as a segregated investment
account for the Registered Contracts; (vi) the Unregistered Accounts are exempt
from the registration requirements of the 1940 Act under the provisions of
Section 3(c)(1) or 3(c)(7) thereof; and (vii) the Unregistered Accounts are
exempt from the provisions of Section 12(d)(1) of the 1940 Act under the
provisions of Section 12(d)(1)(E) of the 1940 Act. The Company further
represents and warrants that: (i) the Registered Contracts are or will be
registered and shall remain registered under the 1933 Act so long as required by
applicable rules and regulations thereunder or in reliance upon the action of
the SEC or its staff; (ii) the Unregistered Contracts are exempt from the
registration requirements of the 1933 Act under the provisions of Section 4(2)
thereof or the rules and regulations promulgated thereunder; (iii) the Contracts
will be issued
5
and sold in compliance in all material respects with all applicable federal and
state laws; and (iv) the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company shall amend
the registration statement for the Registered Accounts and the Registered
Contracts under the 1940 Act and the 1933 Act, respectively, from time to time
as required in order to effect the continuous offering of the Registered
Contracts; moreover, the Company will notify the Fund immediately in writing of
any changes in facts or circumstances leading the Company to believe that any of
the exemptions described above with respect to the Unregistered Contracts or
Unregistered Accounts are not applicable as represented.
2.2. The Fund and the Underwriter represent and warrant that Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
Maryland and all applicable federal and state securities laws and that the Fund
is and shall remain registered under the 0000 Xxx. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and that it will use every reasonable effort to maintain
such qualification (under Subchapter M or any successor or similar provision)
and that it will notify the Company immediately upon having a reasonable basis
for believing that it has ceased to so qualify or might not in the future be so
treated.
2.4. The Company represents and warrants that each Account is and will
continue to be a "segregated asset account" under applicable provisions of the
Code and applicable Treasury Regulations promulgated thereunder and that each
Contract is and will continue to be treated as a "variable contract" under
applicable provisions of the Code and applicable Treasury Regulations
promulgated thereunder. The Company further represents and warrants that it will
make every effort to maintain such treatment and that it will notify the Fund
immediately upon having a reasonable basis for believing that any Account or
Contract has ceased to be so treated or that any Account or Contract might not
be so treated in the future.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have the Board, at least a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7. The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with the
6
1940 Act. The Fund represents and warrants that it is a member in good standing
of the NSCC, or is otherwise entitled to use Fund/SERV, and will abide by the
rules and regulations of the NSCC.
2.8. The Adviser represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws.
2.9. The Underwriter represents and warrants that it is and shall remain
duly registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws.
2.10. The Fund represents and warrants that all of its directors, officers,
employees, and other individuals/entities dealing with the money and/or
securities of the Fund are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund in an
amount not less than the minimum coverage as currently required by Rule 17g-1 of
the 1940 Act or related provisions as may be promulgated from time to time. The
aforesaid blanket fidelity bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Account(s) are and shall continue to be
at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Company and/or the Account(s) that is reasonable and customary in
light of the Company's obligations under this Agreement. The aforesaid includes
coverage for larceny and embezzlement and shall be issued by a reputable bonding
company in an amount not less than $5 million. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Fund, the Underwriter
and the Adviser in the event that such coverage no longer applies.
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus (describing only the Portfolios
listed in Schedule B hereto) and statement of additional information (describing
all of the Fund's Portfolios) as the Company may reasonably request. If
requested by the Company, in lieu of providing printed copies, the Fund shall
provide camera-ready film or computer diskettes or other electronic files
containing the Fund's prospectus and statement of additional information, and
such other assistance as is reasonably necessary in order for the Company once
each year (or more frequently if the prospectus and/or statement of additional
information for the Fund is amended during the year) to have the prospectus or
other disclosure document for the Contracts and the Fund's prospectus (and
statement of additional information for the Fund and the statement of additional
information
7
for the Registered Contracts) printed together in one document. Alternatively,
the Company may print the Fund's prospectus and/or its statement of additional
information in combination with other fund companies' prospectuses and
statements of additional information.
3.2. Except as provided in this Section 3.2, all expenses of preparing,
setting in type, printing and distributing Fund prospectuses and statements of
additional information shall be the expense of the Company. For prospectuses and
statements of additional information provided by the Company to its Contract
owners who currently own shares of one or more Portfolios ("Existing Contract
Owners"), in order to update disclosure as required by the 1933 Act and/or the
1940 Act, the cost of printing shall be borne by the Fund. If the Company
chooses to receive camera-ready film or computer diskettes or other electronic
files in lieu of receiving printed copies of the Fund's prospectus, the Fund
shall bear the cost of typesetting to provide the Fund's prospectus to the
Company in the format in which the Fund is accustomed to formatting
prospectuses, and the Company shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses or other disclosure
documents. In such event, the Fund will reimburse the Company in an amount equal
to the product of "x" and "y", where "x" is the number of such disclosure
documents distributed to Existing Contract Owners and "y" is the Fund's per unit
cost of printing the Fund's prospectus. The same procedures shall be followed
with respect to the Fund's statement of additional information. The Company
agrees to provide the Fund or its designee with such information as may be
reasonably requested by the Fund to assure that the Fund's expenses do not
include the costs of printing, typesetting or distributing any prospectuses or
statements of additional information other than the costs of printing those
prospectuses or statements of additional information actually distributed to
Existing Contract Owners.
3.3. The statement of additional information of the Fund shall be
obtainable from the Fund, the Underwriter, the Company or such other person as
the Fund may designate.
3.4. The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current shareholder report as the Company may
reasonably request. If requested by the Company, in lieu of providing printed
copies the Fund shall provide camera-ready film or computer diskettes or other
electronic files containing the Fund's shareholder reports, and such other
assistance as is reasonably necessary in order for the Company twice each year
(once for the Fund's semi-annual report and once for the Fund's annual report)
to have the reports for the Contract Owners and the Fund's shareholder reports
printed together in one document. Alternately, the Company may print the Fund's
shareholder reports in combination with other fund companies' shareholder
reports.
3.5. Except as provided in this Section 3.5, all expenses of preparing,
setting in type, printing and distributing Fund shareholder reports shall be the
expense of the Company. For Fund shareholder reports provided by the Company to
its Contract owners who currently own shares of one or more Portfolios
("Existing Contract Owners"), in order to deliver such reports as required by
the 1934 Act and/or the 1940 Act, the cost of printing shall be borne by the
Fund. If the Company chooses to receive camera-ready film or computer diskettes
or other electronic files in lieu of receiving printed copies of the Fund's
shareholder reports, the Fund shall bear the cost
8
of typesetting to provide the Fund's shareholder reports to the Company in the
format in which the Fund is accustomed to formatting shareholder reports, and
the Company shall bear the expense of adjusting or changing the format to
conform with any of its reports to Contract Owners. In such event, the Fund will
reimburse the Company in an amount equal to the product of "x" and "y", where
"x" is the number of such shareholder reports distributed to Existing Contract
Owners and "y" is the Fund's per unit cost of printing the Fund's shareholder
reports. The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the costs of printing, typesetting or distributing any
shareholder reports other than the costs of printing those shareholder reports
actually distributed to Existing Contract Owners.
3.6 The Fund, at its expense, shall provide the Company with copies of its
proxy statements and other communications (except for prospectuses and
statements of additional information that are covered in Section 3.1 and reports
to shareholders that are covered in Section 3.4) to shareholders in such
quantity as the Company shall reasonably require for distributing to Existing
Contract Owners. The Fund shall not pay any costs of distributing such materials
to prospective Contract owners.
3.7. If and to the extent required by law, the Company shall distribute all
proxy materials furnished by the Fund to Contract owners to whom voting
privileges are required to be extended and shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Portfolio shares in accordance with instructions
received from Contract owners; and
(iii) vote Portfolio shares for which no instructions have been
received in the same proportion as Portfolio shares for which
instructions have been received;
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. The Company
reserves the right to vote Portfolio shares held in any segregated asset account
in its own right, to the extent permitted by law. If the Company is required to
solicit voting instructions, the Fund and the Company shall follow the
procedures, and shall have the corresponding responsibilities, for the handling
of proxies and voting instruction solicitations, as set forth in Schedule C
attached hereto and incorporated herein by reference. Participating Insurance
Companies shall be responsible for ensuring that each of their separate accounts
participating in the Fund (and for which the soliciting of voting instructions
is required) calculates voting privileges in a manner consistent with the
standards set forth on Schedule C, which standards will also be provided to the
other Participating Insurance Companies.
3.8. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as
9
the SEC may interpret Section 16 of the 1940 Act not to require such meetings)
or comply with Section 16(c) of the 1940 Act (although the Fund is not one of
the trusts described in Section 16(c) of the 0000 Xxx) as well as with Section
16(a) of the 1940 Act and, if and when applicable, Section 16(b) of the 1940
Act. Further, the Fund will act in accordance with the SEC's interpretation of
the requirements of Section 16(a) of the 1940 Act with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund, the Underwriter or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material shall be used without the prior
approval of the Fund or its designee. The Fund shall use its reasonable best
efforts to review any such material as soon as practicable after receipt and no
later than ten (10) Business Days after receipt of such material.
4.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement or prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund which are in the
public domain or approved by the Fund for distribution to Fund shareholders, or
in sales literature or other promotional material approved by the Fund or its
designee, except with the permission of the Fund.
4.3. The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material in which the Company and/or its Account(s) or
Contract(s) are named at least ten (10) Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within ten (10) Business Days after receipt of such material.
4.4. Neither the Fund, the Underwriter nor the Adviser shall give any
information or make any representations on behalf of the Company or concerning
the Company, each Account, or the Contracts, other than the information or
representations contained in a registration statement, prospectus, offering
memorandum or other disclosure document for the Contracts, as such documents may
be amended or supplemented from time to time, or in reports or proxy statements
for each Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests
10
for no-action letters, and all amendments to any of the above, that relate to
the Fund or its shares and are relevant to the Company and the Contracts.
4.6. The Company will provide to the Fund, to the extent applicable, at
least one complete copy of all registration statements, prospectuses, statements
of additional information, offering memoranda or other disclosure documents,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to investment in
the Fund or the Portfolios under the Contracts.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following that
refer to the Fund or any affiliate of the Fund: advertisements (such as material
published, or designed for use in, a newspaper, magazine, or other periodical,
radio, television, telephone or tape recording, videotape display, signs or
billboards, motion pictures, or other public media), sales literature (I.E., any
written communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market letters,
form letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, offering memoranda,
prospectuses, statements of additional information or other disclosure
documents, shareholder reports, and proxy materials.
ARTICLE V. FEES AND EXPENSES
5.1. The Fund shall pay no fee or other compensation to the Company under
this Agreement, except that if the Fund or any Portfolio adopts and implements a
service plan and/or a plan pursuant to Rule 12b-1, then the Underwriter may make
payments to the Company or to the underwriter for the Contracts pursuant to such
plans if and in amounts agreed to by the Underwriter in writing.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. Except as otherwise set forth in
Section 3.2 of this Agreement, the Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders, the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or transfer
of the Fund's shares.
11
5.3. Except as set forth in Article III of this Agreement, the Company
shall bear the expenses of distributing the Fund's prospectus, statement of
additional information, proxy materials and reports to owners of Contracts
issued by the Company.
ARTICLE VI. DIVERSIFICATION
6.1. The Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, relating to the diversification requirements for
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event the Fund ceases to so
qualify, it will immediately(a) notify the Company of such event and (b)
adequately diversify the Fund so as to achieve compliance within the time period
afforded by Regulation 1.817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of contract owners. The Fund shall promptly
inform the Company if the Board determines that an irreconcilable material
conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Board whenever Contract owner voting instructions are disregarded.
The Company agrees that these responsibilities will be carried out with a view
only to the interests of Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested members, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested directors), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another portfolio of the Fund, or
submitting the question whether such segregation should be
12
implemented to a vote of all affected contract owners and, as appropriate,
segregating the assets of any appropriate group (I.E., annuity contract owners,
life insurance policy owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected contract owners the option of making such a change; and
(2) establishing a new registered management investment company or managed
separate account. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and that these responsibilities
will be carried out with a view only to the interests of Contract owners.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and that these responsibilities
will be carried out with a view only to the interests of Contract owners.
7.5. For purposes of Sections 7.3 and 7.4 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 7.3 or 7.4 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3 and 7.4 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
7.7. Each of the Company and the Adviser shall at least annually submit to
the Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out the obligations imposed upon it by the
provisions hereof and in the Shared Funding
13
Exemptive Order. Such reports, materials and data shall be submitted more
frequently if deemed appropriate by the Board.
ARTICLE VIII. CONTRACT HOLDER INFORMATION
8.1 AGREEMENT TO PROVIDE CONTRACT HOLDER INFORMATION PURSUANT TO RULE 22c-2
(i) To the extent required by Rule 22c-2 under the 1940 Act, or in the
event the Company has the ability to do so, the Company agrees to provide the
Fund, upon written request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN") or other
government-issued identifier ("GII"), if known, of any or all Contract holders
and the amount, date, name or other identifier of any investment professional(s)
associated with the Contract holder(s) or account(s) (if known), and transaction
type (purchase, redemption, transfer or exchange) of every purchase, redemption,
transfer or exchange of shares of the Portfolio(s) held through one or more
account(s) maintained by the Company during the period covered by the request
("transaction information").
(ii) Requests must set forth a specific period, not to exceed ninety
(90) business days from the date of the request, for which transaction
information is sought. The Fund may request transaction information older than
ninety (90) business days from the date of the request as it deems necessary to
investigate compliance with policies established by the Fund for the purpose of
eliminating or reducing any dilution of the value of the outstanding shares of
the Portfolio(s) issued by the Fund.
(iii) The Company agrees to transmit the requested transaction
information that is on its books and records to the Fund or its designee
promptly, but in any event not later than ten (10) business days after receipt
of a request. If the requested transaction information is not on the Company's
books and records, the Company agrees to: (i) provide or arrange to provide to
the Fund the requested transaction information from Contract holders who hold an
account with an indirect intermediary; or (ii) if directed by the Fund, restrict
or prohibit further purchases of shares of the Portfolio(s) from such indirect
intermediary. In such instance, the Company agrees to inform the Fund whether it
plans to perform (i) or (ii). Responses required by this paragraph must be
communicated in writing and in a format mutually agreed upon by the parties. To
the extent practicable, the format for any transaction information provided to
the Fund should be consistent with the NSCC Standardized Data Reporting Format.
For purposes of this provision, an "indirect intermediary" has the same meaning
as set forth in Rule 22c-2.
8.2 AGREEMENT TO RESTRICT TRADING; INSTRUCTIONS; CONFIRMATIONS
(i) To the extent required by Rule 22c-2, or in the event the Company
has the ability to do so, the Company agrees to execute written instructions
from the Fund to restrict or prohibit further purchases or exchanges of shares
of the Portfolio(s) by a Contract holder that has been identified by the Fund as
having engaged in transactions of Portfolio shares (directly or indirectly
through the Company's account) that violate market timing or frequent trading
policies
14
established by the Fund for the purpose of eliminating or reducing any dilution
of the value of the outstanding Portfolio shares issued by the Fund.
(ii) Instructions must include the TIN, ITIN or GII, if known, and the
specific restrictions(s) to be executed. If the TIN, ITIN or GII is not known,
the instructions must include an equivalent identifying number of the Contract
holder(s) or account(s) or other agreed upon information to which the
instruction relates.
(iii) The Company agrees to execute instructions as soon as reasonably
practicable, but not later than five (5) business days after receipt of the
instructions by the Company.
(iv) The Company must provide written confirmation to the Fund that
instructions have been executed. The Company agrees to provide confirmation as
soon as reasonably practicable, but not later than ten (10) business days after
the instructions have been executed.
8.3 LIMITATIONS ON USE OF INFORMATION
The Fund agrees not to use the transaction information received from the
Company for any purpose other than to comply with the provisions of Rule 22c-2
or to fulfill other similar legal or regulatory requirements subject to the
privacy provisions of the Xxxxx-Xxxxx-Xxxxxx Act and comparable state laws and
regulations without the prior written consent of the Company.
ARTICLE IX. ANTI-MONEY LAUNDERING
9.1. The Company represents and warrants that it is in compliance and will
continue to be in compliance with all applicable anti-money laundering laws and
regulations, including the Bank Secrecy Act, as amended by the USA PATRIOT Act,
and implementing regulations of the Bank Secrecy Act ("BSA Regulations") and
applicable guidance issued by the SEC and the guidance and rules of the
applicable Exchanges, SROs and the FINRA (collectively, "Guidance").
9.2. In connection with the Fund's reliance on Company to perform Customer
Identification Program ("CIP") procedures on its behalf, the Company represents
and warrants that (1) Company is subject to a rule implementing 31 U.S.C.
5318(h) and maintains an anti-money laundering program consistent with the USA
PATRIOT Act and the rules thereunder; (2) Company is regulated by a Federal
functional regulator as that term is defined under 31.C.F.R. Section
103.120(a)(2); (3) Company has implemented a CIP compliant with Section 326 and
31 C.F.R. Section 103.137(b) that enables Company to form a reasonable belief
that it knows the true identity of its customers, including procedures to obtain
information from and verify the identity of customers, maintain records of the
information used to verify identity, determine whether the customer appears on
any government list of known or suspected terrorists or terrorist organizations,
and provide customers with adequate notice that the institution is requesting
information to verify their identities; and (4) Company will certify annually
that it has
15
implemented its anti-money laundering program and that it or its agent will
perform all aspects of its CIP procedures with respect to customers referred to
the Fund by the Company.
9.3. The Company represents and warrants that to the extent that any owner
of a Contract which provides for the allocation of purchase payments and
Contract value to subaccounts investing in shares of a Portfolio is a current or
former Senior Foreign Political Figure ("SFPF"), an immediate family member of a
SFPF, a person who is widely known (or is actually known by the Company) to
maintain a close personal relationship with any such individual, or a
corporation, business or other entity that has been formed by or for the benefit
of such individual, it has conducted appropriate due diligence of such customer
consistent with Section 312 of the USA PATRIOT Act and any applicable BSA
Regulations and Guidance.
9.4. The Company represents and warrants that to the extent any owner of a
Contract is a foreign bank, it has taken reasonable measures and has obtained
certifications and will obtain re-certifications that indicate that such
Contract owner is not a foreign shell bank, as defined in the BSA Regulations.
9.5. The Company will take all reasonable and practicable steps to ensure
that it does not accept or maintain investments in any Contract from:
(i) A person or entity (A) who is or becomes subject to sanctions
administered by the U.S. Office of Foreign Assets Control ("OFAC"), is included
in any executive order or is on the list of Specially Designated Nationals and
Blocked Persons maintained by OFAC, or (B) whose name appears on such other
lists of prohibited persons and entities as may be mandated by applicable U.S.
law or regulation.
(ii) A foreign shell bank (i.e., a bank with no physical presence in
any country).
9.6 The Company agrees to immediately notify in writing the Anti-Money
Laundering Compliance Officer of the Fund if it becomes aware of any suspicious
activity or pattern of activity or any activity that may require further review
to determine whether it is suspicious in connection with the Funds.
9.7 The Company agrees that if the Fund, Underwriter or Adviser is required
to supply information, documentation or guidance to a securities regulatory
organization ("SRO") or government department or agency about the CIP of the
Fund or the Underwriter or the Adviser or the measures taken to obtain
information and to verify the identity of any owner of a Contract who has
allocated purchase payments or Contract value to Portfolios available under the
Contract, Company shall allow such SRO or government department or agency to
examine its files pertaining to such Contract owner.
16
ARTICLE X. INDEMNIFICATION
10.1. INDEMNIFICATION BY THE COMPANY
10.1(a). The Company agrees to indemnify and hold harmless the Fund, the
Underwriter, the Adviser and each member of the Board and each officer and
employee of the Fund, and each director, officer and employee of the Underwriter
and the Adviser, and each person, if any, who controls the Fund, the Underwriter
or the Adviser within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" and individually, an "Indemnified Party," for purposes
of this Section 10.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation (including reasonable legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
registration statement, prospectus, offering memorandum or other
disclosure document for the Contracts or contained in the
Contracts or sales or other promotional literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to
the Company by or on behalf of the Fund for use in the
registration statement, prospectus, offering memorandum or other
disclosure document for the Contracts or in the Contracts or
sales or other promotional literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its control
and other than statements or representations authorized by the
Fund, the Underwriter or the Adviser) or unlawful conduct of the
Company or persons under its control, with respect to the sale
or distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result 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
17
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance
upon and in conformity with information furnished to the Fund by
or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 10.1(b) and 10.1(c) below.
10.1(b). The 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.
10.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
10.1(d). The Fund, the Underwriter or the Adviser, as applicable, will
promptly notify the Company of the commencement of any litigation or proceedings
against an Indemnified Party in connection with this Agreement, the issuance or
sale of the Fund shares or the Contracts, or the operation of the Fund.
18
10.2. INDEMNIFICATION BY THE UNDERWRITER
10.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors, officers and employees, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, an "Indemnified
Party," for purposes of this Section 10.2) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Underwriter) 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 shares of a Portfolio and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Fund (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 Fund, the
Underwriter or the Adviser by or on behalf of the 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 Contracts
or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in
registration statement, prospectus, offering memorandum, other
disclosure document or sales or other promotional literature for
the Contracts not supplied by the Fund or the Underwriter or
persons under their respective control and other than statements
or representations authorized by the Company) or unlawful
conduct of the Fund or the Underwriter or persons under their
respective control, with respect to the sale or distribution of
the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, offering memorandum, other disclosure
document or sales or other promotional literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund or the
Underwriter; or
19
(iv) arise as a result of any failure by the Underwriter to provide
the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 10.2(b) and 10.2(c) below.
10.2(b). The Underwriter 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 and duties under this Agreement.
10.2(c). The Underwriter 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 Underwriter 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 Underwriter of
any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Underwriter to such party
of the Underwriter'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 Underwriter 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.
10.2(d). The Company will promptly notify the Underwriter of the
commencement of any litigation or proceedings against an Indemnified Party in
connection with this Agreement, the issuance or sale of the Contracts or the
operation of the Account(s).
10.3. INDEMNIFICATION BY THE ADVISER
10.3(a) The Adviser agrees to indemnify and hold harmless the Company and
each of its directors, officers and employees, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually, an "Indemnified
Party," for purposes of this Section 10.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the
20
Adviser) 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 shares of a Portfolio and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the
Fund (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 Fund, the
Underwriter or the Adviser by or on behalf of the 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 Contracts
or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus, offering memorandum, other
disclosure document or sales or other promotional literature for
the Contracts not supplied by the Fund or the Adviser or persons
under their respective control and other than statements or
representations authorized by the Company) or unlawful conduct
of the Fund or the Adviser or persons under their respective
control, with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, offering memorandum, other disclosure
document or sales or other promotional literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund or the
Adviser; or
(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this
Agreement as well as the failure of the Fund, whether
intentional, in good faith, or otherwise, to comply with the
diversification requirements of Section 817(h) of the Code and
Treasury Regulation 1.817-5, and to be qualified as a Regulated
Investment Company under Subchapter M of the Code; or
21
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Adviser.
Each of paragraphs (i) through (v) above is limited by and in accordance with
the provisions of Sections 10.3(b) and 10.3(c) below.
10.3(b). The Adviser 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 and duties under this Agreement.
10.3(c). 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 will 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.
10.3(d). The Company will promptly notify the Adviser of the commencement
of any litigation or proceedings against an Indemnified Party in connection with
this Agreement, the issuance or sale of the Contracts or the operation of the
Account(s).
ARTICLE XI. APPLICABLE LAW
11.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
New York.
11.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
22
ARTICLE XII. TERMINATION
12.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio based upon
the Company's determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts;
provided, however, that said termination shall become effective ten
(10) days after receipt of notice unless the Fund makes available a
sufficient number of shares of the Portfolio to reasonably meet the
requirements of the Contracts within said ten (10) day period; or
(c) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the event
that any of the Portfolio's shares are not registered, issued or sold
in accordance with applicable state and/or federal law or such law
precludes the use of such shares as the underlying investment media of
the Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the event
that such Portfolio ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code or under any successor or
similar provision; or
(e) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or
(f) termination by the Fund, the Underwriter or the Adviser by written
notice to the Company if the Fund, the Underwriter or the Adviser, as
applicable, shall determine, in its sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the
subject of material adverse publicity, subject to the obligation of
the Underwriter and the Fund set forth in Section 12.2 hereof; or
(g) termination by the Company by written notice to the Fund, the
Underwriter and the Adviser, if the Company shall determine, in its
sole judgment exercised in good faith, that the Fund, the Underwriter
or the Adviser has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity; or
23
(h) termination by the Fund, the Underwriter or the Adviser by written
notice to the Company, if the Company gives the Fund, the Underwriter
and the Adviser the written notice specified in Section 1.5 hereof and
at the time such notice was given there was no notice of termination
outstanding under any other provision of this Agreement; provided,
however, any termination under this Section 12.1(h) shall be effective
forty-five (45) days after the notice specified in Section 1.5 was
given; or
(i) termination by any party to this Agreement upon another party's
material breach of any provision of this Agreement.
12.2. Notwithstanding any termination of this Agreement with respect to a
Portfolio, the Fund and the Underwriter shall at the option of the Company
continue to make available additional shares of the Portfolio, pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (the "Existing Contracts"),
unless such further sale of Portfolio shares is proscribed by law, regulation or
applicable regulatory authority, or unless the Board determines that liquidation
of the Portfolio following termination of this Agreement is in the best
interests of the Portfolio. Specifically, subject to the foregoing, the owners
of the Existing Contracts shall be permitted to direct reallocation of
investments in the Portfolio, redemption of investments in the Portfolio and/or
investment in the Portfolio upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 12.2 shall not
apply to any terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
ARTICLE XIII. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
The Universal Institutional Funds, Inc.
c/x Xxxxxx Xxxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Underwriter:
Xxxxxx Xxxxxxx Distribution, Inc.
c/x Xxxxxx Xxxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
24
If to the Adviser:
Xxxxxx Xxxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
If to the Company:
Lincoln Life & Annuity Company of
New York
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 000000-0000
Attention: Xxxxx X. Xxxxxxxxx
ARTICLE XIV. MISCELLANEOUS
14.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund, as neither the
Board, officers, agents or shareholders of the Fund assume any personal
liability for obligations entered into on behalf of the Fund.
14.2. 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) (including, without limitation by similarity or
otherwise, any information provided pursuant to Articles VIII and IX hereof) and
any other information reasonably identified as confidential in writing by
another party ("Confidential Information"). Each party agrees not to disclose,
disseminate or utilize another party's Confidential Information except: (i) as
permitted by this Agreement, (ii) upon the written consent of the other party,
(iii) where the Confidential Information comes into the public domain through no
fault of the party receiving the information, or (iv) as otherwise required or
permitted under applicable law.
14.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
14.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
14.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
25
14.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
FINRA and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish state insurance authorities with any information or reports in
connection with services provided under this Agreement which such authorities
may request in order to ascertain whether the insurance operations of the
Company are being conducted in a manner consistent with applicable law and
regulations.
14.7. 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.
14.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement.
14.9. If requested by the Fund, the Underwriter or the Adviser, the Company
shall furnish, or shall cause to be furnished, to the requesting party or its
designee copies of the following documents:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in
any event within ninety (90) days after the end of each fiscal year;
(b) the Company's quarterly statements (prepared under statutory
accounting principles and GAAP, if any), as soon as practical and in
any event within forty-five (45) days after the end of each quarterly
period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the SEC or any state insurance regulator, as
soon as practical after the filing thereof; and
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them
of the books of the Company, as soon as practical after the receipt
thereof.
26
14.10. Unless otherwise specifically provided in this Agreement, no
provision of this Agreement may be amended or modified in any manner except by a
written agreement executed by all parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
27
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
of the date specified above.
LINCOLN LIFE & ANNUITY COMPANY OF
NEW YORK
BY: /S/ XXXXX X. XXXXXXXXX
-----------------------------------
NAME: XXXXX X. XXXXXXXXX
TITLE: SECOND VICE PRESIDENT
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
BY: /S/ XXXXX XXXXXX
-----------------------------------
NAME: XXXXX XXXXXX
TITLE: PRESIDENT
XXXXXX XXXXXXX DISTRIBUTION, INC.
BY: /S/ XXXXXX XXXXXX
-----------------------------------
NAME: XXXXXX XXXXXX
TITLE: PRESIDENT
XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC.
BY: /S/ XXXXX XXXXXX
-----------------------------------
NAME: XXXXX XXXXXX
TITLE: MANAGING DIRECTOR
28
SCHEDULE A
SEPARATE ACCOUNTS AND ASSOCIATED CONTRACTS
NAME OF SEPARATE ACCOUNT AND FORM NUMBER AND NAME OF
DATE ESTABLISHED BY BOARD OF DIRECTORS CONTRACT FUNDED BY SEPARATE ACCOUNT
-------------------------------------- ---------------------------------------
REGISTERED ACCOUNT(S): REGISTERED CONTRACT(S):
Lincoln New York Account N Lincoln ChoicePlus Assurance (A Class)
For Variable Annuities (Established (Policy Form No. __) (SEC File No.
April 2, 2007 333-145531)
Lincoln ChoicePlus Assurance (B Class)
(Form No. __) (SEC File No. 333-149449)
UNREGISTERED ACCOUNT(S): UNREGISTERED CONTRACT(S):
None None
A-1
SCHEDULE B
PORTFOLIOS OF THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
AVAILABLE UNDER THIS AGREEMENT
CLASS I
N/A
CLASS II
UIF Capital Growth Portfolio
B-1
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the
Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
- The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from Contract owners and to facilitate the establishment of
tabulation procedures. At this time the Fund will inform the Company of the
Record, Mailing and Meeting dates. This will be done verbally approximately
two months before the shareholder meeting.
- Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each Contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later than
two weeks after the Record Date.
- The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of voting instruction
solicitation material. The Fund will provide the last Annual Report to the
Company pursuant to the terms of Section 3.4 of the
Participation Agreement
to which this Schedule relates.
- The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 Business Days for printing information on the Cards. Information
commonly found on the Cards includes:
- name (legal name as found on account registration)
- address
- fund or account number
- coding to state number of units
- individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
C-1
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
- During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
- Voting Instruction Card(s)
- One proxy notice and statement (one document)
- return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
- "urge buckslip" - optional, but recommended (this is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important; one copy will be supplied by the
Fund.)
- cover letter - optional; supplied by Company and reviewed and approved
in advance by the Fund
- The above contents should be received by the Company approximately 3-5
Business Days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
- Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but NOT including,) the
shareholder meeting, counting backwards.
- Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
- Signatures on Card checked against legal name on account registration that
was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
C-2
- If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be NOT RECEIVED for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
- There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
- The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
- Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the shareholder meeting not later than 10:00 a.m. Eastern
time. The Fund may request an earlier deadline if reasonable and if
required to calculate the vote in time for the shareholder meeting.
- A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
- The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
- All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
C-3
SCHEDULE D
Operating Procedures
Unless otherwise defined below, all capitalized terms have the meanings
specified in the
Participation Agreement, each of which this Exhibit is a part.
All parties hereto agree and acknowledge that the Company, or its authorized
agent, may use either the manual procedures or the NSCC Fund/SERV procedures set
forth below to transmit, purchase, exchange and redeem orders of Portfolio
shares.
I. FUND/SERV AND NETWORKING PROCEDURES
A. FUND/SERV ACCOUNT ESTABLISHMENT. All parties hereto agree and
acknowledge that the Company or its designee may not open or establish any new
accounts through Fund/SERV or NSCC's Networking system ("Networking") without
the prior written consent of the Fund. The Company further acknowledges that the
Fund reserves the right to reject any new Fund/SERV or Networking accounts
established by the Company that have not been previously approved by the Fund in
writing.
B. TRANSMITTAL OF PORTFOLIO INFORMATION. With respect to each Portfolio,
the Fund will provide the Company or its designee, via the NSCC's Mutual Fund
Profile System, with (i) the net asset value per share of the Portfolio (the
"Share Price") on each Business Day, determined as of the time specified in the
Portfolio's prospectus ("Close of Trading"); (ii) dividend and capital gains
distribution information on ex-date, but no later than the first Business Day
following each ex-date established for the payment of dividends or capital gains
distributions by the Portfolio; and (iii) in the case of fixed income and money
market Portfolios which declare dividends daily, the daily accrual interest rate
factor. The Fund will use its best efforts to communicate such information to
the Company or its designee via the NSCC's Mutual Fund Profile System by 6:45
p.m. Eastern Time each Business Day; provided, however, that the Fund reserves
the right to communicate the Share Price at a time later than 6:45 p.m. Eastern
Time due to extraordinary or unforeseen circumstances.
C. TRANSMITTAL OF ORDERS. The Company agrees to use its best efforts to
ensure that, unless otherwise agreed to in writing with the Fund, orders for the
purchase, exchange or redemption of Fund shares ("Instructions") received by the
Company prior to the Close of Trading on any Business Day ("Day 1") will be
transmitted to the Fund's transfer agent via Fund/SERV and accepted by Fund/SERV
prior to 6:00 a.m. Eastern Time on the following Business Day ("Day 2") (such
orders are referred to as "Day 1 Trades"). Each transmission by the Company or
its designee of a purchase, exchange or redemption order relating to a Business
Day ("Order") will constitute a representation by the Company that such Order
was based on Instructions that the Company received and accepted as being in
good order prior to the Close of Trading on that Business Day, and that the
Order included all purchase, exchange and redemption Instructions so received by
the Company.
In the event that Orders for any Business Day are not transmitted to the
Fund via Fund/SERV and accepted by Fund/SERV prior to 6:00 a.m. Eastern Time on
Day 2, the
D-1
Company or its designee shall transmit such Orders to the Fund in accordance
with the Manual Procedures below. If such Orders are not transmitted to the Fund
in accordance with the Manual Procedures, the Fund reserves the right, in its
sole discretion, to reject, reverse or re-price the Orders (notwithstanding that
the Company may have received Fund/SERV confirmation of the Orders) and the
Company will be responsible for reimbursement of any loss sustained by the Fund
that may arise out of the improper transmittal of such Orders.
All Orders transmitted to the Fund via Fund/SERV will be communicated in
accordance with Fund/SERV rules, guidelines and procedures. The Company
acknowledges that certain cash flows may be known on or before a trade date, and
the Company agrees to use its reasonable efforts to notify the Fund of such cash
flows before such trade date.
D. FUND/SERV CONFIRMATION. All Orders transmitted in accordance with
Section C of these Fund/SERV and Networking Procedures are subject to acceptance
by the Fund and shall become effective only upon confirmation by the Fund. The
Fund or its designee will transmit a confirmation via Fund/SERV that will set
forth, for each T/A Account, the number of Portfolio shares purchased, exchanged
and redeemed, the beginning and ending share balances, and the net asset value
per share. The Fund reserves the right, in its sole discretion, (i) to reject
any Order (notwithstanding that Company may have received Fund/SERV confirmation
of the Order), and (ii) to require any Order to be settled outside of Fund/SERV,
in which case the Fund shall not confirm such Order via Fund/SERV and such Order
shall settle in accordance with the Manual Procedures discussed below.
E. PRICING OF ORDERS. Day 1 Trades communicated to the Fund as provided
under Section C of these Fund/SERV Procedures will be effected at the Share
Price for the applicable Portfolio on Day 1.
F. SETTLEMENT. Day 1 Trades confirmed by the Fund via Fund/SERV will settle
in U.S. dollars in accordance with the Fund's profile within Fund/SERV
applicable to the Company.
G. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund or designee will furnish the
Company or its designee notice of any dividends or other distributions payable
on the shares of each Portfolio via Networking. Dividends and distributions with
respect to a Portfolio will be automatically reinvested in additional shares of
the Portfolio held by the T/A Account(s) and the Fund or its designee will
notify the Company or its designee, via Networking, as to the number of shares
so issued.
H. ACCOUNT REPORTING AND VERIFICATION. The Fund or its designee will
transmit or make available to the Company, via Networking, a report containing
any transactions or other activity occurring in a T/A Account on a Business Day,
including any Fund/SERV transactions, and the share balance for each T/A Account
in accordance with Fund/SERV's Networking guidelines. The Company will promptly
review and verify this information on Networking and immediately advise the Fund
or designee in writing of any discrepancies between the Company's records and
the balance in the T/A Account(s).
D-2
If the Company chooses not to utilize Networking, the Fund or designee will
deliver to the Company a physical statement for the preceding calendar month
reflecting the shares of each Portfolio held by the T/A Account(s) as of the end
of such preceding month and all purchases, exchanges and redemptions by the
Company of shares of a Portfolio during such preceding month. The Company will,
immediately on receipt of any physical confirmation or statement concerning an
Account, verify the information contained therein against the information
contained on the Company's record-keeping system and immediately advise the Fund
in writing of any discrepancies between such information.
The Fund and the Company will cooperate to resolve any such discrepancies
mentioned in this Section H as soon as reasonably practicable.
I. PROCESSING ADJUSTMENTS. In the event of any error or delay with respect
to these Fund/SERV and Networking Procedures that is caused by the Fund or its
designee, the Fund will make any adjustments on its (or its transfer agent's)
accounting system necessary to correct such error or delay. The Company will
make the corresponding adjustments on its record-keeping system. The Company and
the Fund will each provide the other with prompt notice of any errors or delays
of the type referred to in these Fund/SERV and Networking Procedures.
J. FUND/SERV UNAVAILABILITY. If the Fund/SERV and Networking systems are
unavailable for any reason, or if it is otherwise impracticable to operate in
accordance with these Fund/SERV and Networking Procedures, transactions shall be
processed in accordance with the Manual Procedures below.
II. MANUAL PROCEDURES
A. TRANSMITTAL OF PORTFOLIO INFORMATION. With respect to each Portfolio,
the Fund or it transfer agent will provide the Company with (i) the Share Price
determined as of the Close of Trading on each Business Day; (ii) dividend and
capital gains distribution information on ex-date, but no later than the first
Business Day following each ex-date established for the payment of dividends or
capital gains distributions by the Portfolio; and (iii) in the case of fixed
income and money market Portfolios which declare dividends daily, the daily
accrual interest rate factor. The Fund will use its best efforts to communicate,
or have its transfer agent communicate, such information to the Company or its
designee by 6:45 p.m. Eastern Time each Business Day; however, the Fund reserves
the right to communicate the Share Price at a time later than 6:45 p.m. Eastern
Time due to extraordinary or unforeseen circumstances.
B. TRANSMITTAL OF ORDERS. The Company agrees to use its best efforts to
ensure that, unless otherwise agreed to in writing with the Fund, Instructions
received by the Company prior to the Close of Trading on any Business Day ("Day
1") will be transmitted to the Fund by facsimile no later than 9:00 a.m. Eastern
Time on the following Business Day ("Day 2") (such Orders are referred to as
"Day 1 Trades"). Each transmission by the Company or its designee of a purchase,
exchange or redemption order relating to a Business Day ("Order") will
constitute a representation by the Company that such Order was based on
Instructions that the Company received and accepted as being in good order prior
to the Close of Trading on that Business Day, and that the Order included all
purchase, exchange and redemption Instructions so received by the Company.
D-3
All Orders transmitted to the Fund will be communicated in U.S. dollars and
will indicate the date of the transaction. On Business Days where there are no
Orders, or where the net dollar amount for purchases and redemptions for an
Account equals zero, the communication will so indicate. The Company
acknowledges that certain cash flows may be known on or before a trade date, and
the Company agrees to use its reasonable efforts to notify the Fund of such cash
flows before such trade date.
C. CONFIRMATION. All Orders transmitted in accordance with Section B of
these Manual Procedures are subject to acceptance by the Fund and shall become
effective only upon confirmation by the Fund, which confirmation shall be sent
to the Company or its designee via facsimile. The Fund reserves the right, in
its sole discretion, to reject any Order.
D. PRICING OF ORDERS. The Company or its designee will use its best efforts
to ensure that Day 1 Trades are communicated to the Fund by 9:00 a.m. Eastern
Time on Day 2. Such Day 1 Trades so communicated will be effected at the Share
Price for the applicable Portfolio on Day 1.
E. SETTLEMENT.
1. Purchase Orders. In the case of Day 1 Trades that constitute a net
purchase (including exchanges) Order, the Company or its designee will use its
best efforts to arrange for a federal funds wire transfer of the net purchase
amount to a custodial account designated by the Fund by 2:00 p.m. Eastern Time
on Day 2.
2. Redemption Orders. In the case of Day 1 Trades that constitute a net
redemption (including exchanges) Order, the Fund or its designee will arrange
for a federal funds wire transfer of the net redemption amount to a custodial
account designated by the Company on Day 2, or in no instance later than the
time provided for in the applicable Portfolio's Prospectus.
3. Generally. Settlements will be in U.S. dollars, except that each
Portfolio reserves the right, in cases of substantial liquidations, to pay
redemption proceeds in whole or in part by a distribution in-kind of readily
marketable securities that it holds in lieu of cash in accordance with
applicable law, and the Portfolio's redemption policy as described in the
Prospectus. On any Business Day when the Federal Reserve Wire Transfer System is
closed, all communication and processing rules will be suspended for the
settlement of Orders. Orders will be settled on the next Business Day on which
the Federal Reserve Wire Transfer System is open. Transactions that are the
subject of such Orders will be processed at the Share Price for the applicable
Portfolio on the Business Day to which the Orders originally relate.
F. DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund or its designee will furnish
the Company or its designee written notice of any dividends or other
distributions payable on the shares of each Portfolio, via facsimile or other
method agreed upon by the parties. Dividends and distributions with respect to a
Portfolio will be automatically reinvested in additional shares of the Portfolio
held by the T/A Account(s) and the Fund or designee will notify the Company or
its designee as to the number of shares so issued.
D-4
G. ACCOUNT REPORTING AND VERIFICATION. The Fund or its designee will
deliver to the Company or its designee in writing, via facsimile or other method
agreed upon by the parties a statement for the preceding calendar month
reflecting the shares of each Portfolio held by the T/A Account(s) as of the end
of such preceding month and all purchases, exchanges and redemptions by the
Company of shares of a Portfolio during such preceding month. The Company will,
immediately on receipt of any statement concerning a T/A Account, verify the
information contained therein against the information contained on the Company's
record-keeping system and immediately advise the Fund or its designee, in
writing of any discrepancies between such information. The Fund and the Company
will cooperate to resolve any such discrepancies as soon as reasonably
practicable.
H. PROCESSING ADJUSTMENTS. In the event of any error or delay with respect
to these Manual Procedures that is caused by the Fund or its designee, the Fund
will make any adjustments on its (or its transfer agent's) recordkeeping system
necessary to correct such error or delay. The Company will make the
corresponding adjustments on its accounting system. The Company and the Fund
will each provide the other with prompt notice of any errors or delays of the
type referred to in these Manual Procedures.
D-5
