EXHIBIT (8)
Other Contracts
Forms of Participation Agreements
American Century Variable Portfolios, Inc.
INVESCO Variable Investment Funds, Inc.
Salomon Brothers Variable Series Funds Inc.
Summit Mutual Funds, Inc.
Third Avenue Variable Series Trust
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT effective as of April 30, 2002, by
and between First Ameritas Life Insurance Corp. of New York (the "Company"), and
AMERICAN CENTURY INVESTMENT SERVICES, INC. ("Distributor"),
WHEREAS, the Company offers to the public certain group and individual
variable annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as an investment option
under the Contracts VP Income & Growth (the "Fund") which is a series of mutual
fund shares registered under the Investment Company Act of 1940, as amended, and
issued by American Century Variable Portfolios, Inc. (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds, and the Company is willing and able to furnish such
services;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. Transactions in the Funds. Subject to the terms and conditions of
this Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts (defined in Section 7(a) below) through a single account per Fund at
the net asset value applicable to each order. The Funds' shares shall be
purchased and redeemed on a net basis in such quantity and at such time as
determined by the Company to satisfy the requirements of the Contracts for which
the Funds serve as underlying investment media. Dividends and capital gains
distributions will be automatically reinvested in full and fractional shares of
the Funds.
2. Administrative Services. The Company agrees to provide all
administrative services for the Contract owners, including but not limited to
those services specified in EXHIBIT A (the " Administrative Services"). Neither
Distributor nor the Issuer shall be required to provide Administrative Services
for the benefit of Contract owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise comply
with all laws, rules and regulations applicable to the marketing of the
Contracts and the provision of the Administrative Services. Upon request, the
Company will provide Distributor or its representatives reasonable information
regarding the quality of the Administrative Services being provided and its
compliance with the terms of this Agreement.
3. Timing of Transactions. Distributor hereby appoints the Company as
agent for the Funds for the limited purpose of accepting purchase and redemption
orders for Fund shares from the Contract owners. On each day the New York Stock
Exchange (the "Exchange") is open for business ( each, a "Business Day"), the
Company may receive instructions from the Contract owners for the purchase or
redemption of shares of the Funds ("Orders"). Orders received and accepted by
the Company prior to the close of regular trading on the Exchange (the "Close of
Trading") on any given Business Day (currently, 4:00 p.m. Eastern time) and
transmitted to the Funds' transfer agent by 9:30 a.m. Eastern time on the next
Business Day will be executed at the net asset value determined as of the Close
of Trading on such previous Business Day. Any Orders received by the Company on
such day but after the Close of Trading, will be executed at the net asset value
determined as of the Close of Trading on the next Business Day following the day
of receipt of such Order. The day as of which an Order is executed by the Funds'
transfer agent pursuant to the provisions set forth above is referred to herein
as the "Trade Date". All orders are subject to acceptance or rejection by
Distributor or the Funds in the sole discretion of either of them.
4. Processing of Transactions.
(a) If transactions in Fund shares are to be settled through the
National Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the Fund/SERV and
Networking Agreement, between Company and American Century Services Corporation,
an affiliate of Distributor, shall apply.
(b) If transactions in Fund shares are to be settled directly with the
Funds' transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day,
Distributor (or one of its affiliates) will provide to the Company via facsimile
or other electronic transmission acceptable to the Company the Funds' net asset
value, dividend and capital gain information and, in the case of income funds,
the daily accrual for interest rate factor (mil rate), determined at the Close
of Trading.
(2) By 9:30 a.m. Eastern time on the following Business Day,
the Company will provide to Distributor via facsimile or other electronic
transmission acceptable to Distributor a report stating whether the instructions
received by the Company from Contract owners by the Close of Trading on such
previous Business Day resulted in the Accounts being a net purchaser or net
seller of shares of the Funds. As used in this Agreement, the phrase "other
electronic transmission acceptable to Distributor" includes the use of remote
computer terminals located at the premises of the Company, its agents or
affiliates, which terminals may be linked electronically to the computer system
of Distributor, its agents or affiliates (hereinafter, "Remote Computer
Terminals").
(3) Upon the timely receipt from the Company of the report
described in (2) above, the Funds' transfer agent will execute the purchase or
redemption transactions (as the case may be) at the net asset value computed as
of the Close of Trading on the Trade Date. Payment for net purchase transactions
shall be made by wire transfer to the applicable Fund custodial account
designated by the Funds on the Business Day next following the Trade Date. Such
wire transfers shall be initiated by the Company's bank prior to 4:00 p.m.
Eastern time and received by the Funds prior to 6:00 p.m. Eastern time on the
Business Day next following the Trade Date ("T + 1 "). If payment for a purchase
Order is not timely received, such Order will be, at Distributor's option,
either (i) executed at the net asset value determined on the Trade Date, and the
Company shall be responsible for all costs to Distributor or the Funds resulting
from such delay, or (ii) executed at the net asset value next computed following
receipt of payment. Payments for net redemption transactions shall be made by
wire transfer by the Issuer to the account(s) designated by the Company on T +
1; provided however, the Issuer reserves the right to settle redemption
transactions within the time period set forth in the applicable Fund's
then-current 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 and the
original Trade Date will apply.
(4) In the event adjustments are required to correct any error
in the computation of the net asset value of any Fund's shares at the
shareholder level as a result of a pricing error that is deemed to be material
under the pricing policy of the Fund's Board of Directors or which Distributor
otherwise deems necessary to correct at the shareholder level:
(a) Distributor shall notify the Company as
soon as practicable after discovering the need for those adjustments which
result in a reimbursement to your clients. Notification shall be made by
facsimile or by direct or indirect systems access acceptable to the Company.
(b) If one or more of the Company's client
accounts received amounts from any Fund in excess of the amounts to which
it otherwise would have been entitled prior to an adjustment for an error, the
Company will use its best efforts to collect such excess amounts from the
applicable clients.
(c) If an adjustment is to be made in
accordance with subsection (a) above to correct an error which has caused a
client account to receive an amount less than that to which it is entitled, the
Fund shall use its best efforts to make all necessary adjustments to the number
of shares owned in the account and/or distribute to the Company the amount of
such underpayment for credit to the clients' subaccounts.
(d) For purposes of making adjustments as
provided above, the Funds will apply the same standards to all shareholders.
5. Prospectus and Proxy Materials.
(a) Distributor shall provide the Company with copies of the Issuer's
proxy materials, periodic fund reports to shareholders and other materials that
are required by law to be sent to the Issuer's shareholders. In addition,
Distributor shall provide the Company with a sufficient quantity of prospectuses
of the Funds to be used in conjunction with the transactions contemplated by
this Agreement, together with such additional copies of the Issuer's
prospectuses as may be reasonably requested by Company. If the Company provides
for pass-through voting by the Contract owners, or if the Company determines
that pass- through voting is required by law, Distributor will provide the
Company with a sufficient quantity of proxy materials for each, as directed by
the Company. The form of the Issuer's prospectus provided to the Company shall
be the final form of prospectus as filed with the Securities and Exchange
Commission which form shall include only those Funds the Company is making
available for purchase.
(b) The cost of preparing, printing and shipping of the prospectuses,
periodic fund reports and other materials of the Issuer to the Company shall be
paid by Distributor or its agents or affiliates; provided, however, that if at
any time Distributor or its agent reasonably deems the usage by the Company of
such items to be excessive, it may, prior to the delivery of any quantity of
materials in excess of what is deemed reasonable, request that the Company
demonstrate the reasonableness of such usage. If Distributor believes the
reasonableness of such usage has not been adequately demonstrated, it may
request that the party responsible for such excess usage pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, Distributor may
refuse to supply such additional materials and Distributor shall be deemed in
compliance with this Section 5 if it delivers to the Company at least the number
of prospectuses and other materials as may be required by the Issuer under
applicable law.
(c) The cost of any distribution of prospectuses, proxy materials,
periodic fund reports and other materials of the Issuer to the Contract owners
shall be paid by the Company and shall not be the responsibility of Distributor
or the Issuer.
6. Compensation and Expenses.
(a) The Accounts shall be the sole shareholder of Fund shares purchased
for the Contract owners pursuant to this Agreement (the "Record Owner"). The
Record Owner shall properly complete any applications or other forms required by
Distributor or the Issuer from time to time.
(b) Distributor acknowledges that it will derive a substantial savings
in administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company,
Distributor will pay the Company a fee (the "Administrative Services Fee") equal
to 25 basis points (0.25%) per annum of the average aggregate amount invested by
the Company under this Agreement.
(c) The payments received by the Company under this Agreement are for
administrative and shareholder services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution.
(d) For the purposes of computing the payment to the Company
contemplated by this Section 6, the average aggregate amount invested by the
Company on behalf of the Accounts in the Funds over a one month period shall be
computed by totaling the Company's aggregate investment (share net asset value
multiplied by total number of shares of the Funds held by the Company) on each
Business Day during the month and dividing by the total number of Business Days
during such month.
(e) Distributor will calculate the amount of the payment to be made
pursuant to this Section 6 at the end of each calendar quarter and will make
such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by Distributor for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
First Ameritas Life Insurance Corp. of New York
0000 "0" Xxxxxx
Xxxxxxx, XX 00000
Attention: Sr. Accountant -Variable Processing
Phone No.: 000-000-0000
Fax No.: 000-000-0000
7. Representations.
(a) The Company represents and warrants that (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
Separate Account V and the Separate Account V A-2 (the " Accounts"), each of
which is a duly authorized and established separate account under Nebraska
Insurance law, and has registered each Account as a unit investment trust under
the Investment Company Act of 1940 (the "1940 Act") to serve as an investment
vehicle for the Contracts; (iii) each Contract provides for the allocation of
net amounts received by the Company to an Account for investment in the shares
of one or more specified investment companies selected among those companies
available through the Account to act as underlying investment media; (iv)
selection of a particular investment company is made by the Contract owner under
a particular Contract, who may change such selection from time to time in
accordance with the terms of the applicable Contract; and (v) the activities of
the Company contemplated by this Agreement comply in all material respects with
all provisions of federal and state securities laws applicable to such
activities.
(b) Distributor represents that (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of Distributor,
enforceable in accordance with its terms; (ii) the prospectus of each Fund
complies in all material respects with federal and state securities laws, and
(iii) shares of the Issuer are registered and authorized for sale in accordance
with all federal and state securities laws.
(c) The Distributor represents that the Issuer will invest its assets
in such a manner as to ensure that the Contracts will be treated as annuity or
life insurance contracts, whichever is appropriate, under the Code and the
regulations issued thereunder (or any successor provisions). Without limiting
the scope of the foregoing, each Fund complied and will continue to comply with
Section 8l7(h) of the Code and Treasury Regulation ss. 1.817-5, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts, and any amendments or
other modifications or successor provisions to such Section or Regulations. In
the event of a breach of this Article VI by the Distributor or Issuer, it will
take all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
8. Additional Covenants and Agreements.
(a) Each party shall comply with all provisions of federal and state
laws applicable to its respective activities under this Agreement. All
obligations of each party under this Agreement are subject to compliance with
applicable federal and state laws.
(b) Each party shall promptly notify the other party in the event that
it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners, in
proper form prior to the Close of Trading of the Exchange on that Business Day.
The Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with Section 8( c) hereof.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to Distributor, shall be sent by or under the authority and direction
of a person designated by the Company as being duly authorized to act on behalf
of the owner of the Accounts. Distributor shall be entitled to rely on the
existence of such authority and to assume that any person transmitting Orders
for the purchase, redemption or transfer of Fund shares on behalf of the Company
is "an appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefore. The Company further
agrees to be responsible for the accuracy, propriety and consequences of all
data transmitted to Distributor by the Company by telephone, telecopy or other
electronic transmission acceptable to Distributor .
(e) The Company agrees that, to the extent it is able to do so, it will
use its best efforts to give equal emphasis and promotion to shares of the Funds
as is given to other underlying investments of the Accounts, subject to
applicable Securities and Exchange Commission rules. In addition, the Company
shall not impose any fee, condition, or requirement for the use of the Funds as
investment options for the Contracts that operates to the specific prejudice of
the Funds vis-a-vis the other investment media made available for the Contracts
by the Company.
(f) The Company shall not, without the written consent of Distributor,
make representations concerning the Issuer or the shares of the Funds except
those contained in the then-current prospectus and in current printed sales
literature approved by Distributor or the Issuer .
(g) Advertising and sales literature with respect to the Issuer or the
Funds prepared by the Company or its agents, if any, for use in marketing shares
of the Funds as underlying investment media to Contract owners shall be
submitted to Distributor for review and approval before such material is used.
9. Use of Names. Except as otherwise expressly provided for in this
Agreement, neither Distributor nor any of its affiliates nor the Funds shall use
any trademark, trade name, service xxxx or logo of the Company, or any variation
of any such trademark, trade name, service xxxx or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service xxxx or logo of the
Issuer, Distributor or any variation of any such trademarks, trade names,
service marks, or logos, without the prior written consent of either the Issuer
or Distributor, as appropriate, the granting of which shall be at the sole
option of Distributor and/or the Issuer.
10. Proxy Voting.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in Section 12(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by Distributor and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for which
no voting instructions are received in the same proportion as shares for which
such instructions have been received. The Company and its agents shall not
oppose or interfere with the solicitation of proxies for Fund shares held for
such Contract owners.
11. Indemnity.
(a) Distributor agrees to indemnify and hold harmless the Company and
its officers, directors, employees, agents, affiliates and each person, if any,
who controls the Company within the meaning of the Securities Act of 1933 (
collectively, the "Indemnified Parties" for purposes of this Section 11(a))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively , "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses result from a breach by Distributor of a
material provision of this Agreement. Distributor will reimburse any legal or
other expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. Distributor shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of the Company in performing its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless Distributor and
the Issuer, and their respective officers, directors, employees, agents,
affiliates and each person, if any, who controls Issuer or Distributor within
the meaning of the Securities Act of 1933 (collectively, the "Indemnified
Parties" for purposes of this Section 11(b)) against any Losses to which the
Indemnified Parties may become subject, insofar as such Losses result from a
breach by the Company of a material provision of this Agreement or the use by
any person of the Remote Computer Terminals. The Company will reimburse any
legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Company shall
not be liable for indemnification hereunder if such Losses are attributable to
the negligence or misconduct of Distributor or the Issuer in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 11. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action,
the indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
12. Potential Conflicts
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Issuer on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) 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
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof.
(b) 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.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the Company
is responsible for causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably practicable (as determined
by a majority of the disinterested Board members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the
Fund and reinvesting such assets in a different investment medium or submitting
the question of whether such segregation should be implemented to a vote of all
affected contract owners and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and/or
(ii) establishing a new registered management
investment company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company at
its sole cost, may be required, at the Board's election, to withdraw an
Account's investment in the Issuer and terminate this Agreement; 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.
(e) For the purpose of this Section 12, a majority of the disinterested
Board members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Issuer
be required to establish a new funding medium for any Contract. The Company
shall not be required by this Section 12 to establish a new funding medium for
any Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
13. Termination; Withdrawal of Offering.
(a) This Agreement may be terminated by either party upon 30 days'
prior written notice to the other party. Notwithstanding the above, the Issuer
reserves the right, without prior notice, to suspend sales of shares of any
Fund, in whole or in part, or to make a limited offering of shares of any of the
Funds in the event that (i) any regulatory body commences formal proceedings
against the Company, Distributor, affiliates of Distributor, or the Issuer,
which proceedings Distributor reasonably believes may have a material adverse
impact on the ability of Distributor, the Issuer or the Company to perform its
obligations under this Agreement or (ii) in the judgment of Distributor,
declining to accept any additional instructions for the purchase or sale of
shares of any such Fund is warranted by market, economic or political
conditions. Notwithstanding the foregoing, this Agreement may be terminated
immediately (A) by any party as a result of any other breach of this Agreement
by another party, which breach is not cured within 30 days after receipt of
notice from the other party, or (B) by any party upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order. Termination of this Agreement shall not
affect the obligations of the parties to make payments under Section 4 for
Orders received by the Company prior to such termination and shall not affect
the Issuer's obligation to maintain the Accounts as set forth by this Agreement.
Following termination, Distributor shall not have any Administrative Services
payment obligation to the Company (except for payment obligations accrued but
not yet paid as of the termination date).
(b) Notwithstanding any termination of this Agreement, the Fund and the
Distributor shall, at the option of the Company, continue to make available
additional shares of the Fund pursuant to the terms and conditions of this
Agreement, for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as the "Existing Contract"), unless the
Distributor requests that the Company seek an order pursuant to Section 26(b) of
the 1940 Act to permit substitution of other securities for the shares of the
designated portfolios. The Distributor agrees to bear all costs of seeking any
order requested by Distributor, and the Company agrees that it shall reasonably
cooperate with the Distributor and seek such an order upon request.
Specifically, the owners of the Existing Contracts may be permitted to
reallocate investments in the fund, redeem investments in the Fund and or invest
in the Fund upon the making of additional purchase payments under the Existing
Contracts (subject to any such election by the Distributor.)
14. Non-Exclusivity. Both parties acknowledge and agree that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each party is free to enter into similar agreements and arrangements
with other entities.
15. Survival. The provisions of Section 9 (Use of Names) and
Section 11 (Indemnity) of this Agreement shall survive termination of this
Agreement.
16. Amendment. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
17. Notices. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
First Ameritas Life Insurance Corp. of New York
General Counsel
0000 "0" Xxxxxx
Xxxxxxx, XX 00000
(000) 000-0000 (office number)
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 17 shall be deemed to have been delivered on receipt.
18. Successors and Assigns. This Agreement may not be assigned
without the written consent of both parties to the Agreement at the time of
such assignment. This Agreement shall be binding upon and inure to the benefit
both parties hereto and their respective permitted successors and assigns.
19. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and any party hereto may execute this Agreement by signing any such counterpart.
20. Severability. In case anyone or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity , legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
21. Entire Agreement This Agreement, including the attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
If the foregoing correctly sets forth our understanding, please
indicate your agreement to and acceptance thereof by signing below, whereupon
this Agreement shall become a binding agreement between us as of the latest date
indicated.
AMERICAN CENTURY INVESTMENT
SERVICE, INC.
By:
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Name:
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Title:
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Date:
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We agree to and accept the terms of the foregoing Agreement.
First Ameritas Life Insurance Corp. of New York
By:
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Name: Xxxxxxxx X. Xxxxxxxx
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Title: President and Chief Executive Officer
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Date:
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EXHIBIT A
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain separate records for each Contract owner, which records
shall reflect the shares purchased and redeemed and share balances of such
Contract owners. The Company will maintain a single master account with each
Fund on behalf of the Contract owners and such account shall be in the name of
the Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of
redemptions of shares of the Funds and all dividends and other distributions
not reinvested in shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or
the Contracts, periodic statements showing the total number of shares owned by
the Contract owners as of the statement closing date, purchases and redemptions
of Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on
behalf of the Contract owners in accordance with the procedures set forth in
Section 4 to the Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus,
proxy materials, periodic fund reports to shareholders and other materials that
the Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to
be maintained and preserved in connection with providing the Administrative
Services for the Contracts.
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 30 day April of 2002, (the
"Agreement") by and among First Ameritas Life Insurance Corp. of New York,
organized under the laws of the State of Nebraska (the "Company"), on behalf of
itself and each separate account of the Company named in Schedule A to this
Agreement, as may be amended from time to time (each account referred to as the
"Account" and collectively as the "Accounts"); INVESCO Variable Investment
Funds, Inc., an open-end management investment company organized under the laws
of the State of Maryland (the "Fund"); INVESCO Funds Group, Inc., a corporation
organized under the laws of the State of Delaware and investment adviser to the
Fund (the "Adviser"); and INVESCO Distributors, Inc. , a corporation organized
under the laws of the State of Delaware and principal underwriter/distributor of
the Fund (the "Distributor").
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies which have
entered into participation agreements substantially similar to this Agreement
(the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Company, as depositor, has established the Accounts to serve as
investment vehicles for certain variable annuity contracts and variable life
insurance policies and funding agreements offered by the Company set forth on
Schedule A (the "Contracts"); and
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions of the Board of Directors of the Company
under the insurance laws of the State of Nebraska, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I -SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios which each Account orders, executing such orders on a daily
basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the
Company will be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee will constitute receipt
by the Fund; provided that the Fund receives notice of such order by 11
:00 a.m. Eastern Time on the next following business day. "Business
Day" will mean any day on which the New York Stock Exchange is open for
trading and on which the Fund calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission (the
"Commission"). The Fund may net the notice of redemptions it receives
from the Company under Section 1.3 of this Agreement against the notice
of purchases it receives from the Company under this Section 1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon receipt
by the Fund of the payment, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing
such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request
for redemption. For purposes of this Section 1.3, the Company will be
the designee of the Fund for receipt of requests for redemption from
each Account and receipt by such designee will constitute receipt by
the Fund; provided the Fund receives notice of such requests for
redemption by 11 :00 a.m. Eastern Time on the next following Business
Day. Payment will be made in federal funds transmitted by wire to the
Company's account as designated by the Company in writing from time to
time, on the same Business Day the Fund receives notice of the
redemption order from the Company. After consulting with the Company,
the Fund reserves the right to delay payment of redemption proceeds,
but in no event may such payment be delayed longer than the period
permitted under Section 22(e) of the Investment Company Act of 1940
(the "1940 Act"). The Fund will not bear any responsibility whatsoever
for the proper disbursement or crediting of redemption proceeds; the
Company alone will be responsible for such action. If notification of
redemption is received after 11:00 Eastern Time, payment for redeemed
shares will be made on the next following Business Day. The Fund may
net the notice of purchases it receives from the Company under Section
1.1 of this Agreement against the notice of redemptions it receives
from the Company under this Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on
those days on which the Fund calculates its Designated Portfolio net
asset value pursuant to rules of the Commission; provided, however,
that the Board of Directors of the Fund (the "Fund Board") may refuse
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 Fund 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.
1.5 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Code"), and regulations promulgated thereunder,
the sale to which will not impair the tax treatment currently afforded
the Contracts. No shares of any Portfolio will be sold directly to the
general public.
1.6 The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the
same as Articles I, III, V, and VI of this Agreement are in effect to
govern such sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate sub-account of
each Account.
1.9 The Fund will furnish same day notice (by facsimile) to the Company of
the declaration of any income, dividends or capital gain distributions
payable on each Designated Portfolio's shares. The Company hereby
elects to receive all such dividends and distributions as are payable
on the Portfolio shares in the form of additional shares of that
Portfolio at the ex-dividend date net asset values. The Company
reserves the right to revoke this election and to receive all such
dividends and distributions in cash. The Fund will notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.10 The- Fund will make the net asset value per share for each Designated
Portfolio available to the Company via electronic means on a daily
basis as soon as reasonably practical after the net asset value per
share is calculated and will use its best efforts to make such net
asset value per share available by 7:00 p.m., Eastern Time, each
business day. If the Fund provides the Company materially incorrect net
asset value per share information (as determined under SEC guidelines),
the Company shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share.
Any material error in the calculation or reporting of net asset value
per share, dividend or capital gain information shall be reported to
the Company upon discovery by the Fund.
ARTICLE II -REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are
exempt from registration thereunder, and that the Contracts will be
issued and sold in compliance with all applicable federal and state
laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable
law and that it has legally and validly established each Account as a
separate account under Section 44-402 of the General Statutes of
Nebraska and that each Account is or will be registered as a unit
investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts, or is
exempt from registration thereunder, and that it will maintain such
registration for so long as any Contracts are outstanding, as
applicable. The Company will amend the registration statement under the
1933 Act for the Contracts and the registration statement under the
1940 Act for the Account from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company will register and qualify the
Contracts for sale in accordance with the securities laws of the
various states only if and to the extent deemed necessary by the
Company.
2.2 The Company represents that the Contracts are currently and at the time
of issuance will be treated as annuity contracts and/or life insurance
policies (as applicable) under applicable provisions of the Code, and
that it will make every effort to maintain such treatment and that it
will notify the Fund and the Adviser immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future .
2.3 The Company represents and warrants that it will not purchase shares of
the Designated Portfolio(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4 The Fund represents and warrants that shares of the Designated
Portfolio(s) sold pursuant to this Agreement will be registered under
the 1933 Act and duly authorized for issuance in accordance with
applicable law and that the Fund is and will remain registered as an
open-end management investment company under the 1940 Act for as long
as such shares of the Designated Portfolio(s) are sold. The Fund will
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 will register and qualify
the shares of the Designated Portfolio(s) for sale in accordance with
the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.5 The Fund represents that it will use its best efforts to comply with
any applicable state insurance laws or regulations as they may apply to
the investment objectives, policies and restrictions of the Portfolios,
as they may apply to the Fund, to the extent specifically requested in
writing by the Company. If the Fund cannot comply with such state
insurance laws or regulations, it will so notify the Company in
writing. The Fund makes no other representation as to whether any
aspect of its operations (including, but not limited to, fees and
expenses, and investment policies) complies with the insurance laws or
regulations of any state. The Company represents that it will use its
best efforts to notify the Fund of any restrictions imposed by state
insurance laws that may become applicable to the Fund as a result of
the Accounts' investments therein. The Fund and the Adviser agree that
they will furnish the information required by state insurance laws to
assist the Company in obtaining the authority needed to issue the
Contracts in various states.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have the directors of
its Fund Board, a majority of whom are not "interested" persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.7 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 applicable provisions of the 0000
Xxx.
2.8 The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and 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 minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be Promulgated from time to time. The
aforesaid bond includes coverage for larceny and embezzlement and is
issued by a reputable bonding company.
2.9 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and will remain duly registered under all applicable federal
and state securities laws and that it will perform its obligations for
the Fund in accordance in all material respects with the laws of the
State of Delaware and any applicable state and federal securities laws.
2.10 The Distributor represents and warrants that it is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws, and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and
serves as principal underwriter/distributor of the Funds and that it
will perform its obligations for the Fund in accordance in all material
respects with the laws of the State of Delaware and any applicable
state and federal securities laws.
2.11 The Fund, the Adviser and the Distributor represents and warrants to
the Company that each has a Year 2000 compliance program in existence
and that each reasonably intends to be Year 2000 compliant so as to be
able perform all of the services and/or obligations contemplated by or
under this Agreement without interruption. The Fund, the Adviser, and
the Distributor shall immediately notify the Company if it determines
that it will be unable perform all of the services and/or obligations
contemplated by or under this Agreement in a manner that is Year 2000
compliant.
ARTICLE III -FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
requirements of Subchapter M of the Code or the diversification
requirements of Section 817(h) of the Code may result in the Contracts
not being treated as variable contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners
and could also adversely affect the Company's corporate tax liability.
The Fund and the Adviser further acknowledge that any such failure may
result in costs and expenses being incurred by the Company in obtaining
whatever regulatory authorizations are required to substitute shares of
another investment company for those of the failed Fund or as well as
fees and expenses of legal counsel and other advisors to the Company
and any federal income taxes, interest or tax penalties incurred by the
Company in connection with any such failure.
3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
it will 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 that it might not so qualify in the future.
3.3 The Fund represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be
treated as variable contracts under the Code and the regulations issued
thereunder; including, but not limited to, that the Fund will at all
times comply with Section 817(h) of the Code and Treasury Regulation
1.817-5, as amended from time to time, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts, and with Section 817 (d) of the Code, relating to the
definition of a variable contract, and any amendments or other
modifications to such Section or Regulation. The Fund will notify the
Company immediately upon having a reasonable basis for believing that
the Fund or a Portfolio thereunder has ceased to comply with the
diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the
event of a breach of this representation by the Fund, it will take all
reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation
1.817-5.
3.4 The Adviser agrees to provide the Company with a certificate or
statement indicating compliance by each Portfolio of the Fund with
Section 817(h) of the Code, such certificate or statement to be sent to
the Company no later than thirty (30) days following the end of each
calendar quarter .
ARTICLE IV -PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with as many copies of the current
Fund prospectus and any supplements thereto for the Designated
Portfolio(s) as the Company may reasonably request for distribution, at
the Fund's expense, to Contract owners at the time of Contract
fulfillment and confirmation. To the extent that the Designated
Portfolio(s) are one or more of several Portfolios of the Fund, the
Fund shall bear the cost of providing the Company only with disclosure
related to the Designated Portfolio(s). The Fund will provide, at the
Fund's expense, as many copies of said prospectus as necessary for
distribution, at the Fund's expense, to existing Contract owners. The
Fund will provide the copies of said prospectus to the Company or to
its mailing agent. The Company will distribute the prospectus to
existing Contract owners and will xxxx the Fund for the reasonable cost
of such distribution. If requested by the Company, in lieu thereof, the
Fund will provide such documentation, including a final copy of a
current prospectus set in type at the Fund's expense, and other
assistance as is reasonably necessary in order for the Company at least
annually (or more frequently if the Fund prospectus is amended more
frequently) to have the new prospectus for the Contracts and the Fund's
new prospectus printed together, in which case the Fund agrees to pay
its proportionate share of reasonable expenses directly related to the
required disclosure of information concerning the Fund. The Fund will,
upon request, provide the Company with a copy of the Fund's prospectus
through electronic means to facilitate the Company's efforts to provide
Fund prospectuses via electronic delivery , in which case the Fund
agrees to pay its proportionate share of reasonable expenses related to
the required disclosure of information concerning the Fund.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company. The
Fund will provide the Company, at the Fund's expense, with as many
copies of the SAI and any supplements thereto as the Company may
reasonably request for distribution, at the Fund's expense, to
prospective Contract owners and applicants. To the extent that the
Designated Portfolio(s) are one or more of several Portfolios of the
Fund, the Fund shall bear the cost of providing the Company only with
disclosure related to the Designated Portfolio(s). The Fund will
provide, at the Fund's expense, as many copies of said SAI as necessary
for distribution, at the Fund's expense, to any existing Contract owner
who requests such statement or whenever state or federal law requires
that such statement be provided. The Fund will provide the copies of
said SAI to the Company or to its mailing agent. The Company will
distribute the SAI as requested or required and will xxxx the Fund for
the reasonable cost of such distribution.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, reports to
shareholders/Contract owners and other permissible communications to
shareholders/Contract owners in such quantity as the Company will
reasonably require. The Company will distribute this proxy material,
reports and other communications to existing Contract owners and will
xxxx the Fund for the reasonable cost of such distribution.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Portfolios held in
the Account in accordance with instructions received from
Contract owners; and
(c) vote shares of the Designated Portfolios held in the Account
for which no timely instructions have been received, in the
same proportion as shares of such Designated Portfolio for
which instructions have been received from the Company's
Contract owners,
so long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for variable
Contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent
permitted by law. The Company will be responsible for assuring that the
Accounts participating in the Fund calculates voting privileges in a
manner consistent with all legal requirements, including the Proxy
Voting Procedures set forth in Schedule C and the Mixed and Shared
Funding Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will provide
for annual meetings (except insofar as the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or, as the
Fund currently intends, to 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 Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance with the
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of directors and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE V- SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund or
the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material will be used if the
Fund or the Adviser reasonably objects to such use within five (5)
Business Days after receipt of such material.
5.2 The Company will 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, prospectus or
SAI for Fund shares, as such registration statement, prospectus and SAI
maybe amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in published reports for the Fund which are
in the public domain or approved by the Fund or the Adviser for
distribution, or in sales literature or other material provided by the
Fund or by the Adviser, except with permission of the Fund or the
Adviser. The Fund and the Adviser agree to respond to any request for
approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to
the Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is
named, at least ten (10) Business Days prior to its use. No such
material will be used if the Company reasonably objects to such use
within five (5) Business Days after receipt of such material.
5.4 The Fund and the Adviser will not give any information or make any
representations or statements 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 or
SAI for the Contracts, as such registration statement, prospectus and
SAI may be amended or supplemented from time to time, or in published
reports for each Account or the Contracts which are in the public
domain or approved by the Company for distribution to Contract owners,
or in sales literature or other material provided by the Company,
except with permission of the Company. The Company agrees to respond to
any request for approval on a prompt and timely basis.
5.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAls, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Fund or its shares, within a
reasonable time after filing of each such document with the Commission
or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, 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 the Contracts or each
Account, contemporaneously with the filing of each such document with
the Commission or the NASD (except that with respect to post-effective
amendments to such prospectuses and SAls and sales literature and
promotional material, only those prospectuses and SAls and sales
literature and promotional material that relate to or refer to the Fund
will be provided.) In addition, the Company will provide to the Fund at
least one complete copy of (i) a registration statement that relates to
the Contracts or each Account, containing representative and relevant
disclosure concerning the Fund; and (ii) any post-effective amendments
to any registration statements relating to the Contracts or such
Account that refer to or relate to the Fund.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or
other public media, (i.e., on-line networks such as the Internet or
other electronic messages)), sales literature (i.e., any written
communication distributed or made generally available to customers or
the public, including brochures, circulars, research reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made
generally available to some or all agents or employees, registration
statements, prospectuses, SAIs, shareholder reports, and proxy
materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
5.8 The Investment Company, the Adviser and the Distributor hereby consent
to the Company's use of the names of the INVESCO, AMVESCAP and INVESCO
Funds Group, Inc. as well as the names of the Designated Funds set
forth in Schedule B of this Agreement, in connection with marketing the
Contracts, subject to the terms of Sections 5.1 of this Agreement. The
Company acknowledges and agrees that Adviser and Distributor and/or
their affiliates own all right, title and interest in and to the name
INVESCO and the INVESCO open circle design, and covenants not, at any
time, to challenge the rights of Adviser and Distributor and/or their
affiliates to such name or design, or the validity or distinctiveness
thereof. The Investment Company, the Adviser and the Distributor hereby
consent to the use of any trademark, trade name, service xxxx or logo
used by the Investment Company, the Adviser and the Distributor,
subject to the Investment Company's, the Adviser's and/or the
Distributor's approval of such use and in accordance with reasonable
requirements of the Investment Company, the Adviser or the Distributor.
Such consent will terminate with the termination of this Agreement.
Adviser or Distributor may withdraw this consent as to any particular
use of any such name or identifying marks at any time (i) upon
Adviser's or Distributor's reasonable determination that such use would
have a material adverse effect on the reputation or marketing efforts
of Adviser, Distributor or such Funds or (ii) if no investment company,
or series or class of shares of any investment company advised by
Adviser or distributed by Distributor continues to be offered through
variable insurance contracts issued by Insurance Company; provided
however, that Adviser or Distributor may, in either's individual
discretion, continue to use materials prepared or printed prior to the
withdrawal of such authorization. The Company agrees and acknowledges
that all use, of any designation comprised in whole or in part of the
name, trademark, trade name, service xxxx and logo under this Agreement
shall inure to the benefit of the Investment Company, Adviser and/or
the Distributor .
5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt
and implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is
intended for use only by brokers or agents selling the Contracts is
properly marked as "Not For Use With The Public" and that such
information is only so used.
ARTICLES VI -FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under
this Agreement, except as provided below: (a) if the Fund or any
Designated Portfolio adopts and implements a plan pursuant to Rule
12b-l under the 1940 Act to finance distribution expenses, then,
subject to obtaining any required exemptive orders or other regulatory
approvals, the Fund may make payments to the Company or to the
underwriter for the Contracts if and in such amounts agreed to by the
Fund in writing; (b) the Fund may pay fees to the Company for
administrative services provided to Contract owners that are not
primarily intended to result in the sale of shares of the Designated
Portfolio or of underlying Contracts.
6.2 All expenses incident to performance by the Fund of this Agreement will
be paid by the Fund to the extent permitted by law. All shares of the
Designated Portfolios will be duly authorized for issuance and
registered in accordance with applicable federal law and, to the extent
deemed advisable by the Fund, in accordance with applicable state law,
prior to sale. The Fund will bear the expenses for the cost of
registration and qualification of the Fund's shares, including without
limitation, the preparation of and filing with the SEC of Forms N-SAR
and Rule 24f-2 Notices and payment of all applicable registration or
filing fees with respect to shares of the Fund; preparation and filing
of the Fund's prospectus, SAI and registration statement, proxy
materials and reports; typesetting the Fund's prospectus; typesetting
and printing proxy materials and reports to Contract owners (including
the costs of printing a Fund prospectus that constitutes an annual
report); the preparation of all statements and notices required by any
federal or state law; all taxes on the issuance or transfer of the
Fund's shares; any expenses permitted to be paid or assumed by the Fund
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and
other costs associated with preparation of prospectuses and SAls for
the Designated Portfolios in electronic or typeset format, as well as
any distribution expenses as set forth in Article III of this
Agreement.
ARTICLE VII -MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from the
Commission granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate accounts
relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of
the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to
the extent necessary to permit shares of the Fund to be sold to and
held by variable annuity separate accounts and variable life insurance
separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and qualified pension and retirement plans outside
of the separate account context (the "Mixed and Shared Funding
Exemptive Order"). The parties to this Agreement agree that the
conditions or undertakings specified in the Mixed and Shared Funding
Exemptive Order and that may be imposed on the Company, the Fund and/or
the Adviser by virtue of the receipt of such order by the Commission,
will be incorporated herein by reference, and such parties agree to
comply with such conditions and undertakings to the extent applicable
to each such party .
7.2 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among 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, but not limited to: (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 Participating
Insurance Companies or by variable annuity and variable life insurance
Contract owners; or (t) a decision by an insurer to disregard the
voting instructions of Contract owners. The Fund Board will promptly
inform the Company if it determines that ail. irreconcilable material
conflict exists and the implications thereof. A majority of the Fund
Board will consist of persons who are not "interested" persons of the
Fund.
7.3 The Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities, as delineated in the Mixed and
Shared Funding Exemptive Order, by providing the Fund Board with all
information reasonably necessary for the Fund Board to consider any
issues raised. This includes, but is not limited to, an obligation by
the Company to inform the Fund Board whenever Contract owner voting
instructions are to be disregarded. The Fund Board will record in its
minutes, or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4 If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies will,
at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take whatever
steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (a) withdrawing the assets allocable to
some or all of the 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 submitted to a vote of all
affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., variable annuity Contract owners or
variable life insurance Contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or
offering to the affected Contract owners the option of making such a
change; and (b) establishing a new registered management investment
company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the
affected sub-account of the Account's investment in the Fund and
terminate this Agreement with respect to such sub-account; provided,
however, that such withdrawal and termination will be limited to the
extent required by the foregoing irreconcilable material conflict as
determined by a majority of the disinterested directors of the Fund
Board. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Fund gives written notice to the Company that
this provision is being implemented. Until the end of such six-month
period the Adviser and Fund will, to the extent permitted by law and
any exemptive relief previously granted to the Fund, continue to accept
and implement orders by the Company for the purchase (and redemption)
of shares of the Fund.
7.6 If an irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state insurance regulators, then the Company will
withdraw the affected sub-account of the Account's investment in the
Fund and terminate this Agreement with respect to such sub-account;
provided, however, that such withdrawal and termination will be limited
to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of
the Fund Board. No charge or penalty will be imposed as a result of
such withdrawal. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice to the
Company that this provision is being implemented. Until the end of such
six-month period the Advisor and Fund will, to the extent permitted by
law and any exemptive relief previously granted to the Fund, continue
to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority
of the disinterested members of the Fund Board will determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event, other than as specified in Section 7.4, will
the Fund be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.4 to establish
a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners affected by the
irreconcilable material conflict.
7.7 The Company will at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so
that the Fund Board may fully carry out the duties imposed upon it as
delineated in the Mixed and Shared Funding Exemptive Order, and said
reports, materials and data will be submitted more frequently if deemed
appropriate by the Fund Board.
7.8 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 Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then: (a)
the Fund and/or the Participating Insurance Companies, as appropriate,
will take such steps as may be necessary to comply with Rules 6e-2 and
'6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 4.4, 4.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the extent
that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII -INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund,
the Adviser, the Distributor , and each person, if any,
who controls or is associated with the Fund, the
Adviser, or the Distributor within the meaning of such
terms under the federal securities laws and any
director, trustee, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.1) against any and all losses,
claims, expenses, damages, liabilities (including amounts
paid in settlement with the written consent of the Company)
or actions in respect thereof (including reasonable legal
and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common
(1) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement, prospectus
or SAI for the Contracts or
contained in the Contracts or sales literature or
other promotional material for the Contracts (or any
amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the
alleged omission to state therein a material fact
required to be stated or necessary to make such
statements not misleading in light of the
circumstances in which they were made; provided that
this agreement to indemnify will not apply as to any
Indemnified Party if such statement or omission of
such alleged statement or omission was made in
reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund,
the Adviser, of the Distributor for use in the
registration statement, prospectus or SAI for the
Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund,
or any amendment or supplement to the foregoing, not
supplied by the Company or persons under its control)
or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(3) arise out of untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund
(or amendment or supplement) or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
such statements not misleading in light of the
circumstances in which they were made, if such 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 persons under its
control; or
(4) 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
(5) arise out of any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any
other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement. (c) The
Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree to indemnify and hold
harmless the Company and each person, if any, who controls
or is associated with the Company within the meaning of such
terms under the federal securities laws and any director,
officer, employee or agent of the foregoing (collectively,
the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the
written consent of the Adviser and Distributor) or actions
in respect thereof (including reasonable legal and other
expenses) to which the Indemnified Parties may become
subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or
settlements:
(1) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, prospectus or SAI for
the Fund or sales literature or other promotional
material 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 or
necessary to make such statements not misleading in
light of the circumstances in which they were made;
provided that this agreement to indemnify will not
apply as to any Indemnified Party if such statement or
omission of such alleged statement or omission was made
in reliance upon and in conformity with information
furnished to the Adviser or Fund by or on behalf of the
Company for use in the registration statement,
prospectus or SAI for the Fund or in sales literature
of the Fund ( or any amendment or supplement thereto)
or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statements,
prospectuses or statements of additional information
or sales literature or other promotional material for
the Contracts or of the Fund, or any amendment or
supplement to the foregoing, not supplied by the
Adviser or the Fund or persons under the control of
the Adviser or the Fund respectively) or wrongful
conduct of the Adviser or the Fund or persons under
the control of the Adviser or the Fund respectively,
with respect to the sale or distribution of the
Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI or sales
literature or other promotional material covering the
Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein
a material fact required to be stated or necessary to
make such statement or statements not misleading in
light of the circumstances in which they were made,
if such statement or omission was made in reliance
upon and in conformity with information furnished to
the Company by or on behalf of the Adviser or the
Fund or persons under the control of the Adviser or
the Fund; or
(4) arise as a result of any failure by the Fund or the
Adviser to provide the services and furnish the
materials under the terms of this Agreement; or
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser or the Fund in this Agreement, or arise out
of or result from any other material breach of this
Agreement by the Adviser or the Fund (including a
failure, whether intentional or in good faith or
otherwise, to comply with the requirements of
Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement, as described more fully in Section
8.5 below); except to the extent provided in Sections
8.2(b) and 8.4 hereof. This indemnification will be
in addition to any liability that the Adviser or
Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section
8.2(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard or its
obligations or duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser, the
Fund, and the Distributor of the commencement of any
litigation, proceedings, complaints or actions by regulatory
authorities against them in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.3 Indemnification by the Fund
(a) The Fund agrees to indemnify and hold harmless the Company
and each person, if any, who controls or is associated with
the Company within the meaning of such terms under the
federal securities laws and any director, officer, employee
or agent of the foregoing (collectively, the "Indemnified
Parties" for purposes of this Section 8.3) against any and
all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written
consent of the Fund) or action in respect thereof (including
reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements, are related to the
operations of the Fund and:
(1) arise as a result of any failure by the Fund to provide
the services and furnish the materials under the terms
of this Agreement; or (2) arise out of or result from
any material breach of any representation and/or
warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this
Agreement by the Fund (including a failure, whether
intentional or in good faith or otherwise, to comply
with the requirements of Subchapter M of the Code
specified in Article III, Section 3.2 of this Agreement
and the diversification requirements specified in
Article III, Section 3.3 of this Agreement as described
more fully in Section 8.5 below); or
(3) arise out of or result from the incorrect or untimely
calculation or reporting of daily net asset value per
share or dividend or capital gain distribution rate;
except to the extent provided in Sections 8.3(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section
8.3(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations and duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of
the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party" for the purpose of this
Section 8.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim upon such Indemnified Party (or after such party will have
received notice of such service on any designated agent), but failure
to notify the Indemnifying Party of any such claim will not relieve the
Indemnifying Party from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on
account of the indemnification provision of this Article VIII, except
to the extent that the failure to notify results in the failure of
actual notice to the Indemnifying Party and such Indemnifying Party is
damaged solely as a result of failure to give such notice. In case any
such action is brought against the Indemnified Party, the Indemnifying
Party will be entitled to participate, at its own expense, in the
defense thereof. The Indemnifying Party also will be entitled to assume
the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the Indemnifying Party to the Indemnified
Party of the Indemnifying Party's election to assume the defense
thereof, the Indemnified Party will bear the fees and expenses of any
additional counsel retained by it, and the Indemnifying Party will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless: (a) the Indemnifying Party and the Indemnified
Party will have mutually agreed to the retention of such counsel; or
(b) the named parties to any such proceeding (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The Indemnifying Party will not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there is a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
A successor by law of the parties to this Agreement will be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII will survive
any termination of this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of
this Agreement may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and
without in any way limiting or restricting any other remedies available
to the Company, the Fund, the Adviser and the Distributor will pay on a
joint and several basis all costs associated with or arising out of any
failure, or any anticipated or reasonably foreseeable failure, of the
Fund or any Portfolio to comply with Section 3.3 of this Agreement,
including all costs associated with correcting or responding to any
such failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute
shares of another investment company for those of the failed Fund or
Portfolio (including but not limited to an order pursuant to Section
26(b) of the 1940 Act); fees and expenses of legal counsel and other
advisors to the Company and any federal income taxes or tax penalties
(or "toll charges" or exactments or amounts paid in settlement)
incurred by the Company in connection with any such failure or
anticipated or reasonably foreseeable failure. Such indemnification and
reimbursement obligation shall be in addition to any other
indemnification and reimbursement obligations of the Fund, the Adviser
and/or the Distributor under this Agreement.
ARTICLE IX -APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from those statutes, rules and
regulations as the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof will
be interpreted and construed in accordance therewith.
ARTICLE X -TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to one, some or all of the Portfolios, upon six (6)
month's advance written notice to the other parties or, if
later, upon receipt of any required exemptive relief or orders
from the SEC, unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by
the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event 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
Company; or
(d) at the option of the Fund, upon written notice to the other
parties, upon institution of formal proceedings against the
Company by the NASD, the Commission, the Insurance Commission
of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the
Fund or the Adviser by the NASD, the Commission or any state
securities or insurance department or any other regulatory
body, provided that the Company determines in its sole
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Fund's or the
Adviser's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or under
any successor or similar provision, or if the Company
reasonably and in good faith believes that the Fund may fail
to so qualify; or
(g) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if the Fund fails to
meet the diversification requirements specified in Section 3.3
hereof or if the Company reasonably and in good faith believes
the Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that either the Fund or
the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company, such termination to be
effective sixty ( 60) days' after receipt by the other parties
of written notice of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, determines in its sole judgment
exercised in good faith that the Company has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
the Fund or the Adviser, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any sub-account)
to substitute the shares of another investment company for the
corresponding Portfolio's shares of the Fund in accordance
with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying portfolio.
The Company will give sixty (60) days' prior written notice to
the Fund of the date of any proposed vote or other action
taken to replace the Fund's shares or of the filing of any
required regulatory approval(s); or
(l) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (1) all
Contract owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal
and/or state law. Termination will be effective immediately
upon such occurrence without notice.
10.2 Notice Requirement
(a) No termination of this Agreement, except a termination under
Section 10.1 (m) of this Agreement, will be effective unless
and until the party terminating this Agreement gives prior
written notice to all other parties of its intent to
terminate, which notice will set forth the basis for the
termination.
(b) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the
Adviser and the Distributor will, at the option of the Company,
continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation,
the owners of the Existing Contracts will be permitted to reallocate
investments in the Designated Portfolios (as in effect on such date),
redeem investments in the Designated Portfolios and/or invest in the
Designated Portfolios upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3
will not apply to any terminations under Article VII and the effect of
such Article VII terminations will be governed by Article VII of this
Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In addition,
with respect to Existing Contracts, all provisions of this Agreement
also will survive and not be affected by any termination of this
Agreement.
ARTICLE XI -NOTICES
Any notice will be deemed duly given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
parties.
If to the Company:
First Ameritas Life Insurance Corp. of New York
0000 "0" Xxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
If to the Fund:
INVESCO Variable Investment Funds, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx
If to the Adviser:
INVESCO Funds Group, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx
If to the Distributor:
INVESCO Distributors, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx
ARTICLE XII -MISCELLANEOUS
12.1 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 directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their employees
or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Protected
Parties. The Fund and the Adviser agree that if they come into
possession of any list or compilation of the identities of or other
information about the Protected Parties' customers, or any other
property of the Protected Parties, other than such information as may
be independently developed or compiled by the Fund or the Adviser from
information supplied to them by the Protected Parties' customers who
also maintain accounts directly with the Fund or the Adviser, the Fund
and the Adviser will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such
information or other property except: (a) with the Company's prior
written consent; or (b) as required by law or judicial process. The
Fund and the Adviser acknowledge that any breach of the agreements in
this Section 12.2 would result in immediate and irreparable harm to the
Protected Parties for which there would be no adequate remedy at law
and agree that in the event of such a breach, the Protected Parties
will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal law .
12.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any
respect.
12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, the NASD and state insurance regulators) and will
permit each other and 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.
12.10 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.11 The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund or other applicable terms of
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
FIRST AMERITAS LIFE INSURANCE CORP.
OF NEW YORK
By:
-------------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
--------------------------------------------
Title: President and Chief Executive Officer
-------------------------------------
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By:
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Treasurer
INVESCO FUNDS GROUP, INC.
By:
--------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President & Treasurer
INVESCO DISTRIBUTORS, INC.
By:
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President & Treasurer
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of Ameritas Variable
Life Insurance Company are permitted in accordance with the provisions of this
Agreement to invest in Portfolios of the Fund shown in Schedule B:
Contracts Funded by Separate Account/Name of Separate Account
First Ameritas Variable Life Separate Account
o Encore II!
First Ameritas Variable Annuity Separate Account
o Overture Accent
o Overture Acclaim
o Overture Annuity III-P
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
INVESCO VIF -Dynamics Fund
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the 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.
1. 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 owners of the Contracts 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 meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund, as soon as possible, but
no later than two weeks after the Record Date.
3. 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 6.2 of
the Agreement to which this Schedule relates.
4. 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:
o name (legal name as found on account registration)
o address
o Fund or account number
o coding to state number of units
o individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
5. 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:
o Voting Instruction Card(s)
o one proxy notice and statement (one document)
o return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
o "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.)
o cover letter. optional, supplied by Company and reviewed and approved
in advance by the Fund
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
7. 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 meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
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.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be NOT RECEIVED for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
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.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Fund
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Fund
on the morning of the 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 meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up, in writing.
PARTICIPATION AGREEMENT
BY AND AMONG
FIRST AMERITAS LIFE INSURANCE CORP.
OF NEW YORK
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
AND
SALOMON BROTHERS ASSET MANAGEMENT INC
AND
SALOMON BROTHERS VARIABLE SERIES FUNDS INC
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of April ____, 2002
("Agreement"), by and among Salomon Brothers Variable Series Funds Inc, a
Maryland corporation (the "Fund"), Salomon Brothers Asset Management Inc, a
Delaware Corporation (the "Adviser") and First Ameritas Life Insurance Corp., a
New York corporation ("LIFE COMPANY"), on behalf of itself and each of its
segregated asset accounts listed in Schedule A hereto, as the parties hereto may
amend from time to time (each, an "Account," and collectively, the "Accounts").
WITNESSETH THAT:
WHEREAS, the Fund is registered with the Securities and
Exchange Commission ("SEC") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund is available to the extent set forth herein
to act as the investment vehicle for separate accounts established for variable
life insurance policies and variable annuity contracts to be offered by
insurance companies which have entered into participation agreements with the
Fund ("Participating Insurance Companies");
WHEREAS, the Fund currently consists of seven separate
investment portfolios, shares ("Shares") each of which are registered under the
Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Fund will make Shares of each investment
portfolio of the Fund listed on Schedule A hereto (each, a "Portfolio" and
collectively, the "Portfolios") as the Parties hereto may amend from time to
time available for purchase by the Accounts;
WHEREAS, the Fund has received an order (the "Order") from the
SEC to permit Participating Insurance Companies and variable annuity and
variable life insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies;
WHEREAS, LIFE COMPANY will be the issuer of certain variable
annuity contracts and variable life insurance policies (collectively, the
"Contracts") as set forth on Schedule A hereto, as the Parties hereto may amend
from time to time, which Contracts, if required by applicable law, will be
registered under the 1933 Act;
WHEREAS, LIFE COMPANY will, to the extent set forth herein,
Fund the variable life insurance policies and variable annuity contracts through
the Accounts, each of which may be divided into two or more sub accounts
("Subaccounts"; reference herein to an "Account" includes reference to each
Subaccount thereof to the extent the context requires);
WHEREAS, LIFE COMPANY will serve as the depositor of the
Accounts each of which. is registered as a unit investment trust under the 1940
Act (or exempt therefrom), and the security Interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom);
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, LIFE COMPANY intends to purchase Shares in one or more of the
Portfolios on behalf of the Accounts to Fund the Contracts; and
NOW, THEREFORE, in consideration of the mutual benefits and
promises contained herein, the Parties hereto agree as follows:
Section 1. Available Portfolios
1.1 Available Portfolios
The Fund will make Shares of each Portfolio listed on Schedule
A available to LIFE COMPANY for purchase and redemption at net asset value next
computed after the Fund's receipt of a purchase or redemption order and with no
sales charges, in accordance with the Fund's then current prospectus and subject
to the terms and conditions of this Agreement. The Board of Directors of the
Fund may refuse 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 if, in the sole
discretion of the Directors acting in good faith and in light of their fiduciary
duties under federal and any applicable state laws, such action is deemed in the
best interests of the shareholders of such Portfolio .
1.2 Addition, Deletion or Modification of Portfolios
The Parties hereto may agree, from time to time, to add other
Portfolios to provide additional Funding alternatives for the Contracts, or to
delete or modify existing Portfolios, by amending Schedule A hereto. Upon such
amendment to Schedule A, any applicable reference to a Portfolio, the Fund, or
its Shares herein shall include a reference to all Portfolios set forth on
Schedule A as then amended. Schedule A, as amended from time to time, is
incorporated herein by reference and is a part hereof.
1.3 No Sales to the General Public
The Fund represents that shares of the Portfolios will be sold
only to Participating Insurance Companies, their separate accounts and qualified
pension and retirement plans ("Plans") and that no Shares of any Portfolio have
been or will be sold to the general public.
Section 2. Processing Transactions
2.1 Placing Orders
(a) The Fund or its designated agent will use its best effort
to provide LIFE COMPANY with the net asset value per Share for each Portfolio by
6:30 p.m. Eastern Time on each Business Day. As used herein, "Business Day"
shall mean any day on which (i) the New York Stock Exchange is open for regular
trading, and (ii) the Fund calculates the Portfolios' net asset value. In the
event that net asset values are not made available to the LIFE COMPANY by such
time, the LIFE COMPANY agrees to use its best efforts to include the net asset
value when received in that day's business cycle for purposes of calculating
purchase orders/redemptions are not able to be calculated and available for the
LIFE COMPANY to execute within the timeframe identified in Section 2.1 the Fund
shall reimburse and make the LIFE COMPANY whole for any losses incurred as a
result of such delays.
(b) LIFE COMPANY will use the data provided by the Fund each
Business Day pursuant to paragraph (a) immediately above to calculate Account
unit values and to process transactions that receive that same Business Day's
Account unit values. LIFE COMPANY will perform such Account processing the same
Business Day, and will place corresponding orders to purchase or redeem Shares
with the Fund by 9:30 a.m. Eastern Time the following Business Day.
(c) With respect to payment of the purchase price by LIFE
COMPANY and of redemption proceeds by the Fund, LIFE COMPANY and the Fund shall
net purchase and redemption orders with respect to each Portfolio and shall
transmit one net payment per Portfolio in accordance with Section 2.2, below.
(d) If the Fund provides materially incorrect Share net asset
value information (as determined under SEC guidelines), LIFE COMPANY shall be
entitled to an adjustment to the number of Shares purchased or redeemed to
reflect the correct net asset value per Share. Any material error in the
calculation or reporting of net asset value per Share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE COMPANY.
2.2 Payment
(a) LIFE COMPANY shall pay for Shares of each Portfolio on the
same day that it notifies the Fund of a purchase request for such Shares.
Payment for Shares shall be made in federal Funds transmitted to the Fund by
wire to be received by the Fund by 1:00 P .M. Eastern Time on the day the Fund
is notified of the purchase request for Shares. If payment in federal Funds for
any purchase is not received, or is received by the Fund after 4:00 p.m. Eastern
Time on such Business Day, LIFE COMPANY shall promptly, upon the Fund's request
in writing, reimburse the Fund for any charges, costs, fees, interest or other
expenses incurred by the Fund in connection with any advances to, or borrowings
or overdrafts by, the Fund, or any similar expenses incurred by the Fund, as a
result of non-payment or late payment.
(b) The Fund will wire payment in federal Funds for net
redemptions to an account designated by LIFE COMPANY by 4:00 p.m. Eastern Time
on the business day succeeding the day the order is placed, to the extent
practicable, but in any event within two (2) calendar days after the date the
order is placed in order to enable LIFE COMPANY to pay redemption proceeds
within the time specified in Section 22(e) of the 0000 Xxx. The Fund shall not
bear any responsibility whatsoever for the proper disbursement or crediting of
redemption proceeds by LIFE COMPANY.
2.3 Applicable Price
(a) Share purchase payments and redemption orders that result
from purchase payments, premium payments, surrenders and other transactions
under Contracts (collectively, "Contract transactions") and that LIFE COMPANY
receives prior to the close of regular trading on the New York Stock Exchange on
a Business Day will be executed at the net asset values of the appropriate
Portfolios next computed after receipt by the Fund or its designated agent of
the orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the
designated agent of the Fund for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by the Fund; provided that the Fund receives notice of such
orders by 9:30 a.m. Eastern Time on the following Business Day.
(b) All other Share purchases and redemptions by LIFE COMPANY
will be effected at the net asset values of the appropriate Portfolios next
computed after receipt by the Fund or its designated agent of the order
therefore, and such orders will be irrevocable.
2.4 Dividends and Distributions
The Fund will furnish notice by wire or telephone (followed by
written confirmation) on or prior to the payment date to LIFE COMPANY of any
income dividends or capital gain distributions payable on the Shares of any
Portfolio. LIFE COMPANY hereby elects to reinvest all dividends and capital
gains distributions in additional Shares of the corresponding Portfolio at the
ex-dividend date net asset values until LIFE COMPANY otherwise notifies the Fund
in writing, it being agreed by the Parties that the ex-dividend date and the
payment date with respect to any dividend or distribution will be the same
Business Day. LIFE COMPANY reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. Any
such revocation will take effect with respect to the next income dividend or
capital gain distribution following receipt by the Fund of such notification
from LIFE COMPANY.
2.5 Book Entry
Issuance and transfer of Portfolio Shares will be by book
entry only. Stock certificates will not be issued to LIFE COMPANY. Shares
ordered from the Fund will be recorded in an appropriate title for LIFE COMPANY,
on behalf of its Accounts.
Section 3. Costs and Expenses
3.1 General
(a) Except as otherwise specifically provided herein, each
party will bear all expenses incident to its performance under this Agreement.
(b) The Fund shall pay no fee or compensation other than
described in this section to the LIFE COMPANY under this agreement, except that
if the Fund or any Portfolio adopts and implements a plan pursuant to Rule 12b-l
to finance distribution expenses, then the Fund may make payments to the LIFE
COMPANY or to the underwriter for the Contracts if and in amounts agreed to by
the Fund in writing. Presently, no such payments are contemplated.
3.2 Registration
(a) The Fund will bear the cost of its registering as a
management investment company under the 1940 Act and registering its Shares
under the 1933 Act, and keeping such registrations current and effective;
including, without limitation, the preparation of and filing with the SEC of
Forms N-SAR and Rule 24f-2 Notices with respect to the Fund and its Shares and
payment of all applicable registration or filing fees with respect to any of the
foregoing.
(b) LIFE COMPANY will bear the cost of registering, to the
extent required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Contracts under the 1933 Act and keeping
such registrations current and effective; including, without limitation, the
preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with
respect to each Account and its units of interest and payment of all applicable
registration or filing fees with respect to any of the foregoing.
3.3 Distribution Expenses
(a) LIFE COMPANY will bear the expenses of distribution. These
expenses would include by way of illustration, but are not limited to, the costs
of distributing to Contract owners, annuitants, insureds or participants (as
appropriate) under the Contracts (collectively, "Participants") the following
documents as they relate to the Account: prospectuses, statements of additional
information, proxy materials and periodic reports; as well as the Fund
prospectus and statement of additional information.
(b) The Fund will bear the cost of distributing to existing
Contract owners, annuitants, insureds or participants (as appropriate) under the
Contracts (collectively, "Participants"), the following documents as they relate
to the Portfolios listed on Exhibit A: prospectuses, annual and semi-annual
reports and proxies initiated by the Fund. The Fund's share of the cost of the
total expense for the prospectus containing all Portfolios offered under the
Contracts shall be pro rata based upon page count of the prospectuses of the
Portfolios as compared to the total page count for the combined prospectus
containing all portfolios offered under the Contracts.
3.4 Other Expenses
(a) The Fund will bear, or arrange for others to bear, the
costs of preparing, filing with the SEC and setting for printing the Fund's
prospectus, statement of additional information and any amendments or
supplements thereto (collectively, the "Fund Prospectus"), periodic reports to
shareholders, the Fund proxy material and other shareholder communications to
the extent required by law or as deemed appropriate by the Fund.
(b) LIFE COMPANY will bear the costs of preparing, filing with
the SEC and printing each Account's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"Account Prospectus"), and other Participant communications to the extent
required by law or as deemed appropriate by LIFE COMPANY.
(c) LIFE COMPANY will, to the extent required by law, print in
quantity and deliver to existing Participants the documents described in Section
3.4(b) above and will deliver to such Participants the prospectuses as provided
by the Fund. LIFE COMPANY may elect to receive such prospectuses in camera ready
or computer diskette format. The Fund will print the Fund statement of
additional information, proxy materials relating to the Fund and periodic
reports of the Fund.
3.5 Parties To Cooperate
Each party agrees to cooperate with the other, in arranging to
print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of the Fund and the Accounts.
Section 4. Legal Compliance
4.1 Tax Laws
(a) The Fund represents and warrants that it will elect to be
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will qualify and maintain its qualification as a RIC and to comply with the
diversification requirements set forth in Section 817(h) of the Code and the
regulations thereunder. The Fund will notify LIFE COMPANY immediately upon
having a reasonable basis for believing that it has ceased to so qualify or so
comply, or that it might not so qualify or so comply in the future. Without
limiting the scope of the foregoing, 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 variable annuity , endowment or life insurance
contracts and any amendments or other modifications to such section or
regulations. In the event of a breach of this Section 4.1(a) by the Fund, it
will take all reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 1.817-5. The Fund
shall provide LIFE COMPANY information reasonably requested in relation to
Section 817(h) diversification requirement, including quarterly reports and
annual certifications.
(b) LIFE COMPANY represents and warrants that the Contracts
currently are and will be treated as annuity contracts or life insurance
contracts under applicable provisions of the Code and that it will maintain such
treatment; LIFE COMPANY will notify the Fund immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be so treated in the future.
(c) LIFE COMPANY represents and warrants that each Account is
a "segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. LIFE COMPANY will continue to meet such definitional
requirements, and it will notify the Fund immediately upon having a reasonable
basis for believing that such requirements have ceased to be met or that they
might not be met in the future.
4.2 Insurance and Certain Other Laws
(a) LIFE COMPANY represents and warrants that (i) it is an
insurance company duly organized, validly existing and in good standing under
all applicable laws and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
Account as a segregated asset account under all applicable laws and regulations,
and (iii) the Contracts comply in all material respects with all applicable
federal and state laws and regulations.
(b) The Fund represents and warrants that it is a corporation
duly organized validly existing, and in good standing under the laws of the
State of Maryland and has full corporate power, authority, and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement. Notwithstanding the foregoing, the Fund, makes no
representations as to whether any aspect of its operations (including, but not
limited to, fees and expenses and investment policies) otherwise complies with
the insurance laws or regulations of any state.
(c). The Adviser. represents that it. is and warrants that
it shall remain duly registered as an investment adviser under all applicable
federal and state securities laws and agrees that it shall perform its
obligations to the Fund in accordance in all material respects with such laws.
(d) LIFE COMPANY acknowledges and agrees that it is the
responsibility of LIFE COMPANY and other Participating Insurance Companies to
determine investment restrictions under state insurance law applicable to any
Portfolio, and that the Fund shall bear no responsibility to LIFE COMPANY, for
any such determination or the correctness of such determination. LIFE COMPANY
has determined that the investment restrictions set forth in the current Fund
Prospectus are sufficient to comply with all investment restrictions under state
insurance laws that are currently applicable to the Portfolios as a result of
the Accounts' investment therein. LIFE COMPANY shall inform the Fund of any
additional investment restrictions imposed by state insurance law after the date
of this agreement that may become applicable to the Fund or any Portfolio from
time to time as a result of the Accounts' investment therein. Upon receipt of
any such information from LIFE COMPANY or any other Participating Insurance
Company, the Fund shall determine whether it is in the best interests of
shareholders to comply with any such restrictions. If the Fund determines that
it is not in the best interests of shareholders to comply with a restriction
determined to be applicable by the LIFE COMPANY, the Fund shall so inform LIFE
COMPANY, and the Fund and LIFE COMPANY shall discuss alternative accommodations
in the circumstances.
4.3 Securities Laws
(a) LIFE COMPANY represents and warrants that (i) interests in
each Account pursuant to the Contracts will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Contracts will be duly authorized
for issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
applicable state law, (iii) each Account is and will remain registered under the
1940 Act, to the extent required by the 1940 Act, (iv) each Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Contracts, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, (vii) each Account Prospectus will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (viii) all of its directors, officers, employees, investment
advisers, and other individuals/entities having access to the Funds and/or
securities of any Portfolio are and continue to be at all times covered by a
blanket fidelity bond or similar coverage covering such risks and in such amount
as is customary for companies engaged in similar businesses in similar
industries. The aforesaid bond includes coverage for larceny and embezzlement
and is issued by a reputable bonding company.
(b) The Fund represents and warrants that (i) Shares sold
pursuant to this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act and will be duly authorized for issuance and sold in
compliance with Maryland law, (ii) the Fund is and will remain registered under
the 1940 Act to the extent required by the 1940 Act, (iii) the Fund will amend
the registration statement under the 1933 Act and the 1940 Act from time to time
as required in: order to effect the continuous offering of its Shares, (iv) the
Fund does and will comply in all material respects with the requirements of the
1940 Act and the rules thereunder, (v) the Fund's 1933 Act registration
statement, together with any an1endments thereto, will at all times comply in
all material respects with the requirements of the 1933 Act and rules
thereunder, (vi) the Fund's Prospectus will at all times comply in all material
respects with the requirements of the 1933 Act and the rules thereunder and
(vii) all of its directors, officers, employees, investment advisers, and other
individuals/entities having access to the Funds and/or securities of any
Portfolio are and 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
minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
includes coverage for larceny and embezzlement and is issued by a reputable
bonding company.
(c) The Fund will at its expense register and qualify its
Shares for sale in accordance with the laws of any state or other jurisdiction
if and to the extent reasonably deemed advisable by the Fund.
4.4 Anti-Money Laundering Procedures
LIFE COMPANY agrees that: (a) it is its responsibility to have
in place anti- money laundering procedures which comply with all local laws in
jurisdictions in which Shares or Contracts are distributed, (b) it is its sole
responsibility to take all reasonable steps to determine 1) the true identity of
any purchaser of a Contract ("client"), 2) the source of the client's Funds and
3) that the client is not involved in money laundering activities, and (c) it is
its sole responsibility to comply with any other "know your customer"
requirements. Unless otherwise agreed, LIFE COMPANY agrees that it is its
responsibility to monitor client transactions in order to detect attempted or
actual money laundering. LIFE COMPANY further agrees to promptly provide Fund,
upon Fund's reasonable request, with documentation relating to LIFE COMPANY's
anti-money laundering policies and analysis.
4.5 Notice of Certain Proceedings and Other Circumstances
(a) The Fund will immediately notify LIFE COMPANY of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to the Fund's registration statement
under the 1933 Act or the Fund Prospectus, (ii) any request by the SEC for any
amendment to such registration statement or the Fund Prospectus that may affect
the offering of Shares of any Portfolio, (iii) the initiation of any proceedings
for that purpose or for any other purpose relating to the registration or
offering of Shares of any Portfolio, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of Shares of any Portfolio in any
state or jurisdiction, including, without limitation, any circumstances in which
such Shares are not registered and are not, in all material respects, issued and
sold in accordance with applicable state and federal law. The Fund will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
(b) LIFE COMPANY will immediately notify the Fund of (i) the
issuance by any court or regulatory body of any stop order, cease and desist
order, or other similar order with respect to each Account's registration
statement under the 1933 Act relating to the Contracts or each Account
Prospectus, (ii) any request by the SEC for any amendment to such registration
statement or Account Prospectus that may affect the offering of Shares of any
Portfolio, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of each Account's
interests pursuant to the Contracts, or (iv) any other action or circumstances
that may prevent the lawful offer or sale of said interests in any state or
jurisdiction, including, without limitation, any circumstances in which said
interests are not registered and are not, in all material respects, issued and
sold in accordance with applicable state and federal law. LIFE COMPANY will make
every reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to obtain
the lifting thereof at the earliest possible time.
4.6 Documents Provided by LIFE COMPANY; Information About
the Fund
(a) LIFE COMPANY will provide to the Fund or its designated
agent at least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) LIFE COMPANY will provide to the Fund or its designated
agent at least one (1) complete copy of each piece of sales literature or other
promotional material in which any Portfolio, the Fund or any of its affiliates
is named, at least five (5) Business Days prior to its use or such shorter
period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if the Fund or its designated agent objects to such use
within five (5) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon.
(c) Neither LIFE COMPANY nor any of its affiliates, will give
any information or make any representations or statements on behalf of or
concerning any Portfolio, the Fund or its affiliates in connection with the sale
of the Contracts other than (i) the information or representations contained in
the then current registration statement, including the Fund Prospectus contained
therein, relating to Shares, as such registration statement and the Fund
Prospectus may be amended from time to time; (ii) in reports or proxy materials
for the Fund; (iii) in published reports for the Fund that are in the public
domain and approved by the Fund for distribution by LIFE COMPANY; or (iv) in
sales literature or other promotional material approved by the Fund for use by
LIFE COMPANY, except with the express written permission of the Fund.
(d) LIFE COMPANY shall adopt and implement procedures
reasonably designed to ensure that information concerning the Fund and its
affiliates that is intended for use only by brokers or agents selling the
Contracts (i.e., information that is not intended for distribution to
Participants) ("broker only materials") is so used, and neither the Fund nor any
of its affiliates shall be liable for any losses, damages or expenses relating
to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media
(e.g., on-line networks such as the Internet or other electronic messages)),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
4. 7 Documents Provided by Fund; Information About LIFE
COMPANY
(a) The Fund will provide to LIFE COMPANY at least one (I)
complete copy of all SEC registration statements, Fund Prospectuses, reports,
any preliminary and final proxy material, applications for exemptions, requests
for no-action letters, and all amendments to any of the above, that relate to
the Fund or the Shares of a Portfolio, contemporaneously with the filing of such
document with the SEC or other regulatory authorities.
(b) The Fund will provide to LIFE COMPANY copies of all Fund
prospectuses, and printed copies of all statements of additional information,
proxy materials, periodic reports to shareholders and other materials required
by law to be sent to Participants who have allocated any Contract value to a
Portfolio. The Fund will provide such copies to LIFE COMPANY in a timely manner
so as to enable LIFE COMPANY to print and distribute such materials within the
time required by law to be furnished to Participants. The form of the Fund's
prospectus and/or statement of additional information provided to the LIFE
COMPANY shall be the final form of prospectus and statement of additional
information as filed with the Securities and Exchange Commission which form
shall include only those Portfolios of the Fund identified in Schedule A.
(c) The Fund will provide to LIFE COMPANY or its designated
agent at least one (1) complete copy of each piece of sales literature or other
promotional material in which LIFE COMPANY , or any of its respective affiliates
is named, or that refers to the Contracts, at least five (5) Business Days prior
to its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if LIFE COMPANY or its designated
agent reasonably objects to such use within five (5) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon.
(d) Neither the Fund nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
LIFE COMPANY, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Contracts, as such registration
statement and Account Prospectus may be amended from time to time; (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by LIFE COMPANY for distribution; or (iii) in sales literature or
other promotional material approved by LIFE COMPANY or its affiliates, except
with the express written permission of LIFE COMPANY.
(e) The Fund shall cause its principal underwriter to adopt
and implement procedures reasonably designed to ensure that information
concerning LIFE COMPANY, and its respective affiliates that is intended for use
only by brokers or agents selling the Contracts (i.e., information that is not
intended for distribution to Participants) ("broker only materials") is so used,
and neither LIFE COMPANY, nor any of its respective affiliates shall be liable
for any losses, damages or expenses relating to the improper use of such broker
only materials.
(f) For purposes of this Section 4.6, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article ), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
NASD rules, the 1933 Act or the 1940 Act.
Section 5. Mixed and Shared Funding
LIFE COMPANY acknowledges that the Fund has the Order granting
relief from various provisions of the 1940 Act and the rules thereunder to the
extent necessary to permit Fund shares to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies, as well as by Plans. Any
conditions or undertakings that are imposed on LIFE COMPANY and the Fund by
virtue of such order are be incorporated herein by reference, as of the date
such order is granted, as though set forth herein in full, and the parties to
this Agreement shall comply with such conditions and undertakings to the extent
applicable to each such party .
Section 6. Termination
6.1 Events of Termination
Subject to Section 6.4 below, this Agreement will terminate as
to a Portfolio:
(a) at the option of any party, with or without cause, upon
sixty (60) days advance written notice to the other parties; or
(b) at the option of LIFE Company if shares of a Portfolio are
not reasonably available to meet the requirements of the Contracts as determined
by LIFE COMPANY provided, however, that such a termination shall apply only to
the Portfolio(s) not available. Prompt written notice of the election to
terminate for such cause shall be furnished by LIFE COMPANY to the Fund;
(c) at the option of the Fund upon institution of formal
processing against LIFE COMPANY or its affiliates by the NASD, the SEC, any
state insurance regulator or any other regulatory body regarding LIFE COMPANY's
obligations under this Agreement or related to the sale of the Contracts, the
operation of each Account, or the purchase of Shares, if, in each case, the Fund
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on the Portfolio with respect to which the Agreement is to
be terminated; or
(d) at the option of LIFE COMPANY upon institution of formal
proceedings against the Fund, its principal underwriter, or its investment
adviser by the NASD, the SEC, or any state insurance regulator or any other
regulatory body regarding the Fund's obligations under this Agreement or related
to the operation or management of the applicable Portfolio or the purchase of
the applicable Portfolios, if, in each case, LIFE COMPANY reasonably determines
that such proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences on LIFE
COMPANY, or the Subaccount corresponding to the Portfolio with respect to which
the Agreement is to be terminated; or
(e) at the option of any party in the event that (i) a
Portfolio's Shares are not registered and, in all material respects, issued and
sold in accordance with any applicable federal or state law, or (ii) such law
precludes the use of such Shares as an underlying investment medium of the
Contracts issued or to be issued by LIFE COMPANY; or
(f) at the option of LIFE COMPANY if the applicable Portfolio
ceases to qualify as a RIC under Subchapter M of the Code or under successor or
similar provisions or fails to comply with the diversification requirements of
Section 817(h) of the Code or such requirements under successor or similar
provisions or if Life Company reasonably believes the applicable Portfolio may
so cease to qualify or comply and, in each case, the Fund upon written request
fail to provide reasonable assurance that it will take action to cure or correct
such failure; or
(g) at the option of the Fund if the Contracts issued by LIFE
COMPANY cease to qualify as annuity contracts or life insurance contracts under
the Code or if Fund reasonably believes the applicable Contracts may so cease to
qualify , or if interests in an Account under the Contracts are not registered,
where required, and, in all material respects, are not issued or sold in
accordance with any applicable federal or state law and, in each case, LIFE
COMPANY upon written request fails to provide reasonable assurance that it will
take action to cure or correct such failure; or .
(h) at the option of the Fund by written notice to LIFE
COMPANY, if the Fund shall determine in its sole judgment exercised in good
faith, that LIFE 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; or
(i) at the option of LIFE COMPANY by written notice to the
Fund, if LIFE COMPANY shall determine in its sole judgment exercised in good
faith, that the Fund 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; or
(j) at the option of LIFE COMPANY by written notice to the
Fund, if LIFE COMPANY shall determine in its sole judgment exercised in good
faith, that the Adviser 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; or
(k) at the option of either party upon a determination by a
majority of the Fund's Board of Directors, or a majority of the Fund's
disinterested directors, that an irreconcilable material conflict exists among
the interests of: (1) all contract owners of variable insurance products of all
separate accounts; or (2) the interests of the Participating Insurance Companies
investing in the Fund; or
(l) at the option of any party upon another party's
material breach of any provision of this Agreement; or
(m) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any subaccount) or upon
the receipt of substitution order by the SEC to substitute the shares of another
investment company for the corresponding Fund shares in accordance with the
terms of the Contracts for which those Fund shares had been selected to serve as
the underlying investment media. LIFE COMPANY will give at least 30 days' prior
written notice to the Fund of the date of any proposed vote to replace the
Fund's shares; or
(n) at the option of the Fund if it suspends or terminates the
offering of Shares of the applicable Portfolio to all Participating Insurance
Companies or only designated Participating Insurance Companies, if such action
is required by law or by regulatory authorities having jurisdiction or if, in
the sole discretion of the Fund acting in good faith, suspension or termination
is necessary in the best interests of the shareholders of the applicable
Portfolio (it being understood that "shareholders" for this purpose shall mean
Participants), such notice effective immediately upon receipt of written notice,
it being understood that a lack Participating Insurance Companies interest in
the applicable Portfolio may be grounds for a suspension or termination as to
such Portfolio.
6.2 Notice Requirement for Termination
No termination of this Agreement will be effective unless and
until the party terminating this Agreement gives prior written notice to the
other party to this Agreement of its intent to terminate, and such notice shall
set forth the basis for such termination. Furthermore:
(a) in the event that any termination is based upon the
provisions of Section 6.1(a) hereof, such prior written notice shall be given at
least one (1) year in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the
provisions of Section 6.1(b), 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h),
6.1(i), 6.1(j), 6.1(k), 6.1(l), 6.1(m), or 6.1(n) hereof, such prior written
notice shall be given at least 30 days in advance of the effective date of
termination unless a shorter time is agreed to by the Parties hereto; and
6.3 Fund To Remain Available
Notwithstanding any termination of this Agreement, the Fund
will, at the option of LIFE COMPANY, continue to make available additional
shares of a Portfolio pursuant to the terms and conditions of this Agreement,
for all Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts will be permitted to
reallocate investments in Portfolios of the Fund (as in effect on such date),
redeem investments in Portfolios of the Fund and/or invest in Portfolios of the
Fund upon the making of additional purchase payments under the Existing
Contracts. Notwithstanding any termination of this Agreement, LIFE COMPANY
agrees to distribute to holders of Existing Contracts all materials required by
law to be distributed to such holders (including, without limitation,
prospectuses, statements of additional information, proxy materials and periodic
reports). The parties agree that this Section 6.3 will not apply to any
terminations under the conditions of the Order and the effect of such
terminations will be governed by the Order.
6.4 Survival of Warranties and Indemnifications
All warranties and indemnifications will survive the
termination of this Agreement.
Section 7. Parties To Cooperate Respecting Termination
Subject to the provisions of Section 6.3 hereof, the Parties
hereto agree to cooperate and give reasonable assistance to one another in
taking all necessary and appropriate steps for the purpose of ensuring that an
Account owns no Shares of the applicable Portfolio after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual Fund shares for those of the affected Portfolio, or otherwise
terminating participation by the Contracts in such Portfolio.
Section 8. Assignment
This Agreement may not be assigned by any party , except with
the prior written consent of all the Parties.
Section 9. Notices
Notices and communications required or permitted by Section 9
hereof will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or permitted by this Agreement will be
given to the following persons at the following addresses and facsimile numbers,
or such other persons, addresses or facsimile numbers as the party receiving
such notices or communications may subsequently direct in writing:
First Ameritas Life Insurance Corp. of New York
5900 "O" Street
Lincoln, Nebraska 68510
Attn.: General Counsel
Salomon Brothers Variable Series Funds Inc.
==========================
--------------------------
Attn.: Secretary
Section 10. Voting Procedure
Subject to the cost allocation procedures set forth in Section
3 hereof, LIFE COMPANY will distribute all proxy material furnished by the Fund
to Participants to whom pass-through voting privileges are required to be
extended and will solicit voting instructions from Participants. LIFE COMPANY
will vote Shares in accordance with timely instructions received from
Participants. LIFE COMPANY will vote Shares that are (a) not attributable to
Participants to whom pass-through voting privileges are extended, or (b)
attributable to Participants, but for which no timely instructions have been
received, in the same proportion as Shares for which said instructions have been
received from Participants, so long as and to the extent that the SEC continues
to interpret the 1940 Act to require pass through voting privileges for
Participants. Neither LIFE COMPANY nor any of its affiliates will in any way
recommend action in connection with or oppose or interfere with the solicitation
of proxies for the Shares held for such Participants. LIFE COMPANY reserves the
right to vote shares held in any Account in its own right, to the extent
permitted by law. LIFE COMPANY shall be responsible for assuring that each of
its Accounts holding Shares calculates voting privileges in the manner required
by the Order obtained by the Fund. The Fund will notify LIFE COMPANY of any
amendments to the Order it has obtained.
Section 11. Indemnification
11.1 Of the Fund by LIFE COMPANY
(a) Except to the extent provided in Sections 11.1(b) and
11.1(c), below, LIFE COMPANY agrees to indemnify and hold harmless the Fund, its
affiliates, and each person, if any, who controls the Fund or its affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers (collectively , the "Indemnified Parties" for purposes of
this Section 11.1) against any and all losses, claims, damages, costs, expenses,
liabilities (including amounts paid in settlement with the written consent of
LIFE COMPANY)or actions in respect thereof (including, to the extent reasonable,
legal and other expenses), to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise insofar as such
losses, claims, damages, costs, expenses, liabilities or actions:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts, or
sales literature or advertising 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 written
information furnished to LIFE COMPANY by or on behalf
of the Fund for use in any Account's 1933 Act
registration statement, any Account Prospectus, the
Contracts, or sales literature or advertising ( or
any amendment or supplement to any of the foregoing);
or
(ii)arise out of or as a result of any other statements
or representations (other than statements or
representations contained in the Fund's 1933 Act
registration statement, the Fund Prospectus, sales
literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of LIFE
COMPANY, or its affiliates and on which such persons
have reasonably relied) or the negligent, illegal or
fraudulent conduct of LIFE COMPANY, or its respective
affiliates or persons under their control (including,
without limitation, their employees and "Associated
Persons," as that term is defined in paragraph (m) of
Article I of the NASD's By-Laws) or subject to its
authorization, including without limitation,
broker-dealers or agents authorized to sell the
Contracts, in connection with the sale, marketing or
distribution of the Contracts or Shares; or
(iii)arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Fund's 1933 Act registration
statement, the Fund Prospectus, sales literature or
advertising of the Fund, or any amendment or
supplement to any of the foregoing, or the omission
or alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading if such a
statement or omission was made in reliance upon and
in conformity with information furnished to the Fund
or its affiliates by or on behalf of LIFE COMPANY or
its affiliates for use in the Fund's 1933 Act
registration statement, the Fund Prospectus, sales
literature or advertising of the Fund, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or
persons under its control (or subject to its
authorization) to perform the obligations, provide
the services and furnish the materials required under
the terms of this Agreement, or any material breach
of any representation and/or warranty made by LIFE
COMPANY in this Agreement or arise out of or result
from any other material breach of this Agreement by
LIFE COMPANY or persons under its control (or subject
to its authorization); or
(v) arise as a result of failure to transmit a request
for purchase or redemption of Shares or payment
therefore within the time period specified herein and
otherwise in accordance with the procedures set forth
in this Agreement; or
(vi) arise as a result of any unauthorized use of the
trade names of the Fund to the extent such use is not
required by applicable law or regulation. (b) This
indemnification is in addition to any liability that
LIFE COMPANY may otherwise have. LIFE COMPANY shall
not be liable under this Section 11.1 with respect to
any losses, claims, damages, costs, expenses,
liabilities or actions to which an Indemnified Party
would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the
performance by that Indemnified Party of its duties
or by reason of that Indemnified Party's reckless
disregard of obligations or duties (i) under this
Agreement, or (ii) to the Fund.
(c) LIFE COMPANY shall not be liable under this Section 11.1
with respect to any action against an Indemnified Party unless the Fund shall
have notified LIFE COMPANY in writing promptly after the summons or other first
legal process giving information of the nature of the action 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 LIFE COMPANY shall
be relieved of liability under this Section 11.1 only to the extent the
indemnifying party is damaged solely by reason of such party's failure to so
notify and failure to notify LIFE COMPANY of any such action shall not relieve
LIFE COMPANY from any liability which they may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
11.1. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate, at
its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof, with counsel approved by the Indemnified Party named
in the action, which approval shall not be unreasonably withheld. After notice
from LIFE COMPANY to such Indemnified Party of LIFE COMPANY's election to assume
the defense thereof, the Indemnified Party will cooperate fully with LIFE
COMPANY and shall bear the fees and expenses of any additional counsel retained
by it, and LIFE COMPANY will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
11.2 Of LIFE COMPANY by the Fund
(a) Except to the extent provided in Sections 11.2(b), 11.2(c)
and 11.2(d), below, the Fund agrees to indemnify and hold harmless LIFE COMPANY,
its affiliates, and each person, if any, who controls LIFE COMPANY or its
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors and officers (collectively, the "Indemnified Parties" for
purposes of this Section 11.2) against any and all losses, claims, damages,
costs, expenses, liabilities (including amounts paid in settlement with the
written consent of the Fund) or actions in respect thereof (including, to the
extent reasonable, legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at common law, or otherwise;
insofar as such losses, claims, damages, costs, expenses, liabilities or
actions:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Fund's 1933 Act registration
statement, Prospectus or sales literature or
advertising 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 to any Indemnified Party
if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with written information furnished to
the Fund or its affiliates by or on behalf of LIFE
COMPANY or its affiliates for use in the Fund's 1933
Act registration statement, the Fund Prospectus, or
in sales literature or advertising or otherwise for
use in connection with the sale of Contracts or
Shares ( or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements
or representations ( other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of the Fund
or its affiliates and on which such persons have
reasonably relied) or the negligent, illegal or
fraudulent conduct of the Fund or its affiliates or
persons under its control (including, without
limitation, their employees and "Associated Persons"
as that Term is defined in Section (n) of Article 1
of the NASD By-Laws), in connection with the sale,
marketing or distribution of Fund Shares; or
(iii)arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, or
the omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, if such statement or omission was made in
reliance upon and in conformity with written
information furnished to LIFE COMPANY, or its
affiliates by or on behalf of the Fund for use in any
Account's 1933 Act registration statement, any
Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Fund to
perform the obligations, provide the services and
furnish the materials required of it under the terms
of this Agreement, including, without limitation, any
failure of the Fund or its designated agent to inform
LIFE COMPANY of the correct net asset values per
share for each Portfolio on a timely basis sufficient
to ensure the timely execution of all purchase and
redemption orders at the correct net asset value per
share, or any material breach of any representation
and/or warranty made by the Fund in this Agreement or
arise out of or result from any other material breach
of this Agreement by the Fund.
(b) This indemnification is in addition to any liability that
the Fund may otherwise have. The Fund shall not be liable under this Section
11.2 with respect to any losses, claims, damages, costs, expenses, liabilities
or actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to LIFE COMPANY, each Account or Participants
(c) The Fund shall not be liable under this Section 11.2 with
respect to any action against an Indemnified party unless the Indemnified Party
shall have notified the Fund in writing promptly after the summons or other
first legal process giving information of the nature of the action 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 the Fund
shall be relieved of liability under this Section 11.2 only to the extent the
indemnifying party is damaged solely by reason of such party's failure to so
notify and failure to notify the Fund of any such action shall not relieve the
Fund from any liability which it may have to the Indemnified party against whom
such action is brought otherwise than on account of this Section 11.2. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified party , the Fund will be entitled to participate, at its own
expense, in the defense of such action and also shall be entitled to assume the
defense thereof (which shall include, without limitation, the conduct of any
ruling request and closing agreement or other settlement proceeding with the
IRS), with counsel approved by the Indemnified party named in the action, which
approval shall not be unreasonably withheld. After notice from the Fund to such
Indemnified party of the Fund's election to assume the defense thereof, the
Indemnified Party will cooperate fully with the Fund and shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such Indemnified party under this Agreement for any legal or other
expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
11.3 Of LIFE COMPANY by the Adviser
(a) Except to the extent provided in Sections 11.3(b), 11.3(c)
and 11.3(d), below, the Adviser agrees to indemnify and hold harmless LIFE
COMPANY, its affiliates, and each person, if any, who controls LIFE COMPANY or
its affiliates within the meaning of Section 15 of the 1933 Act and each of
their respective directors and officers (collectively , the "Indemnified
Parties" for purposes of this Section 11.2) against any and all losses, claims,
damages, costs, expenses, liabilities (including amounts paid in settlement with
the written consent of the Fund) or actions in respect thereof (including, to
the extent reasonable, legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law, or
otherwise; insofar as such losses, claims, damages, costs, expenses, liabilities
or actions:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the Fund's 1933 Act registration
statement, Prospectus or sales literature or
advertising 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 to any Indemnified Party
if such statement or omission or such alleged
statement or omission was made in reliance upon and
in conformity with written information furnished to
the Adviser, the Fund or their affiliates by or on
behalf of LIFE COMPANY or its affiliates for use in
the Fund's 1933 Act registration statement, the Fund
Prospectus, or in sales literature or advertising or
otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement
to any of the foregoing); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of the
Adviser, the Fund or their affiliates and on which
such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of the
Adviser, the Fund or their affiliates or persons
under their control (including, without limitation,
their employees and "Associated Persons" as that Term
is defined in Section (n) of Article 1 of the NASD
By-Laws), in connection with the sale, marketing or
distribution of Fund Shares; or
(iii)arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, or
the omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, if such statement or omission was made in
reliance upon and in conformity with written
information furnished to LIFE COMPANY, or its
affiliates by or on behalf of the Adviser or the Fund
for use in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Adviser or
the Fund to perform the obligations, provide the
services and furnish the materials required of it
under the terms of this Agreement, including, without
limitation, any failure of the Fund or its designated
agent to inform LIFE COMPANY of the correct net asset
values per share for each Portfolio on a timely basis
sufficient to ensure the timely execution of all
purchase and redemption orders at the correct net
asset value per share, or any material breach of any
representation and/or warranty made by the Adviser or
the Fund in this Agreement or arise out of or result
from any other material breach of this Agreement by
the Adviser.
(b) This indemnification is in addition to any liability that
the Adviser may otherwise have. The Adviser shall not be liable under this
Section 11.3 with respect to any losses, claims, damages, costs, expenses,
liabilities or actions to which an Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance by that Indemnified Party of its duties or by reason of such
Indemnified Party's reckless disregard of its obligations and duties (i) under
this Agreement, or (ii) to LIFE COMPANY, each Account or Participants.
(c) The Adviser shall not be liable under this Section 11.3
with respect to any action against an Indemnified party unless the Indemnified
Party shall have notified the Adviser in writing promptly after the Summons or
other first legal process giving information of the nature of the action 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 the
Adviser shall be relieved of liability under this Section 11.3 only to the
extent the indemnifying party is damaged solely by reason of such party's
failure to so notify and failure to notify the Adviser of any such action 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
Section 11.3. Except as otherwise provided herein, in case any such action is
brought against an Indemnified party , the Adviser will be entitled to
participate, at its own expense, in the defense of such action and also shall be
entitled to assume the defense thereof (which shall include, without limitation,
the conduct of any ruling request and closing agreement or other settlement
proceeding with the IRS), with counsel approved by the Indemnified party named
in the action, which approval shall not be unreasonably withheld. After notice
from the Adviser to such Indemnified party of the Adviser's election to assume
the defense thereof, the Indemnified party will cooperate fully with the Fund
and shall bear the fees and expenses of any additional counsel retained by it,
and the Adviser will not be liable to such Indemnified party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified party independently in connection with the defense thereof, other
than reasonable costs of investigation.
11.4 Effect of Notice
Any notice given by the indemnifying party to an Indemnified
party referred to in Sections 11.1 (c), 11.2(c) or 11.3(c) above of
participation in or control of any action by the indemnifying party will in no
event be deemed to be an admission by the indemnifying party of liability,
culpability or responsibility, and the indemnifying party will remain free to
contest liability with respect to the claim among the Parties or otherwise.
11.5 Successors
A successor by law of any party shall be entitled to the
benefits of the indemnification contained in this Section 11.
Section 11.6 Obligations of the Fund.
All persons dealing with the Fund must look solely to the
property of the applicable Portfolio for the enforcement of any claims against
the Fund as neither the Board, Officers, agents or shareholders assume any
personal liability for obligations entered into on behalf of the Fund. (a) This
Agreement will be construed and the provisions hereof interpreted under and in
accordance with New York law, without regard for that state's principles of
conflict of laws. (b) This Agreement shall be subject to the provisions of the
1933 Act, 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 Order) and the terms
hereof shall be interpreted and construed in accordance therewith.
Section 13. Execution in- Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together with constitute one and the same
instrument.
Section 14. Severability
If any provision of this Agreement is held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
Section 15. Rights Cumulative
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, that the Parties are entitled to under federal
and state laws.
Section 16. Heading
The Table of Contents and headings used in this Agreement are
for purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
Section 17. Confidentiality
Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of customers of the other party and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not, without the express written consent of the affected
party, disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain.
Section 18. Trademarks and Fund Names
(a) Salomon Brothers Asset Management Inc, the adviser to the
Fund and its affiliates, own all right, title and interest in and to the names,
trademarks and service marks "Salomon" and "Salomon Brothers" and such other
tradenames, trademarks and service marks as may be identified to LIFE COMPANY
from time to time (the "Salomon licensed marks"). Upon termination of this
Agreement LIFE COMPANY and its affiliates shall cease to use the Salomon
licensed marks, except to the extent required by law or regulation.
(b) LIFE COMPANY and its affiliates, own all right, title and
interest in and to the names, trademarks and service marks of its name and such
other tradenames, trademarks and service marks as may be identified to the
Adviser and/or the Fund from time to time (the "Ameritas" licensed marks). Upon
termination of this Agreement the Fund, the Adviser and their affiliates shall
cease to use the Ameritas licensed marks, except to the extent required by law
or regulation.
Section 19. Parties to Cooperate
Each party to this Agreement will cooperate with each other
party and all appropriate governmental authorities (including, without
limitation, the SEC, the NASD and state insurance regulators) and will permit
each other and such authorities reasonable access to its books and records
(including copies thereof) in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers signing below.
SALOMON BROTHERS VARIABLE SERIES
FUNDS INC
Attest: By:
------------------------------------ --------------------------------------------
Name: Name:
-------------------------------------- -----------------------------------------------
Title: Title:
------------------------------------- ----------------------------------------------
SALOMON BROTHERS ASSET MANAGEMENT INC.
Attest: By:
------------------------------------ --------------------------------------------
Name: Name:
-------------------------------------- -----------------------------------------------
Title: Title:
------------------------------------- ----------------------------------------------
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
on behalf of itself and its separate accounts
Attest: By:
------------------------------------ --------------------------------------------
Name: Name: Xxxxxxxx X. Xxxxxxxx
-------------------------------------- -----------------------------------------------
Title: Title: President and Chief Executive Officer
------------------------------------- ----------------------------------------------
SCHEDULE A
PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
Salomon Brothers Variable Capital Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
First Ameritas Variable Annuity Separate Account
First Ameritas Variable Life Separate Account
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Overture Accent
Overture Acclaim
Overture Annuity III-P
PARTICIPATION AGREEMENT
BY AND AMONG
SUMMIT MUTUAL FUNDS, INC.,
CARILLON INVESTMENTS, INC.
FIRST AMERITAS LIFE INSURANCE CORP.
OF NEW YORK
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AMERITAS INVESTMENT CORP .
TABLE OF CONTENTS
Description Page
Section 1 Available Funds ........................................................................ 2
1.1 Availability ........................................................................... 2
1.2 Addition, Deletion or Modification of Funds ............................................ 2
1.3 No Sales to the General Public.......................................................... 2
Section 2. Processing Transactions ................................................................ 3
2.1 Timely Pricing and Orders .............................................................. 3
2.2 Timely Payments......................................................................... 3
2.3 Applicable Price........................................................................ 4
2.4 Dividends and Distributions ............................................................ 4
2.5 Book Entry ............................................................................. 4
Section 3. Costs and Expenses ..................................................................... 5
3.1 General ................................................................................ 5
3.2 Parties To Cooperate ................................................................... 5
Section 4. Legal Compliance ....................................................................... 5
4.1 Tax Laws ............................................................................... 5
4.2 Insurance and Certain Other Laws ....................................................... 7
4.3 Securities Laws ........................................................................ 8
4.4 Notice of Certain Proceedings and Other Circumstances .................................. 9
4.5 LIFE COMPANY To Provide Documents; Information About SMFI .............................. 10
4.6 SMFI To Provide Documents; Information About LIFE COMPANY .............................. 11
Section 5. Mixed and Shared Funding ............................................................... 12
5.1 General ................................................................................ 12
5.2 Disinterested Directors ................................................................ 12
5.3 Monitoring for Material Irreconcilable Conflicts. ...................................... 13
5.4 Conflict Remedies ...................................................................... 14
5.5 Notice to LIFE COMPANY ................................................................. 14
5.6 Information Requested by Board of Directors. ........................................... 15
5.7 Compliance with SEC Ru1es .............................................................. 15
5.8 Other Requirements ..................................................................... 15
Section 6. Termination ............................................................................ 15
6.1 Events of Termination .................................................................. 15
6.2 Notice Requirement for Termination ..................................................... 16
6.3 Funds To Remain Available .............................................................. 17
Description Page
6.4 Survival of Warranties and Indemnifications. ........................................... 17
6.5 Continuance of Agreement for Certain Purposes. ......................................... 17
Section 7. Parties To Cooperate Respecting Termination. ........................................... 17
Section 8. Assignment. ............................................................................ 18
Section 9. Notices ................................................................................ 18
Section 10. Voting Procedures ...................................................................... 18
Section 11. Foreign Tax Credits .................................................................... 19
Section 12. Indemnification ........................................................................ 19
12.1 Of SMFI and Carillon by LIFE COMPANY and UNDERWRITER................................... 19
12.2 Of LIFE COMPANY and UNDERWRITER by SMFI and Carillon .................................. 21
12.3 Effect of Notice ...................................................................... 24
12.4 Successors. ........................................................................... 24
Section 13. Applicable Law. ........................................................................ 24
Section 14. Execution in Counterparts: ............................................................. 24
Section 15. Severability ........................................................................... 24
Section 17. Headings ............................................................................... 25
Section 18. Confidentiality. ....................................................................... 25
Section 19. Trademarks and Fund Names .............................................................. 26
Section 20. Parties to Cooperate.................................................................... 27
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the _________ day of
______________ ,2000 ("Agreement"), by and among Summit Mutual Funds, Inc., a
Maryland corporation ("SMFI"), Carillon Investments, Inc., an Ohio Corporation
("Carillon"), First Ameritas Life Insurance Corp. of New York, a New York life
insurance company ("LIFE COMPANY"), on behalf of itself and each of its
segregated asset accounts listed in Schedule A hereto, as the parties hereto may
amend from time to time (each, an "Account," and collectively, the ("Accounts");
and Ameritas Investment Corp., an affiliate of LIFE COMPANY and the principal
underwriter of the Contracts ("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, SMFI is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, SMFI currently consists of seven separate series ("Series")
within its Pinnacle series of funds, shares ("Shares") of each of which are
registered under the Securities Act of 1933, as amended (the "1933 Act") and are
currently sold to one or more separate accounts of life insurance companies to
fund benefits under variable annuity contracts and variable life insurance
contracts; and
WHEREAS, SMFI will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
references herein to "SMFI" includes reference to each Fund, to the extent the
context requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts (hereinafter collectively, the "Contracts"), if required by applicable
law, will be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts,
each of which may be divided into two or more sub accounts ("Subaccounts";
references herein to an "Account" includes reference to each Subaccount thereof
to the extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each
of which is registered as a unit investment trust investment company under the
1940 Act (or exempt therefrom), and the security interests deemed to be issued
by the Accounts under the Contracts will be registered as securities under the
1933 Act (or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds
on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDER WRITER is a broker-dealer registered with the SEC under
the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, Carillon is a broker-dealer registered with the SEC under the
Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
Section 1. .......Available Funds
1.1 .....Availability .
SMFI will make Shares of each Fund available to LIFE COMPANY for
purchase and redemption at net asset value and with no sales charges, subject to
the terms and conditions of this Agreement. The Board of Directors of SMFI may
refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of the
Directors acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund.
1.2 .....Addition. Deletion or Modification of Funds.
--------------------------------------------
The Parties hereto may agree, from time to time, to add other Funds to
provide additional funding media for the Contracts, or to delete, combine, or
modify existing Funds, by amending Schedule A hereto. Upon such amendment to
Schedule A, any applicable reference to a Fund, SMFI, or its Shares herein shall
include a reference to any such additional Fund. Schedule A, as amended from
time to time, is incorporated herein by reference and is a part hereof.
1.3 .....No Sales to the General Public.
SMFI represents and warrants that no Shares of any Fund have been or
will be sold to the general public, it being understood by the Parties that SMFI
may sell shares of any Fund to any person eligible to invest in that Fund in
accordance with applicable provisions of Section 817(h) of the Code and the
regulations thereunder, and that if such provisions are not applicable, then
SMFI may sell shares of any Fund to any person, including members of the general
public.
Section 2.........Processing Transactions
2.1 .....Timely Pricing and Orders.
(a)......SMFI or its designated agent will use its best efforts to
provide LIFE COMPANY with the net asset value per Share for each Fund by 6:30
p.m. Eastern Standard Time on each Business Day. As used herein, "Business Day"
shall mean any day on which (i) the New York Stock Exchange is open for regular
trading (ii) SMFI calculates the Fund's net asset value, and (iii) LIFE COMPANY
is open for business.
(b) .....LIFE COMPANY will use the data provided by SMFI each Business
Day pursuant to paragraph (a) immediately above to calculate Account unit values
and to process transactions that receive that same Business Day's Account unit
values. LIFE COMPANY will perform such Account processing the same Business Day,
and will place corresponding orders to purchase or redeem Shares with SMFI by
9:30 a.m. Eastern Standard Time the following Business Day; provided, however,
that SMFI shall provide additional time to LIFE COMPANY in the event that SMFI
is unable to meet the 6:30 p.m. time stated in paragraph (a) immediately above.
Such additional time shall be equal to the additional time that SMFI takes to
make the net asset values available to LIFE COMPANY.
(c) .....With respect to payment of the purchase price by LIFE COMPANY
and of redemption proceeds by SMFI, LIFE COMPANY and SMFI shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below.
(d) .....If SMFI provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE COMPANY shall be entitled
to an adjustment to the number of Shares purchased or redeemed to reflect the
correct net asset value per Share, and any reasonable out-of-pocket expenses
incurred by the LIFE COMPANY in adjusting the Share net asset value. Any
material error in the calculation or reporting of net asset value per Share,
dividend or capital gain information shall be reported promptly upon discovery
to LIFE COMPANY.
2.2 .....Timely Payments.
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by SMFI by 2:00 p.m. Eastern Standard Time on the same day as the
order for Shares is placed, to the extent practicable. SMFI will wire payment
for net redemptions to an account designated by LIFE COMPANY by 2:00 p.m.
Eastern Standard Time on the same day as the Order is placed, to the extent
practicable, but in any event within five (5) calendar days after the date the
order is placed in order to enable LIFE COMPANY to pay redemption proceeds
within the time specified in Section 22(e) of the 1940 Act or such shorter
period of time as may be required by law.
2.3 .....Applicable Price.
(a) .....Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives
prior to the close of regular trading on the New York Stock Exchange on a
Business Day will be executed at the net asset values of the appropriate Funds
next computed after receipt by SMFI or its designated agent of the orders. For
purposes of this Section 2.3(a), LIFE COMPANY shall be the designated agent of
SMFI for receipt of orders relating to Contract transactions on each Business
Day and receipt by such designated agent shall constitute receipt by SMFI;
provided that SMFI receives notice of such orders by 9:00 a.m. Eastern Standard
Time on the next following Business Day or such later time as computed in
accordance with Section 2.1 (b) hereof.
(b) .....All other Share purchases and redemptions by LIFE COMPANY will
be effected at the net asset values of the appropriate Funds next computed after
receipt by SMFI or its designated agent of the order therefore, and such orders
will be irrevocable.
(c) .....Notwithstanding any provision of the Agreement to the
contrary, the Parties agree that SMFI shall determine the applicable price for
Share orders attributable to Contracts funded by unregistered Accounts in
accordance with Section 2.3(a) hereof, provided that LIFE COMPANY represents and
warrants that it is legally or contractually obligated to treat such orders in
the same manner as orders attributable to Contracts funded by registered
Accounts. Each Share order placed by LIFE COMPANY that is attributable, in whole
or in part, to Contracts funded by an unregistered Account, shall be deemed to
constitute such representation and warranty by LIFE COMPANY unless the order
specifically states to the contrary. Otherwise, SMFI shall determine the
applicable price for Share orders attributable to Contracts funded by
unregistered Accounts in accordance with Section 2.3(b ) hereof. As used herein,
an Account is registered if it is registered under the 1940 Act.
2.4......Dividends and Distributions.
SMFI will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Fund. LIFE
COMPANY hereby elects to reinvest all dividends and capital gains distributions
in additional Shares of the corresponding Fund at the ex-dividend date net asset
values until LIFE COMPANY otherwise notifies SMFI in writing, it being agreed by
the Parties that the ex-dividend date and the payment date with respect to any
dividend or distribution will be the same Business Day. LIFE COMPANY reserves
the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash.
2.5 .....Book Entry.
Issuance and transfer of SMFI Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from SMFI will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
Section 3. .......Costs and Expenses
3.1 .....General.
--------
Except as otherwise specifically provided in Schedule C, attached
hereto and made a part hereof, each Party will bear, or arrange for other to
bear, all expenses incident to its performance under this Agreement.
3.2 .....Parties To Cooperate.
Each party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of SMFI and the Accounts.
Section 4.........Legal Compliance
4.1 .....Tax Laws.
---------
(a) .....SMFI represents and warrants that each Fund is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will use its best efforts to qualify and to maintain qualification of each Fund
as a RIC. SMFI will notify LIFE COMPANY immediately upon having a reasonable
basis for believing that a Fund has ceased to so qualify or that it might not so
qualify in the future.
(b) .....SMFI represents that it will use its best efforts to comply
and to maintain each Fund's compliance with the diversification requirements set
forth in Section 817(h) of the Code and Section 1.817-5(b) of the regulations
under the Code. SMFI will notify LIFE COMPANY immediately upon having a
reasonable basis for believing that a Fund has ceased to so comply or that a
Fund might not so comply in the future. In the event of a breach of this Section
4.1 (b ) by SMFI, it will use its best efforts to adequately diversify the Fund
so as to achieve compliance within the grace period afforded by Section 1.817-5
of the regulations under the Code. The representations and warranties of this
Section 4.1 (b ) shall not apply with respect to any Fund whose beneficial
interests are held solely by owners of "pension plan contracts" within the
meaning of Section 818(a) of the Code and other persons whose federal income tax
treatment is not dependent on the Fund's compliance with the requirements of
Section 817(h) of the Code.
(c) .....Notwithstanding any other provision herein to the contrary,
LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in
writing in connection with any governmental audit or review of LIFE COMPANY or,
to LIFE COMPANY's knowledge, of any Participant, that any Fund has failed to
comply with the diversification requirements of Section 817(h) of the Code or
LIFE COMPANY otherwise becomes aware of any facts that coul4 give rise to any
claim against SMFI or its affiliates as a result of such a failure or alleged
failure:
(i)......LIFE COMPANY shall promptly notify SMFI of such assertion or
potential claim (subject to the Confidentiality provisions of
Section 18 as to any Participant);
(ii) LIFE COMPANY shall consult with SMFI as to how to minimize any
liability that may arise as a result of such failure or
alleged failure; (iii) LIFE COMPANY shall use its best efforts
to minimize any liability of SMFI or its affiliates resulting
from such failure, including, without limitation,
demonstrating, pursuant to Treasury Regulations Section
1.817-5(a)(2), to the Commissioner of the IRS that such
failure was inadvertent;
(iv) LIFE COMPANY shall permit SMFI, its affiliates and their legal
and accounting advisors to participate in any conferences,
settlement discussions or other administrative or judicial
proceeding or contests (including judicial appeals thereof)
with the IRS, any Participant or any other claimant regarding
any claims that could give rise to liability to SMFI or its
affiliates as a result of such a failure or alleged failure;
provided, however, that LIFE COMPANY will retain control of
the conduct of such conferences discussions, proceedings,
contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY to the
IRS, any Participant or any other claimant in connection
with any of the foregoing proceedings or contests
(including, without limitation, any such materials to be
submitted to the IRS pursuant to Treasury Regulations
Section 1.817-5(a)(2), (a) shall be provided by LIFE COMPANY
to SMFI (together with any supporting information or
analysis), subject to the confidentiality provisions of
Section 18, at least ten (10) business days or such shorter
period to which the Parties hereto agree prior to the day on
which such proposed materials are to be submitted, and (b)
shall not be submitted by LIFE COMPANY to any such person
without the express written consent of SMFI which shall not
be unreasonably withheld;
(vi) LIFE COMPANY shall provide SMFI or its affiliates and their
accounting and legal advisors with such cooperation as SMFI
shall reasonably request (including, without limitation, by
permitting SMFI and its accounting and legal advisors to
review the relevant books and records of LIFE COMPANY) in
order to facilitate review by SMFI or its advisors of any
written submissions provided to it pursuant to the preceding
clause or its assessment of the validity or amount of any
claim against its arising from such a failure or alleged
failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS
or any Participant that would give rise to a claim against
SMFI or its affiliates (a) compromise or settle any claim,
(b) accept any adjustment on audit, or (c) forego any
allowable administrative or judicial appeals, without the
express written consent of SMFI or its affiliates, which
shall not be unreasonably withheld, provided that LIFE
COMPANY shall not be required, after exhausting all
administrative penalties, to appeal any adverse judicial
decision unless SMFI or its affiliates shall have provided
an opinion of independent counsel to the effect that a
reasonable basis exists for taking such appeal; and provided
further that the costs of any such appeal shall be borne
equally by the Parties hereto; and
(viii) SMFI and its affiliates shall have no liability as a result of
such failure or alleged failure if LIFE COMPANY fails to
comply with any of the foregoing clauses (i) through (vii),
and such failure could be shown to have materially contributed
to the liability.
Should SMFI or any of its affiliates refuse to give its written consent
to any compromise or settlement of any claim or liability hereunder, LIFE
COMPANY may, in its discretion, authorize SMFI or its affiliates to act in the
name of LIFE COMPANY in, and to control the conduct of, such conferences,
discussions, proceedings, contests or appeals and all administrative or judicial
appeals thereof, and in that event SMFI or its affiliates shall bear the fees
and expenses associated with the conduct of the proceedings that it is so
authorized to control; provided, that in no event shall LIFE COMPANY have any
liability resulting from SMFI's refusal to accept the proposed settlement or
compromise with respect to any failure caused by SMFI. As used in this
Agreement, the tern "affiliates" shall have the same meaning as "affiliated
person" as defined in Section 2(a)(3) of the 1940 Act.
(d) .....LIFE COMPANY represents and warrants that the Contracts
currently are and will be treated as annuity contracts or life insurance
contracts under applicable provisions of the Code and that it will use its best
efforts to maintain such treatment; LIFE COMPANY will notify SMFI immediately
upon having a reasonable basis for believing that any of the Contracts have
ceased to be so treated or that they might not be so treated in the future.
(e) .....LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. LIFE COMPANY will use its best efforts to continue to
meet such definitional requirements, and it will notify SMFI immediately upon
having a reasonable basis for believing that such requirements have ceased to be
met or that they might not be met in the future.
4.2 .....Insurance and Certain Other Laws.
(a) .....SMFI will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by LIFE COMPANY , including, the furnishing of information not otherwise
available to LIFE COMPANY which is required by state insurance law to enable
LIFE COMPANY to obtain the authority needed to issue the Contracts in any
applicable state.
(b ) ....LIFE COMPANY represents and warrants that (i) it is an
insurance company duly organized, validly existing and in good standing under
the laws of the State of Nebraska and has full corporate power, authority and
legal right to execute, deliver and perform its duties and comply with its
obligations under this Agreement, (ii) it has legally and validly established
and maintains each Account as a segregated asset account under Nebraska
Insurance Law and the regulations thereunder, and (iii) the Contracts comply in
all material respects with all other applicable federal and state laws and
regulations.
(c) .....SMFI represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Maryland and has full power, authority, and legal right to execute, deliver, and
perform its duties and comply with its obligations under this Agreement.
4.3 .....Securities Laws.
(a) .....LIFE COMPANY represents and warrants that (i) interests in
each Account pursuant to the Contracts will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Contracts will be duly authorized
for issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and
Nebraska law, (iii) each Account is and will remain registered under the 1940
Act, to the extent required by the 1940 Act, (iv) each Account does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, to the extent required, (v) each Account's 1933 Act
registration statement relating to the Contracts, together with any amendments
thereto, will at all times comply in all material respects with the requirements
of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend the
registration statement for its Contracts under the 1933 Act and for its Accounts
under the 1940 Act from time to time as required in order to effect the
continuous offering of its Contracts or as may otherwise be required by
applicable law, and (vii) each Account's prospectus, statement of additional
information, private placement memoranda and other documents pursuant to which
Contracts are offered, and any amendments or supplements thereto (collectively,
the "Account Prospectus"), will at all times comply in all material respects
with all applicable requirements of the 1933 Act and the rules thereunder.
(b) .....SMFI represents and warrants that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required by
the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) SMFI is and will remain registered under the 1940 Act to the
extent required by the 1940 Act, (iii) SMFI will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act from
time to time as required in order to effect the continuous offering of its
Shares, (iv) SMFI does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) SMFI's 1933 Act
registration statement, together with any amendments thereto, will at all times
comply in all material respects with the requirements of the 1933 Act and rules
thereunder, and (vi) SMFI's prospectus, statement of additional information and
any amendments or supplements thereto (collectively, the "SMFI Prospectus" will
at all times comply in all material respects with all applicable requirements of
the 1933 Act and the rules thereunder.
(c) .....SMFI will at its expense register and qualify its Shares for
sale in accordance with the laws of any state or other jurisdiction if and to
the extent reasonably deemed advisable by SMFI.
(d) .....SMFI currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
SMFI undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(e) .....SMFI represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and 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 minimal coverage as required currently
by Rule 17 g-(l) of the 1940 Act or related provisions as may be promulgated
from time to time. The aforesaid bond includes coverage for larceny and
embezzlement and is issued by a reputable bonding company.
4.4 .....Notice of Certain Proceedings and Other Circumstances.
------------------------------------------------------
(a) .....SMFI will immediately notify LIFE COMPANY of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to SMFls registration statement under the 1933
Act or SMFI Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or SMFI Prospectus that may affect the offering of Shares
of SMFI, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of SMFI's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b ) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by LIFE COMPANY. SMFI
will make every reasonable effort to prevent the issuance, with respect to any
Fund, of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
(b ) ....LIFE COMPANY will immediately notify SMFI of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to each Account's registration statement under
the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any
request by the SEC for any amendment to such registration statement or Account
Prospectus that may affect the offering of Shares of SMFI, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. LIFE COMPANY will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 .....LIFE COMPANY To Provide Documents: Information About SMFI.
----------------------------------------------------------
(a) .....LIFE COMPANY will provide to SMFI or its designated agent at
least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction solicitation
material, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to each Account or the Contracts,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) .....LIFE COMPANY will provide to SMFI or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which SMFI or any of its affiliates is named, at least
five (5) Business Days prior to its use or such shorter period as the Parties
hereto may, from time to time, agree upon. No such material shall be used if
SMFI or its designated agent objects to such use within five (5) Business Days
after receipt of such material or such shorter period as the Parties hereto may,
from time to time, agree upon. SMFI hereby designates Summit Investment
Partners, Inc. as the entity to receive such sales literature, until such time
as SMFI appoints another designated agent by giving notice to LIFE COMPANY in
the manner required by Section 9 hereof.
(c) .....Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
SMFI or its affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the registration statement,
including the SMFI Prospectus contained therein, relating to Shares, as such
registration statement and SMFI Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for SMFI; or (iii) in published reports for
SMFI that are in the public domain and approved by SMFI for distribution; or
(iv) in sales literature or other promotional material approved by SMFI, except
with the express written permission of SMFI.
(d) .....LIFE COMPANY shall adopt and implement procedures reasonably
designed to ensure that information concerning SMFI and its affiliates that is
intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Participants) ("broker only
materials") is so used, and neither SMFI nor any of its affiliates shall be
liable for any losses, damages or expenses relating to the improper use of such
broker only materials.
(e) .....For the purposes of this Section 4.5, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media,
(e.g., on-line networks such as the Internet or other electronic messages),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters., seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.6 .....SMFI To Provide Documents: Information About LIFE COMPANY .
-----------------------------------------------------------
(a) .....SMFl will provide to LIFE COMPANY at least one (1) complete
copy of all SEC registration statements, SMFI Prospectuses, reports, any
preliminary and final proxy material, applications for exemptions, requests for
no-action letters, and all amendments to any of the above, that relate to SMFI
or the Shares of a Fund, contemporaneously with the filing of such document with
the SEC or other regulatory authorities.
(b) .....SMFI will provide to LIFE COMPANY camera ready copy of all
SMFI prospectuses and printed copies, in an amount specified by LIFE COMPANY ,
of SMFI statements of additional information, proxy materials, periodic reports
to shareholders and other materials required by law to be sent to Participants
who have allocated any Contract value to a Fund. SMFI will provide such copies
to LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may
be, to print and distribute such materials within the time required by law to be
furnished to Participants. The form of the prospectus and statement of
additional information provided by SMFI to the LIFE COMPANY shall be the final
form of prospectus and statement of additional information as filed with the
Securities and Exchange Commission. The prospectus shall include only those
Funds identified in Schedule A.
(c) .....SMFI will provide to LIFE COMPANY or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which LIFE COMPANY, or any of its respective affiliates
is named, or that refers to the Contracts, at least five (5) Business Days prior
to its use or such shorter period as the Parties hereto may, from time to time,
agree upon. No such material shall be used if LIFE COMPANY or its designated
agent objects to such use within five (5) Business Days after receipt of such
material or such shorter period as the Parties hereto may, from time to time,
agree upon. LIFE COMPANY shall receive all such sales literature until such time
as it appoints a designated agent by giving notice to SMFI in the manner
required by Section 9 hereof.
(d) .....Neither SMFI nor any of its affiliates will give any
information or make any representations or statements on behalf of or concerning
LIFE COMPANY, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
Prospectus contained therein, relating to the Contracts, as such registration
statement and Account Prospectus may be amended from time to time; or (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by LIFE COMPANY for distribution; or (iii) in sales literature or
other promotional material approved by LIFE COMPANY or its affiliates, except
with the express written permission of LIFE COMPANY.
(e) .....SMFI shall cause its principal underwriter to adopt and
implement procedures reasonably designed to ensure that information concerning
LIFE COMPANY, and its respective affiliates that is intended for use only by
brokers or agents selling the Contracts (i. e., information that is not intended
for distribution to Participants) ("broker only materials") is so used, and
neither LIFE COMPANY , nor any of its respective affiliates shall be liable for
any losses, damages or expenses relating to the improper use of such broker only
materials.
(f) .....For purposes of this Section 4.6, the phrase "sales literature
or other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media, (e.g.,
on-line networks such as the Internet or other electronic messages), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 1940 Act.
Section 5. .......Mixed and Shared Funding.
5.1 .....General.
--------
SMFI has filed an application with the SEC to exempt it from certain
provisions of the 1940 Act and rules thereunder so that SMFI may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life insurance
contracts, separate accounts of insurance companies unaffiliated with LIFE
COMPANY, and trustees of qualified pension and retirement plans (collectively,
"Mixed and Shared Funding"). The Parties recognize that the SEC has imposed
terms and conditions for such orders that are substantially identical to many of
the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply
pursuant to such an exemptive order granted to SMFI. SMFI hereby notifies LIFE
COMPANY that it may be appropriate to include in the prospectus pursuant to
which a Contract is offered disclosure regarding the potential risks of Mixed
and Shared Funding.
5.2 .....Disinterested Directors.
SMFI agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") are not interested
persons of SMFI within the meaning of Section 2(a)(19) of the 1940 Act and the
rules thereunder and as modified by any applicable orders of the SEC, except
that if this condition is not met by reason of the death, disqualification, or
bona fide resignation of any director, then the operation of this condition
shall be suspended (a) for a period of forty-five (45) days if the vacancy or
vacancies maybe filled by the Board; (b) for a period of sixty (60) days if a
vote of shareholders is required to fill the vacancy or vacancies; or (c) for
such longer period as the SEC may prescribe by order upon application.
5.3 .....Monitoring for Material Irreconcilable Conflicts.
SMFI agrees that its Board of Directors will monitor for the existence
of any material irreconcilable conflict between the interests of the
Participants in all separate accounts of life insurance companies utilizing SMFI
("Participating Insurance Companies"), including each Account, and participants
in all qualified retirement and pension plans investing in SMFI ("Participating
Plans"). LIFE COMPANY agrees to inform the Board of Directors of SMFI of the
existence of or any potential for any such material irreconcilable conflict of
which it is aware. The concept of a "material irreconcilable conflict" is not
defined by the 1940 Act or the rules thereunder, but the Parties recognize that
such a conflict may arise for a variety of reasons, including, without
limitation:
(a) .....an action by any state insurance or other regulatory
authority;
(b) .....a change in applicable federal or state insurance, tax or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax or
securities regulatory authorities;
(c) .....an administrative or judicial decision in any relevant
proceeding;
(d) .....the manner in which the investments of any Fund are being
managed;
(e) .....a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or
by Participants of different Participating Insurance
Companies;
(f) .....a decision by a Participating Insurance Company to
disregard the voting instructions of Participants; or
(g) .....a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist
the Board of Directors in carrying out its responsibilities by providing the
Board of Directors with all information reasonably necessary for the Board of
Directors to consider any issue raised, including information as to a decision
by LIFE COMPANY to disregard voting instructions of Participants. LIFE COMPANY's
responsibilities in connection with the foregoing shall be carried out with a
view only to the interests of Participants.
5.4 .....Conflict Remedies.
(a) .....It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of the Disinterested Directors
that a material irreconcilable conflict exists, LIFE COMPANY will, if it is a
Participating Insurance Company for which a material irreconcilable conflict is
relevant, at its own 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 material irreconcilable conflict, which
steps may include, but are not limited to:
(i) withdrawing the assets allocable to some or all of
the Accounts from SMFI or any Fund and reinvesting
such assets in a different investment medium,
including another Fund of SMFI, or submitting the
question whether such segregation should be
implemented to a vote of all affected Participants
and, as appropriate, segregating the assets of any
particular group (e.g., annuity Participants, life
insurance Participants or all Participants) that
votes in favor of such segregation, or offering to
the affected Participants the option of making such a
change; and
(ii) establishing a new registered investment company of
the type defined as a "management company" in Section
4(3) of the 1940 Act or a new separate account that
is operated as a management company.
(b)......If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote, LIFE
COMPANY may be required, at SMFI's election, to withdraw each Account's
investment in SMFI or any Fund. No charge or penalty will be imposed as a result
of such withdrawal. Any such withdrawal must take place within six (6) months
after SMFI gives notice to LIFE COMPANY that this provision is being
implemented, and until such withdrawal SMFI shall continue to accept and
implement orders by LIFE COMPANY for the purchase and redemption of Shares of
SMFI.
(c) .....If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to LIFE COMPANY
conflicts with the majority of other state regulators, then LIFE COMPANY will
withdraw each Account's investment in SMFI within six (6) months after SMFI's
Board of Directors informs LIFE COMPANY that it has determined that such
decision has created a material irreconcilable conflict, and until such
withdrawal SMFI shall continue to accept and implement orders by LIFE COMPANY
for the purchase and redemption of Shares of SMFI. No charge or penalty will be
imposed as a result of such withdrawal.
(d) .....LIFE COMPANY agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) .....For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will SMFI or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 .....Notice to LIFE COMPANY.
-----------------------
SMFI will promptly make known in writing to LIFE COMPANY, the Board of
Directors determination of the existence of a material irreconcilable conflict,
a description of the facts that give rise to such conflict and the implications
of such conflict.
5.6 .....Information Requested by Board of Directors.
LIFE COMPANY and SMFI (or its investment adviser) will at least
annually submit to the Board of Directors of SMFI such reports, materials or
data as the Board of Directors may reasonably request so that the Board of
Directors may fully carry out the obligations imposed upon it by the provisions
hereof or any exemptive order granted by the SEC to permit Mixed and Shared
Funding, and said reports, materials and data will be submitted at any
reasonable time deemed appropriate by the Board of Directors. All reports
received by the Board of Directors of potential or existing conflicts, and all
Board of Directors actions with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating Plans of
a conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors or
other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 .....Compliance with SEC Rules.
If, at any time during which SMFI is serving as an investment medium
for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding. SMFI agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 .....Other Requirements.
SMFI will require that each Participating Insurance Company and
Participating Plan enter into an agreement with SMFI that contains in substance
the same provisions as are set forth in Sections 4. 1 (b), 4. 1 (d), 4.3(a),
4.4(b), 4.5(a), 5, and 10 of this Agreement.
Section 6. .......Termination.
6.1 .....Events of Termination.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
(a) .....at the option of any party, with or without cause with respect
to the Fund, upon six (6) months advance written notice to the other parties,
or, if later, upon receipt of any required exemptive relief from the SEC, unless
otherwise agreed to in writing by the parties; or
(b) .....at the option of SMFI upon institution of formal proceedings
against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance
regulator or any other regulatory body regarding LIFE COMPANY's obligations
under this Agreement or related to the sale of the Contracts, the operation of
each Account, or the purchase of Shares, if, in each case, SMFI reasonably
determines that such proceedings, or the facts on which such proceedings would
be based, have a material likelihood of imposing material adverse consequences
on the Fund with respect to which the Agreement is to be terminated; or
(c) .....at the option of LIFE COMPANY upon institution off formal
proceedings against SMFI, its principal underwriter, or its investment adviser
by the NASD, the SEC, or any state insurance regulator or any other regulatory
body regarding SMFl's obligations under this Agreement or related to the
operation or management of SMFI or the purchase of SMFI Shares, if, in each
case, LIFE COMPANY reasonably determines that such proceedings, or the facts on
which such proceedings would be based, have a material likelihood of imposing
material adverse consequences on LIFE COMPANY, or the Subaccount corresponding
to the Fund with respect to which the Agreement is to be terminated; or
(d) .....at the option of any party in the event that (i) the Fund's
Shares are not registered, where required, and, in all material respects, issued
and sold in accordance with any applicable federal or state law, or (ii) such
law precludes the use of such Shares as an underlying investment medium of the
Contracts issued or to be issued by LIFE COMPANY; or
(e) ....upon termination of the corresponding Subaccount's investment
in the Fund pursuant to Section 5 hereof; or
(f) .....at the option of LIFE COMPANY if the Fund ceases to qualify as
a RIC under Subchapter M of the Code or under successor or similar provisions,
or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) .....at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, as
applicable, or if LIFE COMPANY reasonably believes that the Fund may fail to so
comply; or
(h) .....at the option of SMFI if the Contracts issued by LIFE COMPANY
cease to qualify as annuity contracts or life insurance contracts under the Code
( other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under the Contracts are
not registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
(i) .....upon another Party's material breach of any provision of this
Agreement.
6.2 .....Notice Requirement for Termination.
No termination of this Agreement will be effective unless and until the
party terminating this Agreement gives prior written notice to the other party
to this Agreement of its intent to terminate, and such notice shall set forth
the basis for such termination. Furthermore:
(a) .....in the event that any termination is based upon the provisions
of Sections 6.1(a) or 6.1 (e) hereof, such prior written notice shall be given
at least six (6) months in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto;
(b) .....in the event that any termination is based upon the provisions
of Sections 6.1 (b) or 6.1 (c) hereof, such prior written notice shall be given
at least ninety (90) days in advance of the effective date of termination unless
a shorter time is agreed to by the Parties hereto; and
(c) .....in the event that any termination is based upon the provisions
of Sections 6.1(d), 6.l(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written
notice shall be given as soon as possible within twenty-four (24) hours after
the terminating Party learns of the event causing termination to be required.
6.3 .....Funds To Remain Available.
Notwithstanding any termination of this Agreement, SMFI will, at the
option of LIFE COMPANY, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation, the
owners of the Existing Contracts will be permitted to reallocate investments in
the Fund (as in effect on such date), redeem investments in the Fund and/or
invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 6.3 will not apply to
any terminations under Section 5 and the effect of such terminations will be
governed by Section 5 of this Agreement.
6.4 .....Survival of Warranties and Indemnifications.
All warranties and indemnifications will survive the termination of
this Agreement.
6.5 .....Continuance of Agreement for Certain Purposes.
If any Party terminates this Agreement with respect to any Fund
pursuant to Sections 6.1(b), 6.l(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i)
hereof, this Agreement shall nevertheless continue in effect as to any Shares of
that Fund that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that LIFE COMPANY may, by written notice shorten said six (6) month period in
the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.I(g), 6.1(h) or
6.1(i).
Section 7. Parties To Cooperate Respecting Termination.
The Parties hereto agree to cooperate and give reasonable assistance to
one another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
Section 8. .......Assignment.
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
Section 9. .......Notices.
Notices and communications required or permitted by this Agreement will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
First Ameritas Life Insurance Corp. of New York
Ameritas Investment Corp.
0000 "0" Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: 402-467- 7956
Attn: General Counsel
Summit Mutual Funds, Inc.
Carillon Investments, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxxxxx, Esq., Law Dept.
Xxxxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxxxxx
Section 10. ......Voting Procedures.
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE
COMPANY will distribute all proxy material furnished by SMFI to Participants
and/or Policyholders to whom pass-through voting privileges are required to be
extended and will solicit voting instructions from Participants. LIFE COMPANY
will vote Shares in accordance with timely instructions received from
Participants. LIFE COMPANY will vote Shares that are (a) not attributable to
Participants to whom pass-through voting privileges are extended, or (b )
attributable to Participants, but for which no timely instructions have been
received, in the same proportion as Shares for which said instructions have been
received from Participants, so long as and to the extent that the SEC continues
to interpret the 1940 Act to require pass through voting privileges for
Participants. Neither LIFE COMPANY nor any of its affiliates will in any way
recommend action in connection with or oppose or interfere with the solicitation
of proxies for the Shares held for such Participants. LIFE COMPANY reserves the
right to vote shares held in any Account in its own right, to the extent
permitted by law. LIFE COMPANY shall be responsible for assuring that each of
its Accounts holding Shares calculates voting privileges in a manner consistent
with that of other Participating Insurance Companies or in the manner required
by the Mixed and Shared Funding exemptive order obtained by SMFI. SMFI will
notify LIFE COMPANY of any changes of interpretations of amendments to Mixed and
Shared Funding exemptive order it obtains. SMFI will comply with all provisions
of the 1940 Act requiring voting by shareholders, and in particular, SMFI either
will provide for annual meetings (except insofar as the SEC may interpret
Section 16 of the 1940 Act not to require such meetings) or will comply with
Section 16(c) of the 1940 Act (although SMFI is not one of the trusts described
in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, SMFI will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
Section 11. ......Foreign Tax Credits.
SMFI agrees to consult in advance with LIFE COMPANY concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.
Section 12. ......Indemnification.
12.1 ....Of SMFI and Carillon by LIFE COMPANY and UNDERWRITER.
-----------------------------------------------------
(a) .....Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless SMFI,
Carillon, their affiliates, and each person, if any, who controls SMFI,
Carillon, or their affiliates within the meaning of Section 15 of the 1933 Act
and each of their respective directors and officers, (collectively, the
"Indemnified Parties" for purposes of this Section 12.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of LIFE COMPANY and UNDER WRITER) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses), to
which the Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as such losses, claims, damages, liabilities
or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
any Account's 1933 Act registration statement, any Account
Prospectus, the Contracts, or sales literature or
advertising 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 LIFE COMPANY
or UNDERWRITER by or on behalf of SMFI or Carillon for use
in any Account's 1933 Act, registration statement, any
Account Prospectus, the Contracts, or sales literature or
advertising or otherwise for use in connection with the sale
of Contracts or Shares (or any amendment or supplement to
any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations ( other than statements or representations
contained in SMFI's 1933 Act registration statement, SMFI
Prospectus, sales literature or advertising of SMFI, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates and on which such
persons have reasonably relied) or the negligent, illegal or
fraudulent conduct of LIFE COMPANY, UNDERWRITER or their
respective affiliates or persons under their control
(including, without limitation, their employees and
"Associated Persons," as that term is defined in paragraph
(m) of Article I of the NASD's By-Laws), in connection with
the sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
SMFI's 1933 Act registration statement, SMFI Prospectus,
sales literature or advertising of SMFI, or any amendment or
supplement to any of the foregoing, or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was
made in reliance upon and in conformity with information
furnished to SMFI, Carillon or their affiliates by or on
behalf of LIFE COMPANY, UNDERWRITER or their respective
affiliates for use in SMFI's 1933 Act registration
statement, SMFI Prospectus, sales literature or advertising
of SMFI, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or
UNDERWRITER to perform the obligations, provide the services
and furnish the materials required of them under the terms
of this Agreement, or any material breach of any
representation and/or warranty made by LIFE COMPANY or
UNDERWRITER in this Agreement or arise out of or result from
any other material breach of this Agreement by LIFE COMPANY
or UNDER WRITER; or (v) arise as a result of failure by the
Contracts issued by LIFE COMPANY to qualify as annuity
contracts or life insurance contracts under the Code,
otherwise than by reason of any Fund's failure to comply
with Subchapter M or Section 817(h) of the Code.
(b) .....Neither LIFE COMPANY nor UNDERWRITER shall be liable under
this Section 12.1 with respect to any losses, claims, damages, liabilities or
actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance by that
Indemnified party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii)
LIFE COMPANY , UNDERWRITER, each Account or Participants.
(c) .....Neither LIFE COMPANY nor UNDERWRITER shall be liable under
this Section 12.1 with respect to any action against an Indemnified Party unless
SMFI or Carillon shall have notified LIFE COMPANY and UNDERWRITER in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the action 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 LIFE COMPANY and
UNDERWRITER of any such action shall not relieve LIFE COMPANY and UNDERWRITER
from any liability which they may have to the Indemnified Party against whom
such action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled to
participate, at their own expense, in the defense of such action and also shall
be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from LIFE COMPANY or UNDERWRITER to such Indemnified
party of LIFE COMPANY's or UNDERWRITER's election to assume the defense thereof,
the Indemnified Party will cooperate fully with LIFE COMPANY and UNDERWRITER and
shall bear the fees and expenses of any additional counsel retained by it, and
neither LIFE COMPANY nor UNDERWRITER will be liable to such Indemnified Party
under this Agreement for any legal or other expenses subsequently incurred by
such Indemnified Party independently in connection with the defense thereof,
other than reasonable costs of investigation.
12.2 ....Of LIFE COMPANY and UNDERWRITER by SMFI and Carillon.
-----------------------------------------------------
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, SMFI and Carillon agree to indemnify and hold harmless LIFE
COMPANY, UNDERWRITER, their respective affiliates, and each person, if any, who
controls LIFE COMPANY, UNDERWRITER or their respective affiliates within the
meaning of Section 15 of the 1933 Act and each of their respective directors and
officers, (collectively, the "Indemnified Parties" for purposes of this Section
12.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of SMFI and/or Carillon) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law, or otherwise, insofar as such losses,
claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
SMFl's 1933 Act registration statement, SMFI Prospectus or
sales literature or advertising of SMFI ( 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 SMFI or its
affiliates by or on behalf of LIFE COMPANY, UNDERWRITER or
their respective affiliates for use in SMFI's 1933 Act
registration statement, SMFI Prospectus, or in sales
literature or advertising or otherwise for use in connection
with the sale of Contracts or Shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in any Account's 1933 Act registration statement,
any Account Prospectus, sales literature or advertising for
the Contracts, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
SMFI, Carillon or their affiliates and on which such persons
have reasonably relied) or the negligent, illegal or
fraudulent conduct of SMFI, Carillon or their affiliates or
persons under their control (including, without limitation,
their employees and II Associated Persons" as that term is
defined in Section (m) of Article I of the NASD By-Laws), in
connection with the sale or distribution of SMFI Shares; or
(iii) rise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
any Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the
Contracts, or any amendment or supplement to any of the
foregoing, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY,
UNDERWRITER or their respective affiliates by or on behalf
of SMFI or Carillon for use in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by SMFI to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any
material breach of any representation and/or warranty made
by SMFI in this Agreement or arise out of or result from any
other material breach of this Agreement by SMFI.
(b) .....Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, SMFI and Carillon agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof with, the written
consent of SMFI and/or Carillon) or actions in respect thereof (including, to
the extent reasonable, legal and other expenses) to which the Indemnified
Parties may become subject directly or indirectly under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
actions directly or indirectly result from or arise out of the failure of any
Fund to operate as a regulated investment company in compliance. with (i)
Subchapter M of the Code and regulations thereunder, or (ii) Section 817(h) of
the Code and regulations thereunder, including, without limitation, any income
taxes and related penalties, rescission charges, liability under state law to
Participants asserting liability against LIFE COMPANY pursuant to the Contracts,
the costs of any ruling and closing agreement or other settlement with the IRS,
and the cost of any substitution by LIFE COMPANY of Shares of another investment
company or portfolio for those of any adversely affected Fund as a funding
medium for each Account that LIFE COMPANY reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) Neither SMFI nor Carillon shall be liable under this Section 12.2
with respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to SMFI or Carillon.
(d) Neither SMFI nor Carillon shall be liable under this Section 12.2
with respect to any action against an Indemnified Party unless the Indemnified
Party shall have notified SMFI and/or Carillon in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the action 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 SMFI or Carillon of any such action
shall not relieve SMFI or Carillon from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this Section 12.2. Except as otherwise provided herein, in case any such
action is brought against an Indemnified Party, SMFI and/or Carillon will be
entitled to participate, at its own expense, in the defense of such action and
also shall be entitled to assume the defense thereof (which shall include,
without limitation, the conduct of any ruling request and closing agreement or
other settlement proceeding with the IRS), with counsel approved by the
Indemnified Party named in the action, which approval shall not be unreasonably
withheld. After notice from SMFI and/or Carillon to such Indemnified Party of
SMFI's or Carillon's election to assume the defense thereof, the Indemnified
Party will cooperate fully with SMFI and Carillon and shall bear the fees and
expenses of any additional counsel retained by it, and SMFI and Carillon will
not be liable to such Indemnified Party under this Agreement for any legal or
other expenses subsequently incurred by such Indemnified Party independently in
connection with the defense thereof, other than reasonable costs of
investigation.
(e) In no event shall SMFI or Carillon be liable under the
indemnification provisions contained in this Agreement to any individual or
entity, including, without limitation, LIFE COMPANY , UNDERWRITER or any other
Participating Insurance Company or any Participant, with respect to any losses,
claims, damages, liabilities or expenses that arise out of or result from (i) a
breach of any representation, warranty, and/or covenant made by LIFE COMPANY or
UNDERWRITER hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants; (ii) the failure by LIFE COMPANY or any Participating Insurance
Company to maintain its segregated asset account (which invests in any Fund) as
a legally and validly established segregated asset account under applicable
state law and as a duly registered unit investment trust under the provisions of
the 1940 Act (unless exempt therefrom); or (iii) the failure by LIFE COMPANY or
any Participating Insurance Company to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
12.3 ....Effect of Notice.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1 (c) or 12.2(d) above of participation in or control
of any action by the indemnifying Party will in no event be deemed to be an
admission by the indemnifying Party of liability, culpability or responsibility,
and the indemnifying Party will remain free to contest liability with respect to
the claim among the Parties or otherwise.
12.4 ....Successors.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
Section 13. Applicable Law.
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Ohio law, without regard for that state's
principles of conflict of laws.
Section 14. Execution in Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
Section 15. Severability.
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative.
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, that the Parties are entitled to under federal and state
laws.
Section 17. ......Headings.
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
Section 18. ......Confidentiality.
SMFI acknowledges that the identities of the customers of LIFE COMPANY
or any of its affiliates (collectively , the "LIFE COMPANY Protected Parties"
for proposes of this Section 18), information maintained regarding those
customers, and all computer programs and procedures or other information
developed by the LIFE COMPANY Protected Parties or any of their employees or
agents in connection with LIFE COMPANY's performance of its duties under this
Agreement are the valuable property of the LIFE COMPANY Protected Parties. SMFI
agrees that if it comes into possession of any list or compilation of the
identities of or other information about the LIFE COMPANY Protected Parties'
customers, or any other information or property of the LIFE COMPANY Protected
Parties, other than such information as may be independently developed or
compiled by SMFI from information supplied to it by the LIFE COMPANY Protected
Parties' customers who also maintain accounts directly with SMFI, SMFI will hold
such information or property in confidence and refrain from using, disclosing or
distributing any of such information or other property except: (a) with LIFE
COMPANY's prior written consent; or (b) as required by law or judicial process.
LIFE COMPANY acknowledges that the identities of the customers of SMFI or any of
its affiliates (collectively, the "SMFI Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the SMFI Protected
Parties or any of their employees or agents in connection with SMFl's
performance of its duties under this Agreement are the valuable property of the
SMFI Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or compilation of the identities of or other information about the SMFI
Protected Parties' customers or any other information or property of the SMFI
Protected Parties, other than such information as may be independently developed
or compiled by LIFE COMPANY from information supplied to it by the SMFI
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with SMFl's prior written consent; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
Section 19. ......Trademarks and Fund Names.
(a) .....Summit Investment Partners, Inc. ("Summit" or "licensor"), an
affiliate of SMFI, owns all right, title and interest in and to the name,
trademark and service xxxx "Summit Pinnacle" and such other tradenames,
trademarks and service marks as may be set forth on Schedule B, as amended from
time to time by written notice from Summit to LIFE COMPANY (the "Summit licensed
marks" or the "licensor's licensed marks") and is authorized to use and to
license other persons to use such marks. LIFE COMPANY and its affiliates are
hereby granted a non-exclusive license to use the Summit licensed marks in
connection with LIFE COMPANY's performance of the services contemplated under
this Agreement, subject to the terms and conditions set forth in this Section
19.
(b) .....The grant of license to LIFE COMPANY and its affiliates ( the
"licensee") shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor's
licensed marks, except that LIFE COMPANY shall have the right to continue to
service any outstanding Contracts bearing any of the Summit licensed marks. Upon
Summit's elective termination of this license, LIFE COMPANY and its affiliates
shall immediately cease to issue any new annuity or life insurance contracts
bearing any of the Summit licensed marks and shall likewise cease any activity
which suggests that it has any right under any of the Summit licensed marks or
that it has any association with Summit, except that LIFE COMPANY shall have the
right to continue to service outstanding Contracts bearing any of the Summit
licensed marks.
(c) .....The licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approvals shall not be unreasonably
withheld.
(d) During the term of this grant of license, a licensor may request
that a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The licensor's
approval shall not be unreasonably withheld, and the licensor, when requesting
reconsideration of a prior approval, shall assume the reasonable expenses of
withdrawing and replacing such disapproved materials. The licensee shall obtain
the prior written approval of the licensor for the use of any new materials
developed to replace the disapproved materials, in the manner set forth above.
(e) .....The licensee hereunder: (i) acknowledges and stipulates that,
to the best of the knowledge of the licensee, the licensor's licensed marks are
valid and enforceable trademarks and/or service marks and that such licensee
does not own the licensor's licensed marks and claims no rights therein other
than as a licensee under this Agreement; (ii) agrees never to contend otherwise
in legal proceedings or in other circumstances; and (iii) acknowledges and
agrees that the use of the licensor's licensed marks pursuant to this grant of
license shall inure to the benefit of the licensor.
(f)......LIFE COMPANY AND UNDERWRITER understand that (i) the S & P
MidCap 400(R) Index is a trademark of the XxXxxx-Xxxx Companies, Inc., the
Nasdaq 100(R) Index is a trademark of The Nasdaq Stock Market, Inc., and the
Xxxxxxx 2000(R) Index is a trademark of the Xxxxx Xxxxxxx Company; (ii) these
trademarks have been licensed for use by SMFI; and (iii) the Funds are not
sponsored, endorsed, sold or promoted by any of the licensing organizations, and
they make no representation or warranty regarding the Funds, and bear no
liability with respect to the Funds. LIFE COMPANY and UNDERWRITER agree to
comply with any requirements of the licensing organizations regarding the use of
their trademarks in any prospectuses, sales literature or other promotional
material.
Section 20. Parties to Cooperate.
Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including, without limitation, the
SEC, the NASD and state insurance regulators) and will permit each other and
such authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers signing below.
SUMMIT MUTUAL FUNDS, INC.
Attest: ......... By:
--------------------------------------------- ----------------------------------------
Name: ......... Name:
Title ......... Title:
CARILLON INVESTMENTS, INC.
Attest: ......... By:
--------------------------------------------- ----------------------------------------
Name: ......... Name:
Title ......... Title:
FIRST AMERITAS LIFE INSURANCE ACORP. OF NEW YORK, on
behalf of itself and its separate accounts
Attest: ......... By:
--------------------------------------------- -------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxxx X. Xxxxxxxx
Title: Assistant Vice President Title: President and Chief Executive Officer
and Associate General Counsel
......... AMERITAS INVESTMENT CORP.
Attest: ......... By:
--------------------------------------------- -------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Vice President Title: President and CEO
and Associate General Counsel
A-1
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
Summit Mutual Funds, Inc. Pinnacle Series:
o S&P MidCap 400 Index Portfolio
x Xxxxxxx 2000 Small Cap Index Portfolio
o Nasdaq-100 Index Portfolio
SEPARATE ACCOUNTS UTILIZING THE FUNDS
o First Ameritas Variable Annuity Separate Account
o First Ameritas Variable Life Separate Account
UNREGISTERED SEPARATE ACCOUNTS UTILIZING THE FUNDS
o None
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
o Overture Encore II!
B-1
SCHEDULE B
SUMMIT MUTUAL FUNDS, INC .
Summit Pinnacle Series:
o S&P MidCap 400 Index Portfolio
x Xxxxxxx 2000 Small Cap Index Portfolio
o Nasdaq-lOO Index Portfolio
summit
investment
partners
Schedule C
EXPENSE ALLOCATIONS
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Life Company SMFI /Carillon
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preparing and filing the Account's preparing and filing the Fund's registration
registration statement statement
text composition for Account prospectuses test composition for Fund prospectuses and
and supplements supplements
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text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and
supplements (Account) supplements (Fund)
printing Account prospectuses and supplements for a camera ready Fund prospectus and
policyowners of record as required by Federal Securities printing Fund prospectuses and supplements for
Laws and printing Fund and Account prospectuses and policyowners of record as required by Federal
supplements for prospective purchasers. Securities Laws
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text composition and printing Account SAIs text composition and printing Fund SAI
mailing and distributing Account SAIs to policy owners mailing and distributing Fund SAIs to policy owners
upon request by policy owners upon request by policy
owners
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mailing and distributing prospectuses mailing and distributing Fund prospectuses and
Account) and supplements supplements to policyowners of record as required
(Account) to policy owners of record as required by of Federal Securities Laws
Federal Securities Laws and (Fund and Account) to
prospective purchasers
text composition (Account), printing, mailing, and text composition (Fund), printing, mailing and
distributing annual and semi-annual reports for Account distributing annual and semi-annual reports (Fund)
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text composition, printing, mailing, distributing, and text composition, printing, mailing, distributing and
tabulation of proxy statements and voting instruction tabulation of proxy statements and voting instruction
solicitation materials to policy owners with respect to solicitation materials to policy owners with respect
proxies related to the Account to proxies related to the Fund
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preparation, printing and distributing sales material and
advertising relating to the Funds, insofar as such
materials relate to the Contracts and filing such
materials with and obtaining approval from, the SEC,
the NASD, any state insurance regulatory authority,
and any other appropriate regulatory authority,
to the extent required
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of April, 2002 (the
"Agreement") by and among First Ameritas Life Insurance Corp. of New York,
organized under the laws of the State of New York (the "Company"), on behalf of
itself and each separate account of the Company named in Schedule A to this
Agreement, as may be amended from time to time (each account referred to as the
"Account" and collectively as the "Accounts"); Third Avenue Variable Series
Trust, an open-end management investment company organized under the laws of the
State of Delaware (the "Fund"); EQSF Advisers, Inc, a corporation organized
under the laws of the State of Delaware and investment adviser to the Fund (the
"Adviser"); and X.X. Xxxxxxx, Inc., a corporation organized under the laws of
the State of New York and principal underwriter/distributor of the Fund.
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance contracts and
variable annuity contracts to be offered by insurance companies which have
entered into participation agreements substantially similar to this Agreement
(the "Participating Insurance Companies"), and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Company, as depositor, has established the Accounts to serve as
investment vehicles for certain variable annuity contracts and variable life
insurance policies and funding agreements offered by the Company set forth on
Schedule A (the "Contracts"); and
WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions of the Board of Directors of the Company
under the insurance laws of the State of New York, to set aside and invest
assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I: SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios which each Account orders, executing such orders on a daily
basis at the net asset value (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order
for the shares of the Fund. For purposes of this Section 1.1, the
Company will be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee will constitute receipt
by the Fund; provided that the Fund receives notice of such order by
11:00 a.m. Eastern Time on the next following business day. "Business
Day" will mean any day on which the New York Stock Exchange is open for
trading and on which the Fund calculates its net asset value pursuant
to the rules of the Securities and Exchange Commission (the
"Commission"). The Fund may net the notice of redemptions it receives
from the Company under Section 1.3 of this Agreement against the notice
of purchases it receives from the Company under this Section 1.1.
2.1 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon receipt
by the Fund of the payment, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any
full or fractional shares of the Fund held by the Company, executing
such requests on a daily basis at the net asset value next computed
after receipt and acceptance by the Fund or its agent of the request
for redemption. For purposes of this Section 1.3, the Company will be
the designee of the Fund for receipt of requests for redemption from
each Account and receipt by such designee will constitute receipt by
the Fund; provided the Fund receives notice of such requests for
redemption by 11:00 a.m. Eastern Time on the next following Business
Day. Payment will be made in federal funds transmitted by wire to the
Company's account as designated by the Company in writing from time to
time, on the same Business Day the Fund receives notice of the
redemption order from the Company. After consulting with the Company,
the Fund reserves the right to delay payment of redemption proceeds,
but in no event may such payment be delayed longer than the period
permitted under Section 22(e) of the Investment Company Act of 1940
(the "1940 Act"). The Fund will not bear any responsibility whatsoever
for the proper disbursement or crediting of redemption proceeds; the
Company alone will be responsible for such action. If notification of
redemption is received after 11:00 Eastern Time, payment for redeemed
shares will be made on the next following Business Day. The Fund may
net the notice of purchases it receives from the Company under Section
1.1 of this Agreement against the notice of redemptions it receives
from the Company under this Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable net asset value per share
by Participating Insurance Companies and their separate accounts on
those days on which the Fund calculates its Designated Portfolio net
asset value pursuant to rules of the Commission; provided, however,
that the Board of Directors of the Fund (the "Fund Board") may refuse
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 Fund 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.
1.5 The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their separate accounts,
qualified pension and retirement plans or such other persons as are
permitted under applicable provisions of the Internal Revenue Code of
1986, as amended, (the "Code"), and regulations promulgated thereunder,
the sale to which will not impair the tax treatment currently afforded
the Contracts. No shares of any Portfolio will be sold directly to the
general public.
1.6 The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the
same as Articles I, III, V, and VI of this Agreement are in effect to
govern such sales.
1.7 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus.
1.8 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate sub-account of
each Account.
1.9 The Fund will furnish same day notice (by facsimile) to the Company of
the declaration of any income, dividends or capital gain distributions
payable on each Designated Portfolio's shares. The Company hereby
elects to receive all such dividends and distributions as are payable
on the Portfolio shares in the form of additional shares of that
Portfolio at the ex-dividend date net asset values. The Company
reserves the right to revoke this election and to receive all such
dividends and distributions in cash. The Fund will notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.10 The Fund will make the net asset value per share for each Designated
Portfolio available to the Company via electronic means on a daily
basis as soon as reasonably practical after the net asset value per
share is calculated and will use its best efforts to make such net
asset value per share available by 7:00 p.m., Eastern Time, each
business day. If the Fund provides the Company materially incorrect net
asset value per share information (as determined under SEC guidelines),
the Company shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct net asset value per share,
and reimbursement for any additional expenses incurred to correct the
net asset value. Any material error in the calculation or reporting of
net asset value per share, dividend or capital gain information shall
be reported to the Company upon discovery by the Fund.
ARTICLE II: REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are
exempt from registration thereunder, and that the Contracts will be
issued and sold in compliance with all applicable federal and state
laws. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable
law and that it has legally and validly established each Account as a
separate account under Section 44-402.01 of the General Statutes of
Nebraska and that each Account is or will be registered as a unit
investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts, or is
exempt from registration thereunder, and that it will maintain such
registration for so long as any Contracts are outstanding, as
applicable. The Company will amend the registration statement under the
1933 Act for the Contracts and the registration statement under the
1940 Act for the Account from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company will register and qualify the
Contracts for sale in accordance with the securities laws of the
various states only if and to the extent deemed necessary by the
Company.
2.2 The Company represents that the Contracts are currently and at the time
of issuance will be treated as annuity contracts and/or life insurance
policies (as applicable) under applicable provisions of the Code, and
that it will make every effort to maintain such treatment and that it
will notify the Fund and the Adviser immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.3 The Company represents and warrants that it will not purchase shares of
the Designated Portfolio(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4 The Fund represents and warrants that shares of the Designated
Portfolio(s) sold pursuant to this Agreement will be registered under
the 1933 Act and duly authorized for issuance in accordance with
applicable law and that the Fund is and will remain registered as an
open-end management investment company under the 1940 Act for as long
as such shares of the Designated Portfolio(s) are sold. The Fund will
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 will register and qualify
the shares of the Designated Portfolio(s) for sale in accordance with
the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.5 The Fund represents that it will use its best efforts to comply with
any applicable state insurance laws or regulations as they may apply to
the investment objectives, policies and restrictions of the Portfolios,
as they may apply to the Fund, to the extent specifically requested in
writing by the Company. If the Fund cannot comply with such state
insurance laws or regulations, it will so notify the Company in
writing. The Fund makes no other representation as to whether any
aspect of its operations (including, but not limited to, fees and
expenses, and investment policies) complies with the insurance laws
or regulations of any state. The Company represents that it will use
its best efforts to notify the Fund of any restrictions imposed by
state insurance laws that may become applicable to the Fund as a result
of the Accounts' investments therein. The Fund and the Adviser agree
that they will furnish the information required by state insurance laws
to assist the Company in obtaining the authority needed to issue the
Contracts in various states.
2.6 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it reserves the right to make such payments in the
future. To the extent that it decides to finance distribution expenses
pursuant to Rule 12b-1, the Fund undertakes to have the directors of
its Fund Board, a majority of whom are not "interested" persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.7 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will
comply in all material respects with applicable provisions of the 0000
Xxx.
2.8 The Fund represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and 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 minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The
aforesaid bond includes coverage for larceny and embezzlement and is
issued by a reputable bonding company.
2.9 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and will remain duly registered under all applicable federal
and state securities laws and that it will perform its obligations for
the Fund in accordance in all material respects with the laws of the
State of Delaware and any applicable state and federal securities laws.
2.10 The Distributor represents and warrants that it is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws, and is a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and
serves as principal underwriter/distributor of the Funds and that it
will perform its obligations for the Fund in accordance in all material
respects with the laws of the State of Delaware and any applicable
state and federal securities laws.
2.11 The Fund, the Adviser and the Distributor represents and warrants to
the Company that each has a Year 2000 compliance program in existence
and that each reasonably intends to be Year 2000 compliant so as to be
able perform all of the services and/or obligations contemplated by or
under this Agreement without interruption. The Fund, the Adviser, and
the Distributor shall immediately notify the Company if it determines
that it will be
unable to perform all of the services and/or obligations contemplated
by or under this Agreement in a manner that is Year 2000 compliant.
ARTICLE III: FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
requirements of Subchapter M of the Code or the diversification
requirements of Section 817(h) of the Code may result in the Contracts
not being treated as variable contracts for federal income tax
purposes, which would have adverse tax consequences for Contract owners
and could also adversely affect the Company's corporate tax liability.
The Fund and the Adviser further acknowledge that any such failure may
result in costs and expenses being incurred by the Company in obtaining
whatever regulatory authorizations are required to substitute shares of
another investment company for those of the failed Fund or as well as
fees and expenses of legal counsel and other advisors to the Company
and any federal income taxes, interest or tax penalties incurred by the
Company in connection with any such failure.
3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that
it will 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 that it might not so qualify in the future.
3.3 The Fund represents that it will at all times invest money from the
Contracts in such a manner as to ensure that the Contracts will be
treated as variable contracts under the Code and the regulations issued
thereunder; including, but not limited to, that the Fund will at all
times comply with Section 817(h) of the Code and Treasury Regulation
1.817-5, as amended from time to time, relating to the diversification
requirements for variable annuity, endowment, or life insurance
contracts, and with Section 817(d) of the Code, relating to the
definition of a variable contract, and any amendments or other
modifications to such Section or Regulation. The Fund will notify the
Company immediately upon having a reasonable basis for believing that
the Fund or a Portfolio thereunder has ceased to comply with the
diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the
event of a breach of this representation by the Fund, it will take all
reasonable steps to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Treasury Regulation
1.817-5.
3.4 The Adviser agrees to provide the Company with a certificate or
statement indicating compliance by each Portfolio of the Fund with
Section 817(h) of the Code, such certificate or statement to be sent to
the Company no later than thirty (30) days following the end of each
calendar quarter.
ARTICLE IV: PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with as many copies of the current
Fund prospectus and any supplements thereto for the Designated
Portfolio(s) as the Company may reasonably request for distribution, at
the Fund's expense, to Contract owners at the time of Contract
fulfillment and confirmation. To the extent that the Designated
Portfolio(s) are one or more of several Portfolios of the Fund, the
Fund shall bear the cost of providing the Company only with disclosure
related to the Designated Portfolio(s). The Fund will provide, at the
Fund's expense, as many copies of said prospectus as necessary for
distribution, at the Fund's expense, to existing Contract owners. The
Fund will provide the copies of said prospectus to the Company or to
its mailing agent. The Company will distribute the prospectus to
existing Contract owners and will xxxx the Fund for the reasonable cost
of such distribution. If requested by the Company, in lieu thereof, the
Fund will provide such documentation, including a final copy of a
current prospectus set in type at the Fund's expense, and other
assistance as is reasonably necessary in order for the Company at least
annually (or more frequently if the Fund prospectus is amended more
frequently) to have the new prospectus for the Contracts and the Fund's
new prospectus printed together, in which case the Fund agrees to pay
its proportionate share of reasonable expenses directly related to the
required disclosure of information concerning the Fund. The Fund will,
upon request, provide the Company with a copy of the Fund's prospectus
through electronic means to facilitate the Company's efforts to provide
Fund prospectuses via electronic delivery, in which case the Fund
agrees to pay its proportionate share of reasonable expenses related to
the required disclosure of information concerning the Fund.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company. The
Fund will provide the Company, at the Fund's expense, with as many
copies of the SAI and any supplements thereto as the Company may
reasonably request for distribution, at the Fund's expense, to
prospective Contract owners and applicants. To the extent that the
Designated Portfolio(s) are one or more of several Portfolios of the
Fund, the Fund shall bear the cost of providing the Company only with
disclosure related to the Designated Portfolio(s). The Fund will
provide, at the Fund's expense, as many copies of said SAI as necessary
for distribution, at the Fund's expense, to any existing Contract owner
who requests such statement or whenever state or federal law requires
that such statement be provided. The Fund will provide the copies of
said SAI to the Company or to its mailing agent. The Company will
distribute the SAI as requested or required and will xxxx the Fund for
the reasonable cost of such distribution.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, reports to
shareholders/Contract owners and other permissible communications to
shareholders/Contract owners in such quantity as the Company will
reasonably require. The Company will distribute this proxy material,
reports and other communications to existing Contract owners and will
xxxx the Fund for the reasonable cost of such distribution.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Portfolios held in the Account
in accordance with instructions received from Contract owners; and
(c) vote shares of the Designated Portfolios held in the Account for
which no timely instructions have been received, in the same
proportion as shares of such Designated Portfolio for which
instructions have been received from the Company's Contract owners,
so long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for variable
Contract owners. The Company reserves the right to vote Fund shares
held in any segregated asset account in its own right, to the extent
permitted by law. The Company will be responsible for assuring that the
Accounts participating in the Fund calculates voting privileges in a
manner consistent with all legal requirements, including the Proxy
Voting Procedures set forth in Schedule C and the Mixed and Shared
Funding Exemptive Order, as described in Section 7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, the Fund either will provide
for annual meetings (except insofar as the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or, as the
Fund currently intends, to 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 Sections 16(a) and, if and when
applicable, 16(b). Further, the Fund will act in accordance with the
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of directors and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE V: SALES MATERIAL AND INFORMATION
5.1 The Company will furnish, or will cause to be furnished, to the Fund or
the Adviser, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least ten (10)
Business Days prior to its use. No such material will be used if the
Fund or the Adviser reasonably objects to such use within five (5)
Business Days after receipt of such material.
5.2 The Company will 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, prospectus or
SAI for Fund shares, as such registration statement, prospectus and SAI
may be amended or supplemented from time to time, or in reports or
proxy statements for the Fund, or in published reports for the Fund
which are in the public domain or approved by the Fund or the Adviser
for distribution, or in sales literature or other material
provided by the Fund or by the Adviser, except with permission of the
Fund or the Adviser. The Fund and the Adviser agree to respond to any
request for approval on a prompt and timely basis.
5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to
the Company or its designee, each piece of sales literature or other
promotional material in which the Company or its separate account is
named, at least ten (10) Business Days prior to its use. No such
material will be used if the Company reasonably objects to such use
within five (5) Business Days after receipt of such material.
5.4 The Fund and the Adviser will not give any information or make any
representations or statements 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 or
SAI for the Contracts, as such registration statement, prospectus and
SAI may be amended or supplemented from time to time, or in published
reports for each Account or the Contracts which are in the public
domain or approved by the Company for distribution to Contract owners,
or in sales literature or other material provided by the Company,
except with permission of the Company. The Company agrees to respond to
any request for approval on a prompt and timely basis.
5.5 The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Fund or its shares, within a
reasonable time after filing of each such document with the Commission
or the NASD.
5.6 The Company will provide to the Fund at least one complete copy of all
definitive prospectuses, definitive SAI, 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 the Contracts or each
Account, contemporaneously with the filing of each such document with
the Commission or the NASD (except that with respect to post-effective
amendments to such prospectuses and SAIs and sales literature and
promotional material, only those prospectuses and SAIs and sales
literature and promotional material that relate to or refer to the Fund
will be provided.) In addition, the Company will provide to the Fund at
least one complete copy of (i) a registration statement that relates to
the Contracts or each Account, containing representative and relevant
disclosure concerning the Fund; and (ii) any post-effective amendments
to any registration statements relating to the Contracts or such
Account that refer to or relate to the Fund.
5.7 For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or
other public media, (i.e., on-line networks such as the Internet or
other electronic messages)), sales literature
(i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints
or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications
distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, SAIs, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act or the
1940 Act.
5.8 The Investment Company, the Adviser and the Distributor hereby consent
to the Insurance Company's use of the names of the Third Avenue
Variable Series Trust, EQSF Advisers, Inc., and the Third Avenue Value
Portfolio, as well as the names of the Designated Funds set forth in
Schedule B of this Agreement, in connection with marketing the
Contracts, subject to the terms of Sections 5.1 of this Agreement.
Insurance Company acknowledges and agrees that Adviser and Distributor
and/or their affiliates own all right, title and interest in and to the
names Third Avenue Variable Series Trust, EQSF Advisers, Inc., and the
Third Avenue Value Portfolio, and covenants not, at any time, to
challenge the rights of Adviser and Distributor and/or their affiliates
to such name or design, or the validity or distinctiveness thereof. The
Investment Company, the Adviser and the Distributor hereby consent to
the use of any trademark, trade name, service xxxx or logo used by the
Investment Company, the Adviser and the Distributor, subject to the
Investment Company's, the Adviser's and/or the Distributor's approval
of such use and in accordance with reasonable requirements of the
Investment Company, the Adviser or the Distributor. Such consent will
terminate with the termination of this Agreement. Adviser or
Distributor may withdraw this consent as to any particular use of any
such name or identifying marks at any time (i) upon Adviser's or
Distributor's reasonable determination that such use would have a
material adverse effect on the reputation or marketing efforts of
Adviser, Distributor or such Funds or (ii) if no investment company, or
series or class of shares of any investment company advised by Adviser
or distributed by Distributor continues to be offered through variable
insurance contracts issued by Insurance Company; provided however, that
Adviser or Distributor may, in either's individual discretion, continue
to use materials prepared or printed prior to the withdrawal of such
authorization. The Insurance Company agrees and acknowledges that all
use of any designation comprised in whole or in part of the name,
trademark, trade name, service xxxx and logo under this Agreement shall
inure to the benefit of the Investment Company, Adviser and/or the
Distributor.
5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt
and implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is
intended for use only by brokers or agents selling the Contracts is
properly marked as "Not For Use With The Public" and that such
information is only so used.
ARTICLES VI: FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under
this Agreement, except as provided below: (a) if the Fund or any
Designated Portfolio adopts and implements a plan pursuant to Rule
12b-1 under the 1940 Act to finance distribution expenses, then,
subject to obtaining any required exemptive orders or other regulatory
approvals, the Fund may make payments to the Company or to the
underwriter for the Contracts if and in such amounts agreed to by the
Fund in writing; (b) the Fund may pay fees to the Company for
administrative services provided to Contract owners that are not
primarily intended to result in the sale of shares of the Designated
Portfolio or of underlying Contracts.
6.2 All expenses incident to performance by the Fund of this Agreement will
be paid by the Fund to the extent permitted by law. All shares of the
Designated Portfolios will be duly authorized for issuance and
registered in accordance with applicable federal law and, to the extent
deemed advisable by the Fund, in accordance with applicable state law,
prior to sale. The Fund will bear the expenses for the cost of
registration and qualification of the Fund's shares, including without
limitation, the preparation of and filing with the SEC of Forms N-SAR
and Rule 24f-2 Notices and payment of all applicable registration or
filing fees with respect to shares of the Fund; preparation and filing
of the Fund's prospectus, SAI and registration statement, proxy
materials and reports; typesetting the Fund's prospectus; typesetting
and printing proxy materials and reports to Contract owners (including
the costs of printing a Fund prospectus that constitutes an annual
report); the preparation of all statements and notices required by any
federal or state law; all taxes on the issuance or transfer of the
Fund's shares; any expenses permitted to be paid or assumed by the Fund
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and
other costs associated with preparation of prospectuses and SAIs for
the Designated Portfolios in electronic or typeset format, as well as
any distribution expenses as set forth in Article III of this
Agreement.
ARTICLE VII: MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has received an order from the
Commission granting Participating Insurance Companies and variable
annuity separate accounts and variable life insurance separate accounts
relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of
the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to
the extent necessary to permit shares of the Fund to be sold to and
held by variable annuity separate accounts and variable life insurance
separate accounts of both affiliated and unaffiliated Participating
Insurance Companies and qualified pension and retirement plans outside
of the separate account context (the "Mixed and Shared Funding
Exemptive Order"). The parties to this Agreement agree that the
conditions or undertakings specified in the Mixed and Shared Funding
Exemptive Order and that may be imposed on the Company, the Fund and/or
the Adviser by virtue of the receipt of such order by the Commission,
will be incorporated herein by reference, and such parties agree to
comply with such conditions and undertakings to the extent applicable
to each such party.
7.2 The Fund Board will monitor the Fund for the existence of any
irreconcilable material conflict among 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, but not limited to: (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 Participating
Insurance Companies or by variable annuity and variable life insurance
Contract owners; or (f) a decision by an insurer to disregard the
voting instructions of Contract owners. The Fund Board will promptly
inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof. A majority of the Fund
Board will consist of persons who are not "interested" persons of the
Fund.
7.3 The Company will report any potential or existing conflicts of which it
is aware to the Fund Board. The Company agrees to assist the Fund Board
in carrying out its responsibilities, as delineated in the Mixed and
Shared Funding Exemptive Order, by providing the Fund Board with all
information reasonably necessary for the Fund Board to consider any
issues raised. This includes, but is not limited to, an obligation by
the Company to inform the Fund Board whenever Contract owner voting
instructions are to be disregarded. The Fund Board will record in its
minutes, or other appropriate records, all reports received by it and
all action with regard to a conflict.
7.4 If it is determined by a majority of the Fund Board, or a majority of
its disinterested directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies will,
at their expense and to the extent reasonably practicable (as
determined by a majority of the disinterested directors), take whatever
steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (a) withdrawing the assets allocable to
some or all of the 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 submitted to a vote of all
affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., variable annuity Contract owners or
variable life insurance Contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or
offering to the affected Contract owners the option of making such a
change; and (b) establishing a new registered management investment
company or managed separate account.
7.5 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions, and such
disregard of voting instructions could conflict with the majority of
Contract owner voting instructions, and the Company's judgment
represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the
affected sub-account of the Account's investment in the Fund and
terminate this Agreement with
respect to such sub-account; provided, however, that such withdrawal
and termination will be limited to the extent required by the foregoing
irreconcilable material conflict as determined by a majority of the
disinterested directors of the Fund Board. No charge or penalty will be
imposed as a result of such withdrawal. Any such withdrawal and
termination must take place within six (6) months after the Fund gives
written notice to the Company that this provision is being implemented.
Until the end of such six-month period the Adviser and Fund will, to
the extent permitted by law and any exemptive relief previously granted
to the Fund, continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.6 If an irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state insurance regulators, then the Company will
withdraw the affected sub-account of the Account's investment in the
Fund and terminate this Agreement with respect to such sub-account;
provided, however, that such withdrawal and termination will be limited
to the extent required by the foregoing irreconcilable material
conflict as determined by a majority of the disinterested directors of
the Fund Board. No charge or penalty will be imposed as a result of
such withdrawal. Any such withdrawal and termination must take place
within six (6) months after the Fund gives written notice to the
Company that this provision is being implemented. Until the end of such
six-month period the Advisor and Fund will, to the extent permitted by
law and any exemptive relief previously granted to the Fund, continue
to accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority
of the disinterested members of the Fund Board will determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event, other than as specified in Section 7.4, will
the Fund be required to establish a new funding medium for the
Contracts. The Company will not be required by Section 7.4 to establish
a new funding medium for the Contracts if an offer to do so has been
declined by vote of a majority of Contract owners affected by the
irreconcilable material conflict.
7.8 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 Mixed and Shared Funding Exemptive
Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then: (a)
the Fund and/or the Participating Insurance Companies, as appropriate,
will take such steps as may be necessary to comply with Rules 6e-2 and
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
rules are applicable; and (b) Sections 4.4, 4.5, 7.1, 7.2, 7.3, 7.4,
and 7.5 of this Agreement will continue in effect only to the extent
that terms and conditions substantially identical to such Sections are
contained in such Rule(s) as so amended or adopted.
ARTICLE VIII: INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund,
the Adviser, the Distributor, and each person, if any, who
controls or is associated with the Fund, the Adviser, or the
Distributor within the meaning of such terms under the
federal securities laws and any director, trustee, officer,
employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the
written consent of the Company) or actions in respect
thereof (including reasonable legal and other expenses), to
which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(1) arise out of or are based upon any untrue statements
or alleged untrue statements of any material fact
contained in the registration statement, prospectus
or SAI for the Contracts or contained in the
Contracts or sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of
or are based upon the omission or the alleged
omission to state therein a material fact required to
be stated or necessary to make such statements not
misleading in light of the circumstances in which
they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party
if such statement or omission of such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Company by or on behalf of the Fund, the Adviser, of
the Distributor for use in the registration
statement, prospectus or SAI for the Contracts or in
the Contracts or sales literature (or any amendment
or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(2) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund,
or any amendment or supplement to the foregoing, not
supplied by the Company or persons under its control)
or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution
of the Contracts or Fund shares; or
(3) arise out of untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, prospectus, SAI or sales
literature or other promotional material of the Fund
(or amendment or supplement) or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
such statements not
misleading in light of the circumstances in which
they were made, if such 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 persons under its control; or
(4) 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
(5) arise out of any material breach of any
representation and/or warranty made by the Company in
this Agreement or arise out of or result from any
other material breach by the Company of this
Agreement;
except to the extent provided in Sections 8.1(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Company otherwise may have.
(b) No party will be entitled to indemnification under Section
8.1(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations or duties under this Agreement.
(c) The Indemnified Parties promptly will notify the Company of
the commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Fund shares or the Contracts
or the operation of the Fund.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree to indemnify and hold harmless
the Company and each person, if any, who controls or is
associated with the Company within the meaning of such terms
under the federal securities laws and any director, officer,
employee or agent of the foregoing (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against
any and all losses, claims, expenses, damages, liabilities
(including amounts paid in settlement with the written consent of
the Adviser and Distributor) or actions in respect thereof
(including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements:
(1) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in the registration statement, prospectus
or SAI for the Fund or sales literature or other
promotional material 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 or necessary to make such statements not
misleading in light of the circumstances in which
they were made; provided that this agreement to
indemnify will not apply as to any Indemnified Party
if such statement or omission of such alleged
statement or omission was made in reliance upon and
in conformity with information furnished to the
Adviser or Fund by or on behalf of the Company for
use in the registration statement, prospectus or SAI
for the Fund or in sales literature of the Fund (or
any amendment or supplement thereto) or otherwise for
use in connection with the sale of the Contracts or
Fund shares; or
(2) arise out of or as a result of statements or
representations (other than statements or
representations contained in the Contracts or in the
Contract or Fund registration statements,
prospectuses or statements of additional information
or sales literature or other promotional material for
the Contracts or of the Fund, or any amendment or
supplement to the foregoing, not supplied by the
Adviser or the Fund or persons under the control of
the Adviser or the Fund respectively) or wrongful
conduct of the Adviser or the Fund or persons under
the control of the Adviser or the Fund respectively,
with respect to the sale or distribution of the
Contracts or Fund shares; or
(3) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a
registration statement, prospectus, SAI or sales
literature or other promotional material covering the
Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein
a material fact required to be stated or necessary to
make such statement or statements not misleading in
light of the circumstances in which they were made,
if such statement or omission was made in reliance
upon and in conformity with information furnished to
the Company by or on behalf of the Adviser or the
Fund or persons under the control of the Adviser or
the Fund; or
(4) arise as a result of any failure by the Fund or the
Adviser to provide the services and furnish the
materials under the terms of this Agreement; or
(5) arise out of or result from any material breach of
any representation and/or warranty made by the
Adviser or the Fund in this Agreement, or arise out
of or result from any other material breach of this
Agreement by the Adviser or the Fund (including a
failure, whether intentional or in good faith or
otherwise, to comply with the requirements of
Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement, as described more fully in Section
8.5 below);
except to the extent provided in Sections 8.2(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Adviser or Distributor otherwise may have.
(b) No party will be entitled to indemnification under Section
8.2(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard or its
obligations or duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser and
the Fund of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them
in connection with the issuance or sale of the Contracts or
the operation of the Account.
8.3 Indemnification by the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and
each person, if any, who controls or is associated with the
Company within the meaning of such terms under the federal
securities laws and any director, officer, employee or agent of
the foregoing (collectively, the "Indemnified Parties" for
purposes of this Section 8.3) against any and all losses, claims,
expenses, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or action in
respect thereof (including reasonable legal and other expenses)
to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements, are related to the operations of
the Fund and:
(1) arise as a result of any failure by the Fund to
provide the services and furnish the
materials under the terms of this Agreement; or
(2) arise out of or result from any material breach of
any representation and/or warranty made by the Fund
in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund
(including a failure, whether intentional or in good
faith or otherwise, to comply with the requirements
of Subchapter M of the Code specified in Article III,
Section 3.2 of this Agreement and the diversification
requirements specified in Article III, Section 3.3 of
this Agreement as described more fully in Section 8.5
below); or
(3) arise out of or result from the incorrect or untimely
calculation or reporting of daily net asset value per
share or dividend or capital gain distribution rate;
except to the extent provided in Sections 8.3(b) and 8.4
hereof. This indemnification will be in addition to any
liability that the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section
8.3(a) if such loss, claim, damage, liability or action is due
to the willful misfeasance, bad faith, or gross negligence in
the performance of such party's duties under this Agreement,
or by reason of such party's reckless disregard of its
obligations and duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or
actions by regulatory authorities against them in connection
with the issuance or sale of the Contracts or the operation of
the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party") for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification
under this Article VIII ("Indemnified Party") for the purpose of this
Section 8.4) unless such Indemnified Party will have notified the
Indemnifying Party in writing within a reasonable time after the
summons or other first legal process giving information of the nature
of the claim will have been served upon such Indemnified Party (or
after such party will have received notice of such service on any
designated agent), but failure to notify the Indemnifying Party of any
such claim will not relieve the Indemnifying Party from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of the indemnification provision of
this Article VIII, except to the extent that the failure to notify
results in the failure of actual notice to the Indemnifying Party and
such Indemnifying Party is damaged solely as a result of failure to
give such notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to
participate, at its own expense, in the defense thereof. The
Indemnifying Party also will be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Indemnifying Party to the Indemnified Party of the
Indemnifying Party's election to assume the defense thereof, the
Indemnified Party will bear the fees and expenses of any additional
counsel retained by it, and the Indemnifying Party will not be liable
to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation,
unless: (a) the Indemnifying Party and the Indemnified Party will have
mutually agreed to the retention of such counsel; or (b) the named
parties to any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. The Indemnifying Party will not be liable for any settlement of
any proceeding effected without its written consent but if settled with
such consent or if there is a final judgment
for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of
such settlement or judgment. A successor by law of the parties to this
Agreement will be entitled to the benefits of the indemnification
contained in this Article VIII. The indemnification provisions
contained in this Article VIII will survive any termination of this
Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Fund and the Adviser acknowledge that any failure (whether
intentional or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of
this Agreement may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. Accordingly, without in
any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and
without in any way limiting or restricting any other remedies available
to the Company, the Fund, the Adviser and the Distributor will pay on a
joint and several basis all costs associated with or arising out of any
failure, or any anticipated or reasonably foreseeable failure, of the
Fund or any Portfolio to comply with Section 3.3 of this Agreement,
including all costs associated with correcting or responding to any
such failure; such costs may include, but are not limited to, the costs
involved in creating, organizing, and registering a new investment
company as a funding medium for the Contracts and/or the costs of
obtaining whatever regulatory authorizations are required to substitute
shares of another investment company for those of the failed Fund or
Portfolio (including but not limited to an order pursuant to Section
26(b) of the 1940 Act); fees and expenses of legal counsel and other
advisors to the Company and any federal income taxes or tax penalties
(or "toll charges" or exactments or amounts paid in settlement)
incurred by the Company in connection with any such failure or
anticipated or reasonably foreseeable failure. Such indemnification and
reimbursement obligation shall be in addition to any other
indemnification and reimbursement obligations of the Fund, the Adviser
and/or the Distributor under this Agreement.
ARTICLE IX: APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Nebraska.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the
1934 Act and the 1940 Act, and the rules and regulations and rulings
thereunder, including such exemptions from hose statutes, rules and
regulations as the Commission may grant (including, but not limited to,
the Mixed and Shared Funding Exemptive Order) and the terms hereof will
be interpreted and construed in accordance therewith.
ARTICLE X: TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with
respect to one, some or all of the Portfolios, upon six (6)
month's advance written notice to the other parties or, if
later, upon receipt of any required exemptive relief or orders
from the SEC, unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the
Portfolio are not reasonably available to meet the
requirements of the Contracts as determined in good faith by
the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event 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
Company; or
(d) at the option of the Fund, upon written notice to the other
parties, upon institution of formal proceedings against the
Company by the NASD, the Commission, the Insurance Commission
of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale
of the Contracts, the administration of the Contracts, the
operation of the Account, or the purchase of the Fund shares,
provided that the Fund determines in its sole judgment,
exercised in good faith, that any such proceeding would have a
material adverse effect on the Company's ability to perform
its obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the
Fund or the Adviser by the NASD, the Commission or any state
securities or insurance department or any other regulatory
body, provided that the Company determines in its sole
judgment, exercised in good faith, that any such proceeding
would have a material adverse effect on the Fund's or the
Adviser's ability to perform its obligations under this
Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or under
any successor or similar provision, or if the Company
reasonably and in good faith believes that the Fund may fail
to so qualify; or
(g) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if the Fund fails to
meet the diversification requirements specified in Section 3.3
hereof or if the Company reasonably and in good faith believes
the Fund may fail to meet such requirements; or
(h) at the option of any party to this Agreement, upon written
notice to the other parties, upon another party's material
breach of any provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith that either the Fund or
the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company, such termination to be
effective sixty (60) days' after receipt by the other parties
of written notice of the election to terminate; or
(j) at the option of the Fund or the Adviser, if the Fund or
Adviser respectively, determines in its sole judgment
exercised in good faith that the Company has suffered a
material adverse change in its business, operations or
financial condition since the date of this Agreement or is the
subject of material adverse publicity which is likely to have
a material adverse impact upon the business and operations of
the Fund or the Adviser, such termination to be effective
sixty (60) days' after receipt by the other parties of written
notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract
owners having an interest in the Account (or any sub-account)
to substitute the shares of another investment company for the
corresponding Portfolio's shares of the Fund in accordance
with the terms of the Contracts for which those Portfolio
shares had been selected to serve as the underlying portfolio.
The Company will give sixty (60) days' prior written notice to
the Fund of the date of any proposed vote or other action
taken to replace the Fund's shares or of the filing of any
required regulatory approval(s); or
(l) at the option of the Company or the Fund upon a determination
by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable
material conflict exists among the interests of: (1) all
Contract owners of variable insurance products of all separate
accounts; or (2) the interests of the Participating Insurance
Companies investing in the Fund as set forth in Article VII of
this Agreement; or
(m) at the option of the Fund in the event any of the Contracts
are not issued or sold in accordance with applicable federal
and/or state law. Termination will be effective immediately
upon such occurrence without notice.
10.2 Notice Requirement
(a) No termination of this Agreement, except a termination under
Section 10.1 (m) of this Agreement, will be effective unless
and until the party terminating this
Agreement gives prior written notice to all other parties of
its intent to terminate, which notice will set forth the basis
for the termination.
(b) In the event that any termination of this Agreement is based
upon the provisions of Article VII, such prior written notice
will be given in advance of the effective date of termination
as required by such provisions.
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the
Adviser and the Distributor will, at the option of the Company,
continue to make available additional shares of the Fund pursuant to
the terms and conditions of this Agreement, for all Contracts in effect
on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"). Specifically, without limitation,
the owners of the Existing Contracts will be permitted to reallocate
investments in the Designated Portfolios (as in effect on such date),
redeem investments in the Designated Portfolios and/or invest in the
Designated Portfolios upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 10.3
will not apply to any terminations under Article VII and the effect of
such Article VII terminations will be governed by Article VII of this
Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's
obligations under Article VIII to indemnify other parties will survive
and not be affected by any termination of this Agreement. In addition,
with respect to Existing Contracts, all provisions of this Agreement
also will survive and not be affected by any termination of this
Agreement.
ARTICLE XI: NOTICES
Any notice will be deemed duly given when sent by registered or certified mail
to the other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
parties.
If to the Company:
-----------------
First Ameritas Life Insurance Corp. of New York
Attn: General Counsel
0000 X Xxxxxx
Xxxxxxx, XX 00000
If to the Fund:
--------------
Third Avenue Variable Series Trust
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel: W. Xxxxx Xxxx
If to the Adviser:
-----------------
EQSF Advisers, Inc.
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel: W. Xxxxx Xxxx
If to the Distributor:
---------------------
X.X. Xxxxxxx, Inc.
000 0xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel: W. Xxxxx Xxxx
ARTICLE XII: MISCELLANEOUS
12.1 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 directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 The Fund and the Adviser acknowledge that the identities of the
customers of the Company or any of its affiliates (collectively the
"Protected Parties" for purposes of this Section 12.2), information
maintained regarding those customers, and all computer programs and
procedures developed by the Protected Parties or any of their employees
or agents in connection with the Company's performance of its duties
under this Agreement are the valuable property of the Protected
Parties. The Fund and the Adviser agree that if they come into
possession of any list or compilation of the identities of or other
information about the Protected Parties' customers, or any other
property of the Protected Parties, other than such information as may
be independently developed or compiled by the Fund or the Adviser from
information supplied to them by the Protected Parties' customers who
also maintain accounts directly with the Fund or the Adviser, the Fund
and the Adviser will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such
information or other property except: (a) with the Company' s prior
written consent; or (b) as required by law or judicial process. The
Fund and the Adviser acknowledge that any breach of the agreements in
this Section 12.2 would result in immediate and irreparable harm to the
Protected Parties for which there would be no adequate remedy at law
and agree that in the event of such a breach, the Protected Parties
will be entitled to equitable relief by way of temporary and permanent
injunctions, as well as such other relief as any court of competent
jurisdiction deems appropriate.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the
same instrument.
12.5 If any provision of this Agreement will be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement will not be affected thereby.
12.6 This Agreement will not be assigned by any party hereto without the
prior written consent of all the parties.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled
to under state and federal law.
12.8 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
12.9 Each party to this Agreement will cooperate with each other party and
all appropriate governmental authorities (including without limitation
the Commission, the NASD and state insurance regulators) and will
permit each other and 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.
12.10 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate or board action, as
applicable, by such party and when so executed and delivered this
Agreement will be the valid and binding obligation of such party
enforceable in accordance with its terms.
12.11 The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts,
the Accounts or the Portfolios of the Fund or other applicable terms of
this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed hereto as of the date specified below.
First Ameritas Life Insurance Corp. of New York
By:
---------------------------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
-------------------------------------------------------
Title: President and Chief Executive Officer
------------------------------------------------------
THIRD AVENUE VARIABLE SERIES TRUST
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
EQSF ADVISERS, INC.
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
X.X. XXXXXXX, INC.
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Associated Contracts of First Ameritas Life
Insurance Corp. of New York are permitted in accordance with the provisions of
this Agreement to invest in Portfolios of the Fund shown in Schedule B:
Name of Separate Account Contracts Funded by Separate Account
--------------------------- ------------------------------------
First Ameritas Variable Life OVERTURE ENCORE!!
Separate Account V
First Ameritas Variable Annuity OVERTURE Annuity III-Plus
Separate Account OVERTURE ACCLAIM!
OVERTURE ACCENT!
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolio(s) of the Fund.
Third Avenue Value Portfolio
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the 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.
1. 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 owners of the Contracts 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 meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund , as soon as possible, but
no later than two weeks after the Record Date.
3. 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 6.2 of
the Agreement to which this Schedule relates.
4. 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).
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
5. 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
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
7. 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 meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
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.
8. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, if the account registration is under "Xxxx X.
Xxxxx, Trustee," then that is the exact legal name to be printed on
the Card and is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be NOT RECEIVED for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
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.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of SHARES.) The Fund
must review and approve tabulation format.
13. The Fund may request an earlier deadline if reasonable and if
required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
