EXHIBIT 28(H)(7)(A)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of June 12, 2009, by and between LINCOLN VARIABLE
INSURANCE PRODUCTS TRUST, a Delaware statutory trust ("Trust"), on its behalf
and on behalf of its investment series set forth in Exhibit A (each, a "Fund"),
LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation
("Distributor"), LINCOLN INVESTMENT ADVISORS CORPORATION, a Tennessee
corporation ("Adviser"), and AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF
NEW YORK ("Life Company"), a life insurance company organized under the laws of
the State of New York.
WHEREAS, the Trust is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("1940 Act") as an open-end,
diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate
investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts offered by life
insurance companies through separate accounts of such life insurance companies
and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007
(File No. 812-13287) ("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
accounts ("Participating Insurance Companies") and qualified pension and
retirement plans outside the separate account context and any other trust,
plan, account, contract or annuity trust that is within the scope of Treasury
Regulation (S)1.817.5(f)(3)(iii) (collectively, the "Plans");
WHEREAS, the Life Company has established or will establish one or more
separate accounts ("Separate Accounts") to offer variable annuity contracts
("Variable Contracts"), set forth on Exhibit B, and it seeks to have each Fund
serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "1934 Act") and is a member in good
standing of the Financial Industry Regulatory Authority ("FINRA"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Life Company intends to purchase Fund shares to serve as
investment options under the Variable Contracts and each Fund is authorized to
sell such shares to the Life Company at net asset value ("NAV").
988998/2
NOW, THEREFORE, in consideration of their mutual promises, the Life Company,
the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of
each Fund as listed in Exhibit B for investment of proceeds from Variable
Contracts allocated to the designated Separate Accounts, such shares to be
offered as provided in Fund's Prospectus.
1.2. The Trust agrees to sell to the Life Company those Fund shares which
the Life Company orders, executing such orders on a daily basis at the NAV next
computed after receipt by the Trust or its designee of the order. For purposes
of this Section, the Life Company shall be the designee of the Trust for
receipt of such orders from the Life Company and receipt by such designee shall
constitute receipt by the Trust; provided that the Trust receives notice of
such order by 8:30 a.m. New York time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Fund calculates its NAV.
1.3. The Trust agrees to redeem for cash, on the Life Company's request, any
full or fractional Fund shares held by the Life Company, executing such
requests on a daily basis at the NAV next computed after receipt by the Trust
or its designee of the request for redemption. For purposes of this Section,
the Life Company shall be the designee of the Trust for receipt of requests for
redemption from the Life Company and receipt by such designee shall constitute
receipt by the Trust; provided that the Trust receives notice of such request
for redemption by 8:30 a.m. New York time on the next following Business Day.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to
the Life Company of any income dividends or capital gain distributions payable
on the shares of any Fund. The Life Company hereby elects to receive all such
income dividends and capital gain distributions as are payable on a Fund's
shares in additional shares of the Fund. The Trust shall notify the Life
Company of the number of shares so issued as payment of such dividends and
distributions. The Life Company reserves the right to revoke this election by
written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s)
available to the Life Company on a daily basis as soon as reasonably
practicable after the NAV per share is calculated but shall use its best
efforts to make such NAV available by 7:00 p.m. New York time. In the event of
an error in the computation of a Fund's NAV or any dividend or capital gain
distribution (each, a "pricing error"), the Distributor or the Fund shall
promptly notify the Life Company as soon as possible after discovery of the
error. Such notification may be verbal, but shall be confirmed promptly in
writing. A pricing error shall be corrected in accordance with the Fund's
policy for correction of pricing errors ("Pricing Policy"); provided such
Pricing Policy meets the requirements of the 1940 Act and any views expressed
by the SEC staff. If an adjustment is necessary to correct a material error
which has caused Variable Contract owners to receive less than the amount to
which they are entitled, the number of shares of the applicable sub-account of
such Variable Contract owners will be adjusted and the amount of any
underpayments shall be credited by the Distributor to the Life Company for
crediting of such
988998/1 - 2 -
amounts to the applicable Variable Contract owners accounts. Upon notification
by the Distributor of any overpayment due to a material error, the Life Company
shall promptly remit to the Distributor any overpayment that has not been paid
to the Variable Contract owners. A pricing error shall be deemed to be
"materially incorrect" or constitute a "material error" in accordance with the
Fund's Pricing Policy for purposes of this Agreement. The standards set forth
in this Section are based on the parties' understanding of the views expressed
by the staff of the SEC as of the date of this Agreement. In the event the
views of the SEC staff are later modified or superseded by SEC or judicial
interpretation, the parties shall amend the foregoing provisions of this
Agreement to comport with the appropriate applicable standards, on terms
mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Life Company shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the Life Company shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the time as of which the Fund calculates its share price as
disclosed in the Fund's prospectus to determine the net dollar amount of the
Fund shares which shall be purchased or redeemed at that day's closing NAV per
share. The net share purchase or redemption orders so determined shall be
transmitted to the Trust by the Life Company by 8:30 a.m. New York Time on the
Business Day next following the Life Company's receipt of such requests and
premiums.
1.7. If the Life Company's order requests the net purchase of the Trust
shares, the Life Company shall pay for such purchase by wiring federal funds to
the Trust or its designated custodial account on the day the order is actually
transmitted by the Life Company by the close of the Federal Reserve wire
system. If the Life Company's order requests a net redemption resulting in a
payment of redemption proceeds to the Life Company, the Trust shall wire the
redemption proceeds to the Life Company on the day the order is actually
received by the Trust by the close of the Federal Reserve wire system. If the
Life Company's order requests the application of redemption proceeds from the
redemption of shares to the purchase of shares of another fund administered or
distributed by the Distributor, the Trust shall so apply such proceeds on the
same Business Day that the Life Company transmits such order to the Trust. The
Life Company shall notify the Distributor at least five days in advance of a
single purchase, redemption or exchange order for one million dollars
($1,000,000) or more of which it has prior knowledge
1.8. Notwithstanding Section 1.7, the Trust reserves the right to suspend
the right of redemption or postpone the date of payment or satisfaction upon
redemption consistent with Section 22(e) of the 1940 Act and any rules
thereunder.
1.9. The Trust agrees that all Fund shares will be sold only to
Participating Insurance Companies which have agreed to purchase Fund shares to
fund their Separate Accounts and/or to certain qualified pension and other
retirement plans, all in accordance with the requirements of Section 817(h) of
the Internal Revenue Code of 1986 ("Code") and Treasury Regulation 1.817-5.
Fund shares will not be sold directly to the general public.
1.10. The Trust may refuse to sell shares of any Fund to any person, or
suspend or terminate the offering of the shares of any Fund if such action is
required by law or by regulatory
988998/1 - 3 -
authorities having jurisdiction or is, in the sole discretion of the Board of
Trustees of the Trust, acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, deemed necessary and in the
best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Life Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of Oregon and that
it has legally and validly established each Separate Account as a segregated
asset account under such laws, and that American General Equity Services
Corporation, the principal underwriter for the Variable Contracts, is
registered as a broker-dealer under the 1934 Act.
2.2. The Life Company represents and warrants that it has registered each
Separate Account as a unit investment trust in accordance with the provisions
of the 1940 Act and cause each Separate Account to remain so registered to
serve as a segregated asset account for the Variable Contracts, unless an
exemption from registration is available. The Life Company represents and
warrants that interests in the Separate Account under the Variable Contracts
will be registered under the Securities Act of 1933 ("1933 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all
material respects with state insurance law suitability requirements.
2.3. The Life Company represents and warrants that the Variable Contracts
are currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify the Trust immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.4. The Life Company represents and warrants that it shall deliver such
prospectuses, statements of additional information, proxy statements and
periodic reports of each Fund as required to be delivered under applicable
federal or state law in connection with the offer, sale or acquisition of the
Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act and shall be
duly authorized for issuance and sold in accordance with all applicable federal
and state laws, and the Trust shall be registered under the 1940 Act prior to
and at the time of any issuance or sale of such shares. The Trust shall amend
its registration statement under the 1933 Act and the 1940 Act as required in
order to effect the continuous offering of Fund shares.
2.6. The Adviser represents and warrants that each Fund currently complies,
and will continue to comply with the diversification requirements set forth in
Section 817(h) of the Code, and the rules and regulations thereunder, and will
notify the Life Company immediately upon having a reasonable basis for
believing any Fund has ceased to comply will take reasonable steps to
adequately diversify the Fund to achieve compliance within the grace period
afforded by Regulation 1.817-5.
988998/1 - 4 -
2.7. The Adviser represents and warrants that each Fund invested in by the
Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will maintain such qualification under
Subchapter M (or any successor or similar provisions) and will notify the Life
Company upon having a reasonable basis for believing any Fund has ceased to so
qualify.
2.8. The Life Company hereby consents to the use by the Trust of the name
and telephone number of the Life Company and to the reference by the Trust to
the relationship between the Life Company and the Trust as part of an
informational page on the Trust's site on the World Wide Web portion of the
Internet. The Life Company hereby further consents to the Trust's establishing
a link between the Trust's site and the Life Company's site from the same place
that the Life Company is listed on the Trust's site.
2.9. The Trust represents that it is lawfully organized and validly existing
under the laws of the State of Delaware.
2.10. The Trust represents and warrants that its directors, officers,
employees dealing with the money and/or securities of the Trust are and shall
continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust in an amount not less than the minimum
coverage as required by Rule 17g-(1) under the 1940 Act or related provisions
as may be promulgated from time to time. The aforesaid blanket fidelity bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an
investment adviser and shall remain duly registered under all applicable
federal and state securities laws and that it shall perform its obligations for
the Trust in compliance in all material respects with the applicable laws of
the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a
broker-dealer and shall remain duly registered under all applicable federal and
state securities laws and that it shall perform its obligations for the Trust
in compliance in all material respects with the applicable laws of the State of
Connecticut and any applicable state and federal securities laws.
2.13. Each party represents and warrants that the execution and delivery of
this Agreement and the consummation of the transactions contemplated herein
have been duly authorized by all necessary corporate, partnership or trust
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.
2.14. The Life Company represents and warrants that all orders for the
purchase and sale of Fund shares submitted to the Trust (or counted by the Life
Company in submitting a net order under this Agreement) will have been received
in good order by the Life Company prior to the time as of which the Fund
calculates its NAV on that Business Day, as disclosed in the prospectus for the
pertinent Fund (the "trading deadline"), in accordance with Rule 22c-1 under
the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under
the 1940 Act, respecting initial purchase payments on variable annuity
contracts, and to the established administrative procedures of the Life Company
as described under Rule 6e-3(T)(b)(12)(iii) under
988998/1 - 5 -
the 1940 Act respecting premium processing for variable life insurance
contracts). The Life Company will, upon reasonable request, certify to the
Trust and the Distributor that the Life Company is in compliance with this
Section.
2.15. The Life Company represents and warrants that it is currently in
compliance, and will remain in compliance, with all applicable anti-money
laundering laws, regulations and requirements, including, but not limited to,
its obligations under the U.S. Bank Secrecy Act of 1970, and the rules and
regulations thereunder.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators
requiring such filing all shareholder reports, notices, proxy materials (or
similar materials such as voting instruction solicitation materials),
prospectuses and statements of additional information of the Trust.
3.2. The Trust will bear the printing costs and mailing costs associated
with the delivery of the following Trust (or individual Fund) documents, and
any supplements thereto, to existing Variable Contract owners of the Life
Company who are invested in the Trust:
(i) Prospectuses and statements of additional information;
(ii) Annual and semi-annual reports; and
(iii) Proxy materials (including, but not limited to, the proxy cards,
notice and statement, as well as the costs associated with
tabulating votes).
The Life Company will submit any bills for printing, duplicating and/or
mailing costs, relating to the Trust documents described above, to the Trust
for reimbursement by the Trust. The Life Company shall monitor such costs and
shall use its best efforts to control these costs. Upon request, the Life
Company will provide the Trust on a semi-annual basis, or more frequently as
reasonably requested by the Trust, with a current tabulation of the number of
existing Variable Contract owners of the Life Company whose Variable Contract
values are invested in each Fund. This tabulation will be sent to the Trust in
the form of a letter signed by a duly authorized officer of the Life Company
attesting to the accuracy of the information contained in the letter. If
requested by the Life Company, the Trust shall provide such documentation
(including a final copy of the Trust's prospectus as set in type or in
camera-ready copy) and other assistance as is reasonably necessary in order for
the Life Company to print together in one document the current prospectus for
the Variable Contracts issued by the Life Company and the current prospectus
for the Trust. Should the Life Company wish to print any of these documents in
a format different from that provided by the Trust, Life Company shall provide
the Trust with sixty (60) days' prior written notice and the Life Company shall
bear the cost associated with any format change.
3.3. The Trust will provide, at its expense, the Life Company with the
following Trust (or individual Fund) documents, and any supplements thereto,
with respect to existing Contract owners who are prospective purchasers of the
Trust and with respect to prospective Variable Contract owners of the Life
Company:
988998/1 - 6 -
(i) The current prospectus suitable for printing;
(ii) The current statement of additional information suitable for
duplication;
(iii) The current proxy material suitable for printing; and
(iv) The current annual and semi-annual reports suitable for printing.
The Life Company will pay all the expenses for printing and mailing these
documents.
3.4. The Trust will provide the Life Company with at least one complete copy
of all prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, exemptive applications and all
amendments or supplements to any of the above that relate to the Fund after the
filing of each such document with the SEC or other regulatory authority. The
Life Company will provide the Trust with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account after the
filing of each such document with the SEC or other regulatory authority.
3.5. The Life Company agrees that it will cooperate with the Distributor and
the Trust by providing to the Distributor and the Trust, within thirty
(30) days prior to any deadline imposed by applicable laws, rules or
regulations, information regarding shares sold and redeemed and whether the
Separate Accounts are registered or unregistered under the 1940 Act and any
other information pertinent to enabling the Distributor and the Trust to pay
registration or other fees with respect to the Trust shares sold during the
fiscal year in accordance with Rule 24f-2 or to register and qualify Trust
shares under any applicable laws, rules or regulations in a timely manner.
3.6. Except with respect to information regarding the Life Company provided
in writing by that party, the Life Company shall not be responsible for the
content of the prospectus or statement of additional information for the Trust.
Also, except with respect to information regarding the Trust, Distributor,
Adviser or the Fund provided in writing by the Trust, Distributor or Adviser,
neither the Trust, the Distributor nor Adviser are responsible for the content
of the prospectus or statement of additional information for the Variable
Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Life Company will furnish, or will cause to be furnished, to the
Trust and the Distributor, each piece of sales literature or other promotional
material in which the Trust, the Distributor or Adviser is named, at least ten
(10) Business Days prior to its intended use. No such material will be used if
the Trust or the Distributor objects to its use in writing within ten
(10) Business Days after receipt of such material.
4.2. The Trust and the Distributor will furnish, or will cause to be
furnished, to the Life Company, each piece of sales literature or other
promotional material in which the Life Company or its Separate Accounts are
named, at least ten (10) Business Days prior to its
988998/1 - 7 -
intended use. No such material will be used if the Life Company objects to its
use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information
or make any representations on behalf of the Life Company or concerning the
Life Company, the Separate Accounts, or the Variable Contracts issued by the
Life Company, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus, or in reports of the Separate Accounts
or reports prepared for distribution to owners of such Variable Contracts, or
in sales literature or educational or other promotional material approved by
the Life Company or its designee, except with the written permission of the
Life Company.
4.4. The Life Company and its affiliates and agents shall not give any
information or make any representations on behalf of the Trust or a Fund or
concerning the Trust or a Fund other than the information or representations
contained in a registration statement or prospectus for the Trust, as such
registration statement and prospectus, or in sales literature or other
educational or promotional material approved by the Trust or its designee,
except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement
shall treat as confidential all information pertaining to the owners of the
Variable Contracts and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by this Agreement,
shall not disclose, disseminate or utilize such names and addresses and other
confidential information until such time as it may come into the public domain
without the express written consent of the affected party. Each party shall be
solely responsible for the compliance of their officers, directors, employees,
agents, independent contractors, and any affiliated and non-affiliated third
parties with all applicable privacy-related laws and regulations including but
not limited to the Xxxxx-Xxxxx-Xxxxxx Act and Regulation S-P. The provisions of
this Section shall survive the termination of this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the "Board") will monitor the Trust
for the existence of any material irreconcilable conflict between the interests
of the Variable Contract owners of Participating Insurance Company Separate
Accounts investing in the Trust. A material irreconcilable conflict may arise
for a variety of reasons, including: (a) state insurance regulatory authority
action; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling, or
any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of the Trust are being managed; (e) a
difference in voting instructions given by variable annuity and variable life
insurance contract owners or by contract owners of different Participating
Insurance Companies; or (f) a decision by a Participating Insurance Company to
disregard voting instructions of Variable Contract owners.
5.2. The Life Company will report any potential or existing conflicts to the
Board. The Life Company will be responsible for assisting the Board in carrying
out its responsibilities under the Conditions set forth in the notice issued by
the SEC for the Trust on May 11, 2007 (the
988998/1 - 8 -
"Notice") (Investment Company Act Release No. IC-27821), by providing the Board
with all information reasonably necessary for it to consider any issues raised.
This responsibility includes, but is not limited to, an obligation by the Life
Company to inform the Board whenever Variable Contract owner voting
instructions are disregarded by the Life Company. These responsibilities will
be carried out with a view only to the interests of the Variable Contract
owners.
5.3. If a majority of the Trust's Trustees or a majority of its
disinterested trustees ("Independent Trustees") determines that a material
irreconcilable conflict exists, affecting the Life Company, the Life Company,
at its expense and to the extent reasonably practicable (as determined by a
majority of Independent Trustees), will take any steps necessary to remedy or
eliminate the irreconcilable material conflict, including: (a) withdrawing the
assets allocable to some or all of the Separate Accounts from the Trust or any
Fund thereof and reinvesting those assets in a different investment medium,
which may include another Fund of the Trust or another investment company or
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., Variable Contract owners
of one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account. If a material irreconcilable
conflict arises because of the Life Company's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, the Life Company may be required,
at the election of the Trust, to withdraw its Separate Account's investment in
the Trust, and no charge or penalty will be imposed as a result of such
withdrawal. The responsibility to take such remedial action shall be carried
out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees
shall determine whether or not any proposed action adequately remedies any
material irreconcilable conflict, but in no event will the Trust be required to
establish a new funding medium for any Variable Contract. Further, the Life
Company shall not be required by this Section to establish a new funding medium
for any Variable Contract if any offer to do so has been declined by a vote of
a majority of Variable Contract owners materially affected by the
irreconcilable material conflict.
5.4. The Board's determination of the existence of a material irreconcilable
conflict and its implications shall be made known promptly and in writing to
the Life Company.
5.5. No less than annually, the Life Company shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out the obligations imposed upon it by these Conditions.
Such reports, materials, and data shall be submitted more frequently if the
Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act
or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever
Trust shall have a meeting of shareholders of any series or class of shares,
the Life Company shall:
988998/1 - 9 -
. Solicit voting instructions from Variable Contract owners;
. Vote Trust shares held in each Separate Account at such shareholder
meetings in accordance with instructions received from Variable
Contract owners;
. Vote Trust shares held in each Separate Account for which it has not
received timely instructions in the same proportion as it votes the
applicable series or class of Trust shares for which it has received
timely instructions; and
. Vote Trust shares held in its general account in the same proportion
as it votes the applicable series or class of Trust shares held by
the Separate Accounts for which it has received timely instructions.
Except with respect to matters as to which the Life Company has the right under
Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without
regard to voting instructions from Variable Contract owners, neither the Life
Company nor any of its affiliates will recommend action in connection with, or
oppose or interfere with, the actions of the Trust Board to hold shareholder
meetings for the purpose of obtaining approval or disapproval from shareholders
(and, indirectly, from Variable Contract owners) of matters put before the
shareholders or a vote recommended by Trust Board. The Life Company shall be
responsible for assuring that it calculates voting instructions and votes Trust
shares at shareholder meetings in a manner consistent with other Participating
Insurance Companies. The Trust shall notify the Life Company of any changes to
the Order or conditions. Notwithstanding the foregoing, the Life Company
reserves the right to vote Trust shares held in any segregated asset account in
its own right, to the extent permitted by law.
6.2. If and to the extent 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 thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Order, then
the Trust and/or the Life Company, as appropriate, shall take such steps as may
be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule
6e-3, as adopted, to the extent such Rules are applicable.
Article VII. INDEMNIFICATION
7.1. Indemnification by the Life Company. The Life Company agrees to
indemnify and hold harmless the Trust, the Distributor and the Adviser and each
of their Trustees, directors, officers, employees and agents and each person,
if any, who controls the Trust, the Distributor or Adviser within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of Sections 7.1 to 7.3) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Life Company, which consent shall not be unreasonably withheld) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements:
988998/1 - 10 -
(a) 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 sales literature for the
Variable Contracts or contained in the Variable Contracts (or
any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Life Company by or
on behalf of the Trust for use in the registration statement,
prospectus or sales literature for the Variable Contracts or in
the Variable Contracts (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable
Contracts or Fund shares;
(b) Arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Trust not supplied by the Life Company, or persons under its
control) or wrongful conduct of the Life Company or any of its
directors, officers, employees or agents, with respect to the
sale or distribution of the Variable Contracts or Fund shares;
(c) Arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus or sales literature of the Trust or any amendment
thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Trust for inclusion
therein by or on behalf of the Life Company;
(d) Arise as a result of any failure by the Life Company to
substantially provide the services and furnish the materials
under the terms of this Agreement; or
(e) Arise out of or result from any material breach of any
representation and/or warranty made by the Life Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Life Company.
7.2. The Life Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may arise
from such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations or duties under
this Agreement or to the Trust, whichever is applicable.
988998/1 - 11 -
7.3. The Life Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Life Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Life
Company of any such claim shall not relieve the Life Company from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against an Indemnified Party, the Life Company shall be
entitled to participate at its own expense in the defense of such action.
7.4. Indemnification by the Adviser. The Adviser agrees to indemnify and
hold harmless the Life Company and each of its directors, officers, employees,
and agents and each person, if any, who controls the Life Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for the purposes of Sections 7.4 to 7.6) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Adviser which consent shall not be unreasonably withheld) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements:
(a) 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 sales literature of the
Trust (or any amendment or supplement to any of the foregoing),
or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Adviser, the
Distributor or the Trust by or on behalf of the Life Company for
use in the registration statement or prospectus for the Trust or
in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable
Contracts or Fund shares;
(b) Arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by the Adviser or persons under
its control) or wrongful conduct of the Trust, the Distributor
or the Adviser or persons under their control, with respect to
the sale or distribution of the Variable Contracts or Fund
shares;
(c) Arise out of any untrue statement or alleged untrue statement of
a material fact contained in the registration statement,
prospectus or sales literature covering the Variable Contracts,
or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
988998/1 - 12 -
not misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to the Life Company for
inclusion therein by or on behalf of the Trust;
(d) Arise as a result of a failure by the Trust to substantially
provide the services and furnish the materials under the terms
of this Agreement; or
(e) Arise out of or result from any material breach of any
representation and/or warranty made by the Adviser, the
Distributor or the Trust in this Agreement or arise out of or
result from any other material breach of this Agreement by the
Adviser, the Distributor or the Trust.
7.5. The Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Life Company.
7.6. The Adviser shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the Adviser of
any such claim shall not relieve the Adviser from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against the Indemnified Parties, the Adviser shall be entitled to
participate at its own expense in the defense thereof.
7.7. The provisions of this Article VII shall survive the termination of
this Agreement.
Article VIII. TERM; TERMINATION
8.1. This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2. This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the Life Company or the Trust at any time from
the date hereof upon 180 days' notice, unless a shorter time is
agreed to by the parties;
(b) At the option of the Life Company or the Trust, if Fund shares
are not reasonably available to meet the requirements of the
Variable Contracts. Prompt notice of election to terminate shall
be furnished by the Life Company. The termination will be
effective ten days after receipt of
988998/1 - 13 -
notice unless the Trust makes available a sufficient number of
Fund shares to reasonably meet the requirements of the Variable
Contracts within the ten-day period;
(c) At the option of the Life Company, upon the institution of
formal proceedings against the Trust, the Distributor or Adviser
by the SEC, the FINRA, or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which
would, in the Life Company's reasonable judgment, materially
impair the Trust's, the Distributor's or the Adviser's ability
to meet and perform their respective obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by the Life Company with said termination to be
effective upon receipt of notice;
(d) At the option of the Trust, the Distributor or the Adviser, upon
the institution of formal proceedings against the Life Company
by the SEC, the FINRA, or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which
would, in Trust's reasonable judgment, materially impair the
Life Company's ability to meet and perform its obligations and
duties hereunder. Prompt notice of election to terminate shall
be furnished by Trust with said termination to be effective upon
receipt of notice;
(e) At the option of the Life Company, in the event the Trust's
shares are not registered, issued or sold in accordance with
applicable state or federal law, or such law precludes the use
of such shares as the underlying investment medium of Variable
Contracts issued or to be issued by the Life Company.
Termination shall be effective immediately upon notice to the
Trust;
(f) At the option of the Trust if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if the Trust reasonably believes
that the Variable Contracts may fail to so qualify. Termination
shall be effective upon receipt of notice by the Life Company;
(g) At the option of the Life Company, upon the Trust's breach of
any material provision of this Agreement, which breach has not
been cured to the satisfaction of the Life Company within ten
days after written notice of such breach is delivered to the
Trust;
(h) At the option of the Trust, upon the Life Company's breach of
any material provision of this Agreement, which breach has not
been cured to the satisfaction of the Trust within ten days
after written notice of such breach is delivered to the Life
Company;
988998/1 - 14 -
(i) At the option of the Trust, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately
upon such occurrence without notice to the Life Company;
(j) At the option of the Life Company in the event that any 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 Life Company reasonably believes that any
Fund may fail to so qualify. Termination shall be effective
immediately upon notice to the Trust;
(k) At the option of the Life Company in the event that any Fund
fails to meet the diversification requirements specified in
Article II hereof or if the Life Company reasonably believes
that any Fund may fail to meet such diversification
requirements. Termination shall be effective immediately upon
notice to the Trust; and
(l) In the event this Agreement is assigned without the prior
written consent of the Life Company, the Trust, the Distributor
and the Adviser, termination shall be effective immediately upon
such occurrence without notice.
8.3. Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, the Trust shall, at the option of the Life Company,
continue to make available additional Fund shares, as provided below, for so
long as the Life Company desires pursuant to the terms and conditions of this
Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement ("Existing Contracts"). Specifically, without
limitation, if the Life Company so elects to make additional Fund shares
available, the owners of the Existing Contracts or the Life Company, whichever
shall have legal authority to do so, shall be permitted to reallocate
investments in the Trust, redeem investments in the Trust and/or invest in the
Trust upon the payment of additional premiums under the Existing Contracts. In
the event of a termination of this Agreement, the Life Company, as promptly as
is practicable under the circumstances, shall notify the Trust, the Distributor
and the Adviser whether the Life Company elects to continue to make Fund shares
available after such termination. If Fund shares continue to be made available
after such termination, the provisions of this Agreement shall remain in effect.
8.4. Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, the Life
Company shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to the Life Company's assets held in the
Separate Accounts or invested directly), and the Life Company shall not prevent
Variable Contract owners from allocating payments to a Fund that was otherwise
available under the Variable Contracts, until thirty (30) days after the Life
Company shall have notified the Trust of its intention to do so.
988998/1 - 15 -
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Trust: Lincoln Variable Insurance Products Trust
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
c/o Xxxxx X. Xxxxxxxxx
If to the Distributor: Lincoln Financial Distributors, Inc.
Metro Center, 000 Xxxxxx Xxxxxx
Xxxxxxxx, Xx 00000
c/o Xxxx Xxxxxxx
If to the Adviser: Lincoln Investment Advisors Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
c/o Xxxxxxx X. Xxxxx Xx.
If to the Life Company: American International Life Assurance
Company of New York
c/o American General Life Companies
0000-X Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.2. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
10.3. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York
without regard to conflicts of laws principles thereof. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the SEC granting exemptive relief
therefrom and the conditions of such orders.
988998/1 - 16 -
10.4. The parties agree that the assets and liabilities of each Fund are
separate and distinct from the assets and liabilities of each other Fund. No
Fund shall be liable or shall be charged for any debt, obligation or liability
of any other Fund. No Trustee, officer or agent shall be personally liable for
such debt, obligation or liability of any Fund.
10.5. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, FINRA and state
insurance regulators) and shall permit such authorities reasonable access to
its books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
10.6. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.7. No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by the
Trust, the Distributor, the Adviser and the Life Company; provided, however,
that the Adviser may from time to time update Exhibit A to this Agreement, with
a copy to the Life Company in due course, to add a new Fund, delete an inactive
or terminated Fund, or reflect the change of name of a Fund. The establishment
by the Life Company of an account in any Fund, whether or not as yet reflected
on an updated Exhibit A, shall constitute the agreement by the Life Company and
the Trust, the Distributor and the Adviser to be bound by the provisions of
this Agreement with respect to that Fund.
10.8. Notwithstanding anything to the contrary contained herein, the Trust,
the Distributor and the Adviser agree that the Life Company shall be fully
entitled to make disclosure of information relating to the structure and tax
aspects of the transactions contemplated by this Agreement, without limitation
of any kind on such disclosure, and all materials of any kind (including
opinions or other tax analysis) that are provided herein related to such
structure and tax aspects as described in Treasury Regulation
Section 301.6111-2(c)(3).
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first
above written.
LINCOLN VARIABLE INSURANCE PRODUCTS LINCOLN INVESTMENT ADVISORS CORPORATION
TRUST
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx, Xx.
----------------------------- -------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx Xx.
Title: President Title: 2/nd/ Vice President and Asst.
Treasurer
LINCOLN FINANCIAL DISTRIBUTORS, INC.
By: /s/ Xxxxx Xxxx
-----------------------------
Name: Xxxxx Xxxx
Title: Vice President
988998/1 - 17 -
AMERICAN INTERNATIONAL LIFE ATTEST:
ASSUARANCE COMPANY OF NEW YORK
By: ------------------------- By: --------------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. Xxxxx
Title: Executive Vice President Title: Chief Counsel and Assistant Secretary
(Seal)
988998/1 - 18 -
EXHIBIT A
The currently available Funds of the Trust are:
1. LVIP Delaware Foundation Moderate Allocation Fund
988998/1 - 19 -
EXHIBIT B
SEPARATE ACCOUNTS OF THE LIFE COMPANY REGISTERED UNDER THE 1940 ACT AS UNIT
INVESTMENT TRUSTS
The following separate accounts are subject to this Agreement:
American International Life Assurance Company of New York Variable Account A
VARIABLE ANNUITY CONTRACTS AND VARIABLE LIFE INSURANCE CONTRACTS REGISTERED
UNDER THE SECURITIES ACT OF 1933
The following contracts are subject to this Agreement:
Variable Annuity Contracts (SEC Reg. No. 033-09144)
988998/1 - 20 -
