Exhibit (8)(g)
PARTICIPATION AGREEMENT
Among
XXXXXX VARIABLE TRUST
XXXXXX MUTUAL FUNDS CORP.
and
THE UNITED STATES LIFE INSURANCE COMPANY
IN THE CITY OF NEW YORK
THIS AGREEMENT, made and entered into as of this ____ day of __________,
1999, among The United States Life Insurance Company in the City of New York
(the "Company"), a New York corporation, on its own behalf and on behalf of each
separate account of the Company set forth on Schedule A hereto, as such Schedule
may be amended from time to time (each such account hereinafter referred to as
the "Account"), PUTNAM VARIABLE TRUST (the "Trust"), a Massachusetts business
trust, and XXXXXX MUTUAL FUNDS CORP. (the "Underwriter"), a Massachusetts
corporation.
WHEREAS, the Trust is an open-end diversified management investment company
and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
(collectively, the "Variable Insurance Products") to be offered by insurance
companies which have entered into Participation Agreements with the Trust and
the Underwriter (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission ("SEC"), dated December 29, 1993 (File No. 812-8612), granting the
variable annuity and variable life insurance separate accounts participating in
the Trust exemptions from the provisions of sections 9(a), 13(a), 15(a) and
15(b) of the Investment Company Act of 1940, as amended (the "1940 Act"), and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by variable annuity and
variable life insurance
separate accounts of the Participating Insurance Companies (the "Shared Funding
Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and the sale of its shares is registered under the
Securities Act of 1933, as amended (the " 1933 Act"); and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
WHEREAS, each Account is a duly organized, validly existing separate
account, established by resolution of the Board of Directors of the Company, on
the date shown for such Account on Schedule A hereto, to set aside and invest
assets attributable to one or more variable insurance contracts (the
"Contracts"); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the " 1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in certain Funds
("Authorized Funds") on behalf of each Account to fund certain of the Contracts
and the Underwriter is authorized to sell such shares to unit investment trusts
such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company, the
Trust and the Underwriter agree as follows:
ARTICLE 1. Sale of Trust Shares
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1.1 The Underwriter agrees, subject to the Trust's rights under Section
1.2 and otherwise under this Agreement, to sell to the Company those Trust
shares representing interests in Authorized Funds which each Account orders,
executing such orders on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the order for the shares of the
Trust. For purposes of this Section 1. 1, the Company shall be the designee of
the Trust for receipt of such orders from each Account 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. Eastern time on the next following Business
Day. "Business Day" shall mean any day on
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which the New York Stock Exchange is open for trading and on which the Trust
calculates its net asset value pursuant to the rules of the SEC. The initial
Authorized Funds are set forth in Schedule B, as such schedule is amended from
time to time.
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC and the Trust shall use reasonable efforts to
calculate such net asset value on each day on which the New York Stock Exchange
is open for trading. Notwithstanding the foregoing, the Trustees of the Trust
(the "Trustees") may refuse to sell shares of any Fund to the Company or any
other 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 over
the Trust or if the Trustees determine, in the exercise of their fiduciary
responsibilities, that to do so would be in the best interests of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will be
sold only to Participating Insurance Companies and their separate accounts. No
shares of any Fund will be sold to the general public.
1.4 The Trust shall redeem its shares in accordance with the terms of its
then current prospectus. For purposes of this Section 1.4, the Company shall be
the designee of the Trust for receipt of requests for redemption from each
Account 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., Eastern time, on the next following Business Day.
1.5 The Company shall purchase and redeem the shares of Authorized Funds
offered by the then current prospectus of the Trust in accordance with the
provisions of such prospectus.
1.6 The Company shall pay for Trust shares on the next Business Day after
an order to purchase Trust shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
1.7 Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded as instructed by the Company to
the Underwriter in an appropriate title for each Account or the appropriate sub-
account of each Account.
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1.8 The Underwriter shall furnish prompt notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Fund shares in additional shares of that
Fund. The Company reserves the right to revoke this election and therefore to
receive all such income dividends and capital gain distributions in cash. The
Underwriter shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.9 The Underwriter shall make the net asset value per share for each Fund
available to the Company on a daily basis as soon as reasonably practical after
the Trust calculates its net asset value per share and each of the Trust and the
Underwriter shall use its best efforts to make such net asset value per share
available by 7:00 p.m. Eastern time.
ARTICLE II. Representations and Warranties
------------------------------
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement the Contracts are or
will be registered under the 1933 Act; the Contracts will be issued and sold in
compliance in all material respects with all applicable laws and the sale of the
Contracts shall comply in all material respects with state insurance suitability
laws and regulations. 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 prior to any issuance
or sale thereof as a separate account under applicable law and has registered
or, prior to any issuance or sale of the Contracts, will register each Account
as a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts; and
(b) the Contracts are currently treated as endowment, annuity or life
insurance contracts, under applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and that it will make every effort to maintain
such treatment and that it will notify the Trust and the Underwriter 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.
2.2 The Trust represents and warrants that
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(a) it is lawfully organized and validly existing under the laws of the
Commonwealth of Massachusetts and that it does and will comply in all material
respects with the 1940 Act.
(b) it is currently qualified as a Regulated Investment Company under
Subchapter M of the Code, and that it will use its best efforts to maintain such
qualification (under Subchapter M or any successor 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; and
(c) at all times during the term of this Agreement Trust shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold by the Trust to the Company in compliance with
all applicable laws, subject to the terms of Section 2.4 below, and the Trust is
and shall remain registered under the 1940 Act. The Trust shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Trust or the Underwriter in connection with their sale by the Trust to
the Company and only as required by Section 2.4;
2.3 The Underwriter represents and warrants that
(a) it is a member in good standing of the NASD;
(b) is registered as a broker-dealer with the SEC;
(c) it will sell and distribute the Trust shares in accordance
with all applicable securities laws, including without limitation, the 1933
Act, the 1934 Act and the 0000 Xxx.
2.4 Notwithstanding any other provision of this Agreement, the Trust shall
be responsible for the registration and qualification of its shares and of the
Trust itself under the laws of any jurisdiction only in connection with the
sales of shares directly to the Company through the Underwriter. The Trust shall
not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of Trust
shares or the Trust by the Trust may be required in connection with the sale of
the Contracts or the indirect interest of any Contract in any shares of the
Trust and advising the Trust thereof at such time and in such manner as is
necessary to permit the Trust to comply.
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2.5 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
ARTICLE III. Prospectuses and Proxy Statements; Voting
-----------------------------------------
3.1 The Trust shall provide such documentation (including a camera-ready
copy of its prospectus) and other assistance as is reasonably necessary in order
for the Company once each year (or more frequently if the prospectus for the
Trust is amended) to have the prospectus for the Contracts and the Trust's
prospectus printed together in one or more documents. The cost of printing
prospectuses for the Contracts and the Trust for delivery in connection with the
offering and sale of new Contracts will be at the Underwriter's expense.
Printing of prospectuses for other purposes will be at the Company's expense.
The Company will bear the expense of mailing prospectuses to new purchasers of
Contracts.
3.2 The Trust's Prospectus shall state that the Statement of Additional
Information for the Trust is available from the Underwriter or its designee (or
in the Trust's discretion, the Prospectus shall state that such Statement is
available from the Trust), and the Underwriter (or the Trust), at its expense,
shall print and provide such Statement free of charge to the Company and free of
charge to any owner of a Contract or prospective owner who requests such
Statement.
3.3 The Trust, at its expense, shall provide the Company with copies of
its reports to shareholders, proxy material and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to the Contract owners, such distribution shall be at the expense
of the Trust, provided that the Trust and the Company shall bear their
proportional share of the distribution expenses of any report containing both
the Trust's and the Accounts' financial reports.
3.4 The Company shall vote all Trust shares as required by law and the
Shared Funding Exemptive Order. The Company reserves the right to vote Trust
shares held in any separate account in its own right, to the extent permitted by
law and the Shared Funding Exemptive Order. The Company shall be responsible for
assuring that each of its separate accounts participating in the Trust
calculates voting privileges in a manner consistent with all legal requirements
and the Shared Funding Exemptive Order.
3.5 The Trust will comply with all applicable provisions of the 1940 Act
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requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust 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,
the Trust will act in accordance with the SEC's interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and
with whatever rules the SEC may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
------------------------------
4.1 Without limiting the scope or effect of Section 4.2 hereof, the
Company shall furnish, or shall cause to be furnished, to the Underwriter each
piece of sales literature or other promotional material (as defined hereafter)
in which the Trust, its investment adviser or the Underwriter is named at least
10 days prior to its use. No such material shall be used if the Underwriter
objects to such use within five Business Days after receipt of such material.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Trust or concerning the Trust in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Trust shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in annual or semi-annual reports or proxy statements for the
Trust, or in sales literature or other promotional material approved by the
Trust or its designee or by the Underwriter, except with the written permission
of the Trust or the Underwriter or the designee of either or as is required by
law.
4.3 The Underwriter or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material prepared by the Underwriter in which the Company
and/or its separate account(s) is named at least 10 days prior to its use. No
such material shall be used if the Company or its designee objects to such use
within five Business Days after receipt of such material.
4.4 Neither the Trust nor the Underwriter shall give any information or
make any representations on behalf of the Company concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in
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published reports for each Account which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with the
written permission of the Company or as is required by law.
4.5 For purposes of this Article IV, 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), 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 registered representatives.
ARTICLE V. Fees and Expenses
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5.1 Except as provided in Article VI, the Trust and Underwriter shall pay
no fee or other compensation to the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this Agreement
shall be paid by the Trust. The Trust shall bear the expenses for the cost of
registration and qualification of the Trust's shares, preparation and filing of
the Trust's prospectus and registration statement, proxy materials and reports,
setting the prospectus and shareholder reports in type, setting in type and
printing the proxy materials, distributing reports and proxy statements to
contractholders (provided that if the reports are combined with the Company's
reports the Trust and the Company shall bear such share of the expense as its
proportion of the joint report bears the the whole combined report) and the
preparation of all statements and notices required by any federal or state law,
in each case as may reasonably be necessary for the performance by it of its
obligations under this Agreement.
5.3 The Company shall bear the expenses of printing the Trust's prospectus
(other than those used in connection with the offering and sales of the
Contracts) and of distributing the Trust's prospectuses to new purchasers of
Contracts.
Article VI. Service Fees
------------
6.1 The Underwriter shall pay the Company a service fee (the "Service
Fee") on shares of the Funds held in the Accounts at the annual rates specified
in Schedule
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B (excluding any accounts for the Company's own corporate retirement plans),
subject to Section 6.2 hereof.
6.2 The Company understands and agrees that all Service Fee payments are
subject to the limitations contained in each Fund's Distribution Plan, which may
be varied or discontinued at any time, and understands and agrees that it will
cease to receive such Service Fee payments with respect to a Fund if the Fund
ceases to pay fees to the Underwriter pursuant to its Distribution Plan.
6.3 (a) The Company's failure to provide the services described in
Section 6.4 will render it ineligible to receive Service Fees; and
(b) the Underwriter may, without the consent of the Company, amend
this Article VI to change the amount of Service Fees or the terms on which
Service Fees are paid or to terminate further payments of Service Fees upon
written notice to the Company.
6.4 The Company will provide the following services to the Contract
Owners purchasing Fund shares:
(i) Maintaining regular contact with Contract owners and assisting in
answering inquiries concerning the Funds;
(ii) Assisting in the process of printing and distributing shareholder
reports, prospectuses and other sale and service literature provided by the
Underwriter;
(iii) Assisting the Underwriter and its affiliates in the establishment and
maintenance of Contract owner and shareholder accounts and records;
(iv) Assisting Contract owners in effecting administrative changes, such
as exchanging shares in or out of the Funds;
(v) Assisting in processing purchase and redemption transactions; and
(vi) Providing any other information or services as the Contract owners or
the Underwriter may reasonably request.
The Company will support the Underwriter's marketing and servicing efforts
by granting reasonable requests for visits to the Company's offices by
representatives of the Underwriter.
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6.5 The Company's performance under the service requirement set forth in
this Agreement will be evaluated from time to time by the Underwriter's
monitoring of redemption levels of Fund shares held in any Account and by such
other methods as the Underwriter deems appropriate.
ARTICLE VII. Diversification
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7.1 The Trust shall cause each Authorized Fund to maintain a diversified
pool of investments that would, if such Fund were a segregated asset account,
satisfy the diversification provisions of Treas. Reg. (S) 1.817-5(b)(1) or (2).
7.2 The Trust shall annually send the Company a certificate, in the form
mutually agreed, certifying as to its compliance with Section 7.1.
ARTICLE VIII. Potential Conflicts
-------------------
8.1 The Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Trust. A material irreconcilable conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities law 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 owners; or (f) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trust shall promptly inform the Company if the Trustees determine that a
material irreconcilable conflict exists and the implications thereof.
8.2 The Company will report any potential or existing conflicts of which
it is aware to the Trustees. The Company will assist the Trustees in carrying
out their responsibilities under the Shared Funding Exemptive Order, by
providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Trustees whenever Contract owner voting
instructions are disregarded.
8.3 If it is determined by a majority of the Trustees, or a majority of
the disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall to the extent reasonably practicable (as determined by a majority
of the
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disinterested Trustees), take, at the Company's expense, whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict, up to and
including: (1) withdrawing the assets allocable to some or all of the separate
accounts from the Trust or any Fund and reinvesting such assets in a different
investment medium, including (but not limited to) another Fund of the Trust, or
submitting the question 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 Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account.
8.4 If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in one or more Authorized Funds of the Trust and terminate this
Agreement with respect to such Account; 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 Trustees. No charge or penalty shall be imposed as a result of
such withdrawal. Any such withdrawal and termination must take place within six
(6) months after the Trust gives written notice that this provision is being
implemented, and until the end of that six month period the Underwriter and
Trust shall, to the extent permitted by law and any exemptive relief previously
granted to the Trust, continue to accept and implement orders by the Company for
the purchase (or redemption) of shares of the Trust.
8.5 If a material irreconcilable conflict arises because of a particular
state insurance regulator's decision applicable to the Company to disregard
Contract owner voting instructions and that decision represents a minority
position that would preclude a majority vote, then the Company may be required,
at the Trust's direction, to withdraw the affected Account's investment in one
or more Authorized Funds of the Trust; 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 Trustees. Any such withdrawal and termination must take place
within six (6) months after the Trust gives written notice that this provision
is being implemented, unless a shorter period is required by law, and until the
end of the foregoing six month period (or such shorter period if required by
law), the Underwriter and Trust shall, to the extent permitted by law and any
exemptive relief previously granted to the Trust, continue to accept and
implement orders by
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the Company for the purchase (and redemption) of shares of the Trust. No charge
or penalty will be imposed as a result of such withdrawal.
8.6 For purposes of Sections 8.3 through 8.6 of this Agreement, a majority
of the disinterested Trustees shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. Neither the Trust nor
the Underwriter shall be required to establish a new funding medium for the
Contracts, nor shall the Company be required to do so, if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the material irreconcilable conflict. In the event that the Trustees
determine that any proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the Account's investment
in one or more Authorized Funds of the Trust and terminate this Agreement within
six (6) months (or such shorter period as may be required by law or any
exemptive relief previously granted to the Trust) after the Trustees inform the
Company in writing of the foregoing determination; provided, however, that such
withdrawal and termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty will be imposed as a result of such
withdrawal.
8.7 The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and to bear the
cost of such remedial action shall be the obligation of the Company, and the
obligation of the Company set forth in this Article VIII shall be carried out
with a view only to the interests of Contract owners.
8.8 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 Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then (a) the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable;
and (b) Sections 3.4, 3.5, 8.1, 8.2, 8.3, 8.4 and 8.5 of this Agreement shall
continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or
adopted.
8.9 The Company has reviewed the Shared Funding Exemption Order and hereby
assumes all obligations referred to therein which are required, including,
without limitation, the obligation to provide reports, material or data as the
Trustees
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may request as conditions to such Order, to be assumed or undertaken by the
Company.
ARTICLE IX. Indemnification
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9.1. Indemnification by the Company
------------------------------
9.1 (a). The Company shall indemnify and hold harmless the Trust
and the Underwriter and each of the Trustees, directors of the Underwriter,
officers, employees or agents of the Trust or the Underwriter and each person,
if any, who controls the Trust or the Underwriter within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 9.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company which consent
may not be unreasonably withheld) or litigation (including reasonable legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation or at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Trust's shares or the
Contracts or the performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a Registration
Statement, Prospectus or Statement of Additional Information for the
Contracts or contained in the Contracts or sales literature for the
Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Trust for use in the
Registration Statement, Prospectus or Statement of Additional
Information 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 Trust shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations contained in
the Trust's Registration Statement or Prospectus, or in sales
literature for Trust shares not supplied by the Company, or persons
under its control) or wrongful conduct of the
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Company or persons under its control, with respect to the sale or
distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus, or sales
literature of the 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 a statement or omission was made in reliance upon
information furnished to the Trust or the Underwriter by or on behalf of
the Company; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or result
from any other breach of this Agreement by the Company, as limited by and
in accordance with the provisions of Sections 9.1(b) and 9.1(c) hereof.
9.1 (b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent 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.
9.1 (c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim but failure to notify the Company of any such claim shall
not relieve the Company from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Company to such Indemnified Party of
the Company's election to assume the defense thereof the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will
14
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.
9.1 (d) The Underwriter shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust or the
Underwriter in connection with the issuance or sale of the Trust Shares or the
Contracts or the operation of the Trust.
9. 1 (e) The provisions of this Section 9.1 shall survive
any termination of this Agreement.
9.2 Indemnification by the Underwriter
----------------------------------
9.2 (a) The Underwriter shall indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of this Section
9.2) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter which consent may
not be unreasonably withheld) or litigation (including reasonable legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, regulation or at common law, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Trust's shares or the Contracts or the
performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the sales literature of the
Trust prepared by or approved by the Trust or Underwriter (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 Underwriter or Trust by or on behalf of the
Company for use in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
15
(ii) arise out of or as a result of written statements or representations
(other than statements or representations contained in the Registration
Statement, Prospectus, Statement of Additional Information or sales
literature for the Contracts not supplied by the Underwriter or persons
under its control) of the Underwriter or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, Prospectus, Statement
of Additional Information or sales literature covering the Contracts, or
any amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Underwriter; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Underwriter in this Agreement or arise out of or
result from any other breach of this Agreement by the Underwriter or result
from a breach of Article VII; as limited by and in accordance with the
provisions of Sections 9.2(b) and 9.2(c) hereof.
9.2 (b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party for 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 each Company or the Account, whichever is
applicable.
9.2 (c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Underwriter of any such claim
shall not relieve the Underwriter from any liability which it may have to the
Indemnified Party against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is brought against
the Indemnified Parties, the Underwriter will be entitled to
16
participate, at its own expense, in the defense thereof. The Underwriter also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the Indemnified Party named in the action. After notice from the Underwriter to
such Indemnified Party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such 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.
9.2 (d) The Company shall promptly notify the Underwriter of the Trust
of the commencement of any litigation or proceedings against it or any of its
officers or directors, in connection with the issuance or sale of the Contracts
or the operation of each Account.
9.2 (e) The provisions of this Section 9.2 shall survive any termination
of this Agreement.
9.3 Indemnification by the Trust
----------------------------
9.3 (a) The Trust shall indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 9.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Trust which consent may not be
unreasonably withheld) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
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 Trust and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement,
Prospectus and Statement of Additional Information 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 Underwriter or
Trust by or on behalf of the
17
Company for use in the Registration Statement, Prospectus, or Statement of
Additional Information for the Trust (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts or Trust
shares; or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement or arise out of or
result from any other material breach of this Agreement by the Trust
(including Section 7.1 hereof), as limited by and in accordance with the
provisions of Sections 9.3(b) and 9.3(c) hereof.
9.3 (b) The Trust shall not be liable under the indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party for willful misfeasance, bad
faith, or gross negligence or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Company, the
Trust, the Underwriter or each Account, whichever is applicable.
9.3 (c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against any Indemnified Party unless
such Indemnified Party shall have notified the Trust 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) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Trust of any such claim shall
not relieve the Trust 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 Trust will be entitled to participate, at its own
expense, in the defense thereof. The Trust also shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified Party
named in the action. After notice from the Trust to such Indemnified Party of
the Trust's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Trust 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.
9.3 (d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its officers
or
18
directors, in connection with this Agreement, the issuance or sale of the
Contracts or the sale or acquisition of shares of the Trust.
9.3 (e) The provisions of this Section 9.3 shall survive any
termination of this Agreement.
ARTICLE X. Applicable Law
--------------
10.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
10.2 This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE XI. Termination
-----------
11.1. This Agreement shall terminate:
(a) at the option of the Trust upon 180 days prior written notice, upon
a decision by the Trustees of the Trust that termination of the Agreement is in
the best interests of shareholders of the Trust; or
(b) with respect to any Account, upon requisite vote of the Contract
owners having an interest in such Account (or any subaccount) to substitute the
shares of another investment company for the corresponding Fund shares of the
Trust in accordance with the terms of the Contracts for which those Fund shares
had been selected to serve as the underlying investment media. The Company will
give 90 days' prior written notice to the Trust of the date of any proposed vote
to replace the Trust's shares; or
(c) with respect to any Authorized Fund, upon 60 days advance written
notice from the Underwriter to the Company, upon a decision by the Underwriter
to cease offering shares of the Fund for sale.
11.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for any
reason or for no reason.
19
11.3 No termination of this Agreement shall be effective unless and until
the party terminating this Agreement gives prior written notice to all other
parties to this Agreement of its intent to terminate, which notice shall set
forth the basis for such termination. Such prior written notice shall be given
in advance of the effective date of termination as required by this Article XI.
11.4 Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement, the Trust and the Underwriter shall, at the
option of the Company, continue to make available additional shares of the Trust
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, subject
to Section 1.2 of this Agreement, the owners of the Existing Contracts shall be
permitted to reallocate investments in the Trust, redeem investments in the
Trust and/or invest in the Trust upon the making of additional purchase payments
under the Existing Contracts. The parties agree that this Section 11.4 shall not
apply to any termination under Article VIII and the effect of such Article VIII
termination shall be governed by Article VIII of this Agreement.
11.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets held
in either Account) except (i) as necessary to implement Contract owner initiated
transactions, or (ii) as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application (hereinafter referred
to as a "Legally required Redemption"). Upon request, the Company will promptly
furnish to the Trust and the Underwriter an opinion of counsel for the Company,
reasonably satisfactory to the Trust, to the effect that any redemption pursuant
to clause (ii) above is a Legally Required Redemption. Furthermore, except in
cases where permitted under the terms of the Contracts, subject to Section 1.2
of this Agreement, the Company shall not prevent Contract owners from allocating
payments to an Authorized Fund that was otherwise available under the Contracts
without first giving the Trust or the Underwriter 90 days notice of its
intention to do.
ARTICLE XII. Notices
-------
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Trust:
00
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
If to the Underwriter:
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
If to the Company:
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
ARTICLE XIII. Miscellaneous
-------------
13.1 A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of or arising out of this instrument, including without limitation Article VII,
are not binding upon any of the Trustees or shareholders individually but
binding only upon the assets and property of the Trust.
13.2 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.
13.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
21
13.4 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
13.5 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall pertmit 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.
13.6 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.
13.7 Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Underwriter are several and, without limiting
in any way the generality of the foregoing, neither such party shall have any
liability for any action or failure to act by the other party, or any person
acting on such other party's behalf.
22
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
and its seal to be hereunder affixed hereto as of the date specified below.
THE UNITED STATES LIFE INSURANCE
COMPANY IN THE CITY OF NEW YORK
By its authorized officer,
_________________________________
Name:
Title:
XXXXXX VARIABLE TRUST
By its authorized officer,
_________________________________
Name:
Title:
XXXXXX MUTUAL FUNDS CORP.
By its authorized officer,
_________________________________
Name:
Title:
23
Schedule A
----------
Separate Accounts
-----------------
The United States Life Insurance Company
in the City of New York Separate Account USL VL-R
24
Schedule B
----------
Authorized Funds
Xxxxxx VT Diversified Income Fund
Xxxxxx VT Growth and Income Fund
Xxxxxx VT International Growth and Income Fund
25
