Exhibit 3
AGREEMENT TO PURCHASE SHARES
THIS AGREEMENT, made and entered into this the 30th day of June, 1993, and
amended as of the 15th day of March, 1995, by and between ALLSTATE LIFE
INSURANCE COMPANY OF NEW YORK (hereinafter the "Company"), on its own behalf and
on behalf of the Allstate Life Insurance Company of New York Variable Annuity
Account (hereinafter the "Account"), a separate account of the Company, and XXXX
XXXXXX VARIABLE INVESTMENT SERIES, an unincorporated business trust organized
under the laws of the Commonwealth of Massachusetts (hereinafter the "Trust")
and XXXX XXXXXX DISTRIBUTORS INC. (hereinafter the "Distributor").
WHEREAS, by resolution of its Board of Directors on June 26, 1987, the
Company established the Account to set aside and invest assets attributable to
certain variable annuity contracts (hereinafter the "Contracts") issued by the
Company;
WHEREAS, the Company has registered the Account as a unit investment trust
under the Investment Company Act of 1940, as amended, (hereinafter the "1940
Act");
WHEREAS, the Securities and Exchange Commission (hereinafter "S.E.C.")
declared the Account's registration statement of the Contract filed under the
Securities Act of 1933, as amended, (hereinafter the "1933 Act") effective on
February 15, 1989;
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the 1940 Act and has filed
its registration statement with the S.E.C. which declared such registration
statement effective on October 5, 1983;
WHEREAS, the Distributor is registered as a broker-dealer with the S.E.C.
under the Securities Exchange Act of 1934, as amended, (hereinafter the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD");
WHEREAS, the Trust is available to act as the investment vehicle for
separate accounts established for variable annuity contracts and variable life
insurance contracts offered or to be offered by insurance companies which have
entered into agreements to purchase shares or participation agreements with the
Trust and the Distributor (hereinafter "Participating Insurance Companies");
WHEREAS, the Trust has obtained an order from the S.E.C., dated November
23, 1994 (File No. 812-9128), granting Participating Insurance Companies and
variable annuity and variable life insurance separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies (hereinafter the "Shared Funding Exemptive Order");
WHEREAS, the Trust is presently comprised of eleven Portfolios designated
as the Money Market Portfolio, the Quality Income Plus Portfolio, the High Yield
Portfolio, the Utilities Portfolio, the Dividend Growth Portfolio, the Capital
Growth Portfolio, the Global Dividend Growth Portfolio, the European Growth
Portfolio, the Pacific Growth Portfolio, the Equity Portfolio and the Managed
Assets Portfolio, and other Portfolios may be subsequently established by the
Trust (hereinafter the "Portfolios");
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends by purchasing shares of the Portfolios on
behalf of the Account to fund the Contracts and the Distributor is authorized to
sell such shares to the Company for the benefit of the Account at net asset
value without the imposition of any charges;
Now, THEREFORE, in consideration of their mutual promises, the Company, the
Trust and the Distributor agree as follows:
1. Purchase of Shares. In accordance with the Trust's and the Distributor's
Distribution Agreement dated June 30, 1993, as amended as of March 15, 1995,
(the "Distribution Agreement"), the Company agrees to purchase and redeem the
Trust shares of each Portfolio offered by the then current prospectus of the
Trust (hereinafter the "Prospectus") included in the Trust's registration
statement (hereinafter "the Registration Statement") most recently filed from
time to time with the S.E.C. and effective under the 1933 and 1940 Acts or as
the Prospectus may be amended or supplemented and filed with the S.E.C. pursuant
to the 1933 Act.
2. Sale of Shares. The Distributor agrees to sell shares of the Trust to
the Company for allocation to the Account as orders from the Company are
received at the next determined net asset value per share after receipt by the
Trust or its designee of the order for shares of the Trust, of the applicable
Portfolio determined as set forth in the Prospectus.
3. Redemption of Shares. At the Company's request, the Trust agrees to
redeem for cash without charge, any full or fractional shares of the Trust held
by the Company, executing such requests on a daily basis at the net asset value
of applicable Portfolio computed after receipt of the redemption request
provided, however, that the Trust reserves the right to suspend the right of
redemption or to postpone the date of payment upon redemption of the shares of
any Portfolio under the circumstances and for the period of time specified in
the Prospectus.
4. Availability of Shares. Subject to Sections 3(c) and 4(b) of the
Distribution Agreement, the terms of which are incorporated herein by reference,
the Trust agrees to make its shares available indefinitely for purchase by the
Company.
5. Payment of Shares. The Company shall pay for Trust shares within five
days after it places the order for Trust shares. The Trust reserves the right to
delay issuing or transferring Trust shares and/or to delay accruing or declaring
dividends in accordance with any policy set forth in its then current prospectus
with respect to such shares until any payment check has cleared. If the Trust or
the Distributor does not receive payment within the five days period, the Trust
may, without notice, cancel the order and require the Company to reimburse the
Trust promptly for any loss the Trust suffered by reason of the Company failing
to timely pay for its shares.
6. Fee for Shares. The Company shall purchase and redeem shares in the
Trust at net asset value and the Company shall not pay any commission, dealers
fee or other fee to the Distributor or any other dealer broker.
7. Trust's Registration Statement and Prospectus. 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 and, at its own expense, shall provide the Company with as many copies of
its current prospectus as the Company may reasonably request.
8. Investment of Assets. The Trust agrees to invest its assets in
accordance with the representations made to the Internal Revenue Service in
connection with the Company's request for a private letter ruling regarding the
ownership of the Trust's shares attached as Exhibit "A:' and in accordance with
Section 817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5, as
amended from time to time, and any Treasury interpretations thereof, relating to
the diversification requirements for variable annuity contracts and any
amendments or other modifications to such Section or Regulations.
9. Administration of Contracts. The Company shall be responsible for
administering the Contracts and keeping records on the Contracts.
10. Stockholder Information. The Trust shall furnish the Company copies of
its proxy material, reports to stockholders and other communication to
stockholders in such quantity as the Company shall reasonably require for
distributing to owners or participants under the Contracts. The Company will
distribute these materials to such owners or participants as required.
11. Voting. (a) To the extent required by law, the Company shall vote Trust
shares in accordance with instructions received from contract owners. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote the Trust's shares in its own right, it
may elect to do so. The Company shall vote shares of a Portfolio for which no
instructions have been received in the same proportion as the vote of
shareholders of such Portfolio from which instructions have been received.
Neither the Company nor persons under its control shall recommend action in
connection with solicitation of proxies for Trust shares allocated to the
Account. The Company shall also vote shares it owns that are not attributable to
contract owners in the same proportion. Participating Insurance Companies shall
be responsible for assuring that each of their separate accounts participating
in the Trust calculates voting privileges in a manner consistent with other
Participating Insurance Companies.
(b) The Trust will comply with all provisions of the 1940 Act 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
Section 16(a) and, if and when applicable, 16(b). Further, the Trust will act in
accordance with the S.E.C.'s interpretation of the requirements of Section 16(a)
with respect to periodic elections of trustees and with whatever rules the
S.E.C. may promulgate with respect thereto.
12. Company Approval. The Trust and the Distributor agree that the approval
of the Company will be required prior to the Trust and the Distributor entering
into any new agreements to sell shares of the Trust to other Participating
Companies.
13. Trust's Warranty. The Trust represents and warrants that Trust shares
sold pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with all applicable federal and state
laws.
14. Company's Warranty. The Company represents and warrants that it is an
insurance company duly organized and in good standing under New York law and
that it has legally and validly established the Account under Section 424.40 of
the New York Insurance Laws and has registered the Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a segregated
investment account for certain Contracts. The Company further represents and
warrants that the Contracts will be registered under the 1933 Act and the
Contracts will be issued and sold in compliance with all applicable Federal and
State laws.
15. Distributor's Warranty. The Distributor represents and warrants that it
is a member in good standing of the NASD and is registered as a broker-dealer
with the S.E.C. under the 1934 Act. The Distributor further represents that it
will sell and distribute the shares in accordance with the 1933, 1934 and 1940
Acts and will not make any representations concerning the Account except those
contained in the then current registration statement or related prospectus and
any sales literature approved by the Trust. For purposes of this paragraph,
Section 6 of the Distribution Agreement is incorporated in this Agreement.
16. Termination of Agreement. The parties may terminate this Agreement as
follows:
(1)(a) at the option of the Company or the Trust or the Distributor upon 90
days' written notice to the other party;
(b) at the option of the Company if, for any reason, except for those specified
in Sections 3(c) and 4(b) of the Distribution Agreement, Trust shares are not
available to meet the requirements of the Contracts as determined by the
Company; or
(c) at the option of the Trust upon the NASD, the S.E.C., the New York Insurance
Commissioner or any other regulatory body instituting legal proceedings against
the Company regarding its duties under this Agreement.
(2) This Agreement shall automatically terminate in the event of its assignment.
17. Company's Indemnification Agreement. (a) The Company agrees to
indemnity and hold harmless the Trust or Distributor and each of their Directors
or Trustees who is not an "interested person" of the Trust, as defined in the
1940 Act (collectively the "Indemnified Parties" for purposes of this paragraph
17) against any losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or expenses or actions to
which such Indemnified Parties may become subject, under the Federal securities
laws or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements arise as a result of any
failure by the Company to provide the services and furnish the materials under
terms of this Agreement or which arise from erroneous instructions by the
Company to the Distributor concerning the particular Portfolio or Portfolios
whose shares are to be allocated to the Account. This indemnity agreement is in
addition to any liability which the Company may otherwise have. Provided,
however, that in no case is the indemnity of the Company in favor of the
Distributor deemed to protect the Distributor against any liability to the Trust
or its shareholders to which the Distributor would otherwise be subject by
reason of its bad faith, wilful misfeasance or negligence in the performance of
its duties or by reason of reckless disregard of its obligations and duties
under this Agreement.
(b) The Company will reimburse the Indemnified Parties for any legal or
other expenses reasonably incurred by the Indemnified Parties in connection with
investigating or defending of any such loss, claim, damage, liability or action.
(c) Promptly after receipt by any of the Indemnified Parties of notice of
the commencement of any action, or the making of any claim for which indemnity
may apply under this paragraph, the Indemnified Parties will, if a claim thereof
is to be made against the Trust, notify the Company of the commencement thereof;
but the omission so to notify the Company will not relieve the Company from any
liability which it may have to the Indemnified Parties otherwise than under this
Agreement. In case any such action is brought against the Indemnified Parties,
and the Company is notified of the commencement thereof, the Company will be
entitled to participate therein and to assume the defense thereof, with counsel
satisfactory to the party named in the action, and after notice from the Company
to such party of the Company's election to assume the defense thereof, the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
18. Trust and Distributor Indemnification Agreements. (a) The Trust and
Distributor each agree to indemnity and hold harmless the Company and each of
its Directors who is not an "interested person" of the Company, as defined in
the 1940 Act (collectively the "Company's Indemnified Parties" for purposes of
this paragraph 18) against any losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Trust) or expenses or
actions to which such Indemnified Parties may become subject, under the Federal
securities laws or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise as a result of any failure by the Trust or Distributor to
provide the services and furnish the materials under the terms of this
Agreement; or
(ii) arise out of the Trust's or Distributor's failure, whether
unintentional or in good faith or otherwise, to comply with the
representations made to the Internal Revenue Service attached as Exhibit
"A:' in connection with the request for a private letter ruling regarding
the ownership of Trust shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in registration statement
or 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
the Company's Indemnified Parties if such statement or omission was made in
reliance upon and in conformity with information furnished to the Trust or
Distributor by or on behalf of the 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 Contracts or Trust shares; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Trust or the Distributor in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Trust or the Distributor, including a failure, whether
unintentional or in good faith or otherwise, to comply with the
requirements specified in paragraph 8 of this Agreement.
(b) The Trust represents and warrants that the Trust will at all nines
invest its assets in such a manner as to ensure that the Contracts will be
treated as an annuity under the Internal Revenue Code and the regulations
thereunder. Without limiting the scope of the foregoing, the Trust will at all
times comply with Section 817(h) of the Code and Treas. Reg. Sec. 1.817-5, as
amended from time to time, and any Treasury interpretations thereof, relating to
the diversification requirements for variable annuity contracts and any
amendments or other modifications to such section or Regulations.
(c) Trust shares wig not be sold to any person or entity that would result
in the Contracts not being treated as annuity contracts in accordance with the
statutes and regulations referred to in the preceding paragraph.
(d) The Trust and the Distributor will reimburse the Company for any legal
or other expenses reasonably incurred by the Company's Indemnified Parties in
connection with investigating or defending of any such loss, claim, damage,
liability or action.
(e) Promptly after receipt by any of the Company's Indemnified Parties of
notice of the commencement of any action, or the making of any claim for which
indemnity may apply under this paragraph, the Company's Indemnified Parties
will, if a claim in respect thereof is to be made against the Company, notify
the Trust or the Distributor of commencement thereof; but the omission so to
notify the Trust or the Distributor will not relieve the Trust or the
Distributor from any liability which it may have to the Company's Indemnified
Parties otherwise than under this Agreement. In case any such action is brought
against the Company's Indemnified Parties, and the Trust or the Distributor is
notified of the commencement thereof, the Trust or the Distributor will be
entitled to participate therein and to assume the defense thereof, with counsel
satisfactory to the party named in the action, and after notice from the Trust
or the Distributor to such party of the Trust's or the Distributor's election to
assume the defense thereof, the Trust or the Distributor will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
19. Indemnification of Trust by or of Distributor. For purposes of this
Agreement, the Trust and the Distributor shall indemnity each other according to
the terms of the Distribution Agreement the terms of which are incorporated by
reference.
20. Potential Conflicts. (a) The Trustees of the Trust will monitor the
operations of 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. An irreconcilable material conflict may arise for a
variety of reasons, including: (i) an action by any state insurance regulatory
authority; (ii) a change in applicable Federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance, tax, or
securities regulatory authorities; (iii) an administrative or judicial decision
in any relevant proceeding; (iv) the manner in which the investments of any
Portfolio are being managed; (v) a difference in voting instructions given by
variable annuity contract and variable life insurance contract owners; or (vi) a
decision by an insurer to disregard the voting instructions of contract owners.
The Trustees shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which it
is aware to the Trustees of the Trust. 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.
(c) If it is determined by a majority of the Trustees, or a majority of the
Trustees who are not parties to this Agreement or interested persons of any such
party and who have no direct or indirect financial interest in this Agreement or
any agreement related thereto (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Company shall, at its expense and to the
extent reasonably practicable (as determined by a majority of the Independent
Trustees), take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, up to and including: (i) withdrawing the
assets allocable to the Account from the Trust or any Portfolio and reinvesting
such assets in a different investment medium, including (but not limited to)
another Portfolio 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 variable annuity contract owners
invested in the Account from those of any other 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 contract owners the option of making such a
change; and (ii) establishing a new registered management investment company or
managed separate account.
(d) 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 Account's investment
in the Trust and terminate this Agreement; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
Independent 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, and until the end of that six month period the Distributor and
Trust shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.
(e) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with the
majority of other state regulators, then the Company will withdraw the Account's
investment in the Trust and terminate this Agreement within six months after the
Trustees inform the Company in writing that they have determined that such
decision has created an irreconcilable material conflict; 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 Independent Trustees. Until the end of the foregoing six month period, the
Distributor and Trust shall continue to accept and implement orders by the
Company for the purchase (and redemption) of shares of the Trust.
(f) For purposes of sections (c) through (f) of this paragraph, a majority
of the Independent Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Trust be required to establish a new funding medium for the Contracts. The
Company shall not be required by section (c) to establish a new funding medium
for the Contracts if an offer to do so has been declined by vote of a majority
of contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any proposed action does
not adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Trust and terminate this Agreement
within six (6) months 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 Independent Trustees.
(g) 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) paragraphs 11(a), 11(b), 20(a), 20(b), 20(c), 20(d), 20(e) and 20(f) of
this Agreement shall continue in effect only to the extent that terms and
conditions substantially identical to such paragraphs are contained in such
Rule(s) as so amended or adopted.
21. Duration of this Agreement. This Agreement, as amended, shall remain in
force until April 30, 1995 and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the Trustees of
the Trust, or by the vote of a majority of the outstanding voting securities of
the Trust, cast in person or by proxy. Ibis Agreement also may be terminated in
accordance with paragraph 16 hereof.
The terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person", when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
22. Amendments of this Agreement. This Agreement may be amended by the
parties only if such amendment is specifically approved by (i) the Trustees of
the Trust, or by the vote of a majority of outstanding voting securities of the
Trust, and (ii) a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party and who have no direct or
indirect financial interest in this Agreement or in any agreement related
thereto, cast in person at a meeting called for the purpose of voting on such
approval.
23. Governing Law. This Agreement shall be construed in accordance with
the law of the State of Illinois and the applicable 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 S.E.C. may
grant and the terms hereof shall be interpreted and construed in accordance
therewith. To the extent the applicable law of the State of New York, or any of
the provisions herein, conflict with the applicable provisions of the 1940 Act,
the latter shall control. 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.
24. Personal Liability. The Declaration of Trust establishing Xxxx Xxxxxx
Variable Investment Series, dated February 24, 1983, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name Xxxx
Xxxxxx Variable Investment Series refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no Trustee,
shareholder, officer, employee or agent of Xxxx Xxxxxx Variable Investment
Series shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise,
in connection with the affairs of said Xxxx Xxxxxx Variable Investment Series,
but the Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement, as
amended, to be duly executed as of March 15, 1995.
Company:
ATTEST: ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By:
Trust:
ATTEST: XXXX XXXXXX VARIABLE INVESTMENT SERIES
By:
Distributor:
ATTEST: XXXX XXXXXX DISTRIBUTORS INC.
