Exhibit 8(b)
Participation Agreement
as of October 8, 2002
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin Xxxxxxxxx Distributors, Inc.
Allstate Life Insurance Company of New York
Allstate Distributors, LLC
CONTENTS
Section Subject Matter
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
Schedules to this Agreement
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust;
Investment Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. Rule 12b-1 Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. Parties and Purpose
This agreement (the "Agreement") is between certain portfolios,
specified below and in Schedule C, of Franklin Xxxxxxxxx Variable Insurance
Products Trust, an open-end management investment company organized as a
business trust under Massachusetts law (the "Trust"), Franklin Xxxxxxxxx
Distributors, Inc., a California corporation which is the principal underwriter
for the Trust (the "Underwriter," and together with the Trust, "we" or "us") and
the insurance company identified on Schedule a ("you") and your distributor, on
your own behalf and on behalf of each segregated asset account maintained by you
that is listed on Schedule B, as that schedule may be amended from time to time
("Account" or "Accounts").
The purpose of this Agreement is to entitle you, on behalf of the
Accounts, to purchase the shares, and classes of shares, of portfolios of the
Trust ("Portfolios") that are identified on Schedule C, solely for the purpose
of funding benefits of your variable life insurance policies or variable annuity
contracts ("Contracts") that are identified on Schedule D. This Agreement does
not authorize any other purchases or redemptions of shares of the Trust.
2. Representations and Warranties
2.1 Representations and Warranties by You
You represent and warrant that:
2.1.1 You are an insurance company duly organized and in good
standing under the laws of your state of incorporation.
2.1.2 All of your directors, officers, employees, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall 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 $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. You agree to make all reasonable efforts
to see that this bond or another bond containing such provisions is always in
effect, and you agree to notify us in the event that such coverage no longer
applies.
2.1.3 Each Account is a duly organized, validly existing
segregated asset account under applicable insurance law and interests in each
Account are offered exclusively through the purchase of or transfer into a
"variable contract" within the meaning of such terms under Section 817 of the
Internal Revenue Code of 1986, as amended ("Code") and the regulations
thereunder. You will use your best efforts to continue to meet such definitional
requirements, and will notify us immediately upon having a reasonable basis for
believing that such requirements have ceased to be met or that they might not be
met in the future.
2.1.4 Each Account either: (i) has been registered or, prior
to any issuance or sale of the Contracts, will be registered as a unit
investment trust under the Investment Company Act of 1940 ("1940 Act"); or (ii)
has not been so registered in proper reliance upon an exemption from
registration under Section 3(c) of the 1940 Act; if the Account is exempt from
registration as an investment company under Section 3(c) of the 1940 Act, you
will use your best efforts to maintain such exemption and will notify us
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.
2.1.5 The Contracts or interests in the Accounts: (i) are or,
prior to any issuance or sale will be, registered as securities under the
Securities Act of 1933, as amended (the "1933 Act"); or (ii) are not registered
because they are properly exempt from registration under Section 3(a)(2) of the
1933 Act or will be offered exclusively in transactions that are properly exempt
from registration under Section 4(2) or Regulation D of the 1933 Act, in which
case you will make every effort to maintain such exemption and will notify us
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.
2.1.6 The Contracts: (i) will be sold by broker-dealers, or
their registered representatives, who are registered with the Securities and
Exchange Commission ("SEC") under the Securities and Exchange Act of 1934, as
amended (the "1934 Act") and who are members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
state insurance suitability requirements and NASD suitability guidelines.
2.1.7 The Contracts currently are and will be treated as
annuity contracts or life insurance contracts under applicable provisions of the
Code and you will use your best efforts to maintain such treatment; you will
notify us immediately upon having a reasonable basis for believing that any of
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.1.8 The fees and charges deducted under each Contract, in
the aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.
2.1.9 You will use shares of the Trust only for the purpose of
funding benefits of the Contracts through the Accounts.
2.1.10 Contracts will not be sold outside of the
United States.
2.1.11 With respect to any Accounts which are exempt from
registration under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
2.1.11.1 the principal underwriter for each
such Account and any subaccounts
thereof is a registered
broker-dealer with the SEC under the
1934 Act;
2.1.11.2 the shares of the Portfolios of the
Trust are and will continue to be
the only investment securities held
by the corresponding subaccounts;
and
2.1.11.3 with regard to each Portfolio, you,
on behalf of the corresponding
subaccount, will:
(a) vote such shares held by it in
the same proportion as the
vote of all other holders of
such shares; and
(b) refrain from substituting
shares of another security
for such shares unless the
SEC has approved such
substitution in the manner
provided in Section 26 of
the 0000 Xxx.
2.1.12 You undertake and agree to comply, and to take full
responsibility in complying with any and all laws, regulations, and other
requirements relating to money laundering in the United States, including,
without limitation, the International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001 (Title III of the USA Patriot Act),
hereinafter, collectively with the rules, regulations and orders promulgated
thereunder, the "Act," and any requirements and/or requests in connection
therewith, made by regulatory authorities, the Trust or the Underwriter or their
duly appointed agents, either generally or in respect of a specific transaction,
and/or in the context of a "primary money laundering concern" as defined in the
Act.
You agree as a condition precedent to any transaction taking or continuing to be
in effect, to comply with any and all anti-money laundering laws, regulations,
orders or requirements, and without prejudice to the generality of the above, to
provide regulatory authorities, the Trust, the Underwriter or their duly
appointed agents, with all necessary reports and information for them to fulfill
their obligations, if any, under the Act for the purposes of the Trust, the
Underwriter, or other third parties complying with any and all anti-money
laundering requirements, including, without limitation, the enhanced due
diligence obligations imposed by the Act, the filing of Currency Transaction
Reports and/or of Suspicious Activity Reports obligations required by the Act,
and/or the sharing of information requirements imposed by the Act.
In the event satisfactory reports and information are not received within a
reasonable time period from the date of the request, the Trust or the
Underwriter reserve the right to reject any transaction and/or cease to deal
with you and/or the Accounts.
Further, you represent that you have not received notice of, and to your
knowledge, there is no basis for, any claim, action, suit, investigation or
proceeding that might result in a finding that you are not or have not been in
compliance with the Act, and the rules and regulations promulgated thereunder.
You agree to notify the Trust and the Underwriter within a reasonable time
period if the representation in the previous sentence is no longer true or if
you have reasonable basis for believing that such representation may no longer
be true.
2.2 Representations and Warranties by the Trust
The Trust represents and warrants that:
2.2.1 It is duly organized and in good standing under the laws of the State
of Massachusetts.
2.2.2 All of its directors, officers, employees and others dealing with the
money and/or securities of a Portfolio are and shall 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 required by Rule 17g-1 or other
regulations under the 1940 Act. Such bond shall include coverage for larceny and
embezzlement and be issued by a reputable bonding company.
2.2.3 It is registered as an open-end management investment company under
the 0000 Xxx.
2.2.4 Each class of shares of the Portfolios of the Trust is registered
under the 0000 Xxx.
2.2.5 It will amend its registration statement under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of its shares.
2.2.6 It will comply, in all material respects, with the 1933 and 1940 Acts
and the rules and
regulations thereunder.
2.2.7 It is currently qualified as a "regulated investment
company" under Subchapter M of the Code, it will make every effort to maintain
such qualification, and will notify you 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.
2.2.8 The Trust will use its best efforts to comply with the
diversification requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817-5. Upon
having a reasonable basis for believing any Portfolio has ceased to comply and
will not be able to comply within the grace period afforded by Regulation
1.817-5, the Trust will notify you immediately and will take all reasonable
steps to adequately diversify the Portfolio to achieve compliance.
2.2.9 It currently intends for one or more classes of shares (each, a
"Class") to make payments to finance its distribution expenses, including
service fees, pursuant to a plan ("Plan") adopted under rule 12b-1 under the
1940 Act ("Rule 12b-1"), although it may determine to discontinue such practice
in the future. To the extent that any Class of the Trust finances its
distribution expenses pursuant to a Plan adopted under rule 12b-1, the Trust
undertakes to comply with any then current SEC interpretations concerning rule
12b-1 or any successor provisions.
2.3 Representations and Warranties by the Underwriter
The Underwriter represents and warrants that:
2.3.1 It is registered as a broker dealer with the SEC under
the 1934 Act, and is a member in good standing of the NASD. 2.3.2 Each
investment adviser listed on Schedule C (each, an "Adviser") is duly registered
as an investment adviser under the Investment Advisers Act of 1940, as amended,
and any applicable state securities law.
2.4 Warranty and Agreement by Both You and Us
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order grants exemptions from certain provisions of the 1940 Act
and the regulations 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
and qualified pension and retirement plans outside the separate account context.
You and we both warrant and agree that both you and we will comply with the
"Applicants' Conditions" prescribed in the Shared Funding Order as though such
conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges. In order for the Trust's Board of Trustees to perform its duty to
monitor for conflicts of interest, you agree to inform us of the occurrence of
any of the events specified in condition 2 of the Shared Funding Order to the
extent that such event may or does result in a material conflict of interest as
defined in that order.
3. Purchase and Redemption of Trust Portfolio Shares
3.1 We will make shares of the Portfolios available to the Accounts for
the benefit of the Contracts. The shares will be available for purchase at the
net asset value per share next computed after we (or our agent) receive a
purchase order, as established in accordance with the provisions of the then
current prospectus of the Trust. Notwithstanding the foregoing, the Trust's
Board of Trustees ("Trustees") may refuse to sell shares of any Portfolio to any
person, or may suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or if, in the sole discretion of the Trustees, they deem such action to be in
the best interests of the shareholders of such Portfolio. Without limiting the
foregoing, the Trustees have determined that there is a significant risk that
the Trust and its shareholders may be adversely affected by investors whose
purchase and redemption activity follows a market timing pattern, and have
authorized the Trust, the Underwriter and the Trust's transfer agent to adopt
procedures and take other action (including, without limitation, rejecting
specific purchase orders) as they deem necessary to reduce, discourage or
eliminate market timing activity. You agree to cooperate with us to assist us in
implementing the Trust's restrictions on purchase and redemption activity that
follows a market timing pattern.
3.2 We agree that shares of the Trust will be sold only to life
insurance companies which have entered into fund participation agreements with
the Trust ("Participating Insurance Companies") and their separate accounts or
to qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order. No shares of any Portfolio will be sold to the general
public.
3.3 You agree that all net amounts available under the Contracts shall
be invested in: (i) the Company's general account; (ii) investment companies
currently available as funding vehicles for the Contracts and appearing on
Schedule E of this Agreement; or (iii) other investment companies, provided that
you shall have given the Trust and the Underwriter thirty (30) days' advance
written notice of your intention to add such other investment companies.
3.4 You shall be the designee for us for receipt of purchase orders and
requests for redemption resulting from investment in and payments under the
Contracts ("Instructions"). The Business Day on which such Instructions are
received in proper form by you and time stamped by the close of trading will be
the date as of which Portfolio shares shall be deemed purchased, exchanged, or
redeemed as a result of such Instructions. Instructions received in proper form
by you and time stamped after the close of trading on any given Business Day
shall be treated as if received on the next following Business Day. You warrant
that all orders, Instructions and confirmations received by you which will be
transmitted to us for processing on a Business Day will have been received and
time stamped prior to the Close of Trading on that Business Day. Instructions we
receive after 9 a.m. Eastern Time shall be processed on the next Business Day.
"Business Day" shall mean any day on 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 and its current prospectus.
3.5 We shall calculate the net asset value per share of each Portfolio
on each Business Day, and shall communicate these net asset values to you or
your designated agent on a daily basis as soon as reasonably practical after the
calculation is completed (normally by 6:30 p.m. Eastern time).
3.6 You shall submit payment for the purchase of shares of a Portfolio
on behalf of an Account in federal funds transmitted by wire to the Trust or to
its designated custodian, which must receive such wires no later than the close
of the Reserve Bank, which is 6:00 p.m. East Coast time, on the Business Day
following the Business Day as of which such purchases orders are made.
3.7 We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us (or our agent) of the request for redemption, as established
in accordance with the provisions of the then current prospectus of the Trust.
We shall make payment for such shares in the manner we establish from time to
time, but in no event shall payment be delayed for a greater period than is
permitted by the 0000 Xxx.
3.8 Issuance and transfer of the Portfolio shares will be by book entry
only. Stock certificates will not be issued to you or the Accounts. Portfolio
shares purchased from the Trust will be recorded in the appropriate title for
each Account or the appropriate subaccount of each Account.
3.9 We shall furnish, on or before the ex-dividend date, notice to you
of any income dividends or capital gain distributions payable on the shares of
any Portfolio. You hereby elect to receive all such income dividends and capital
gain distributions as are payable on shares of a Portfolio in additional shares
of that Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
3.10 Each party to this Agreement agrees that, in the event of a
material error resulting from incorrect information or confirmations, the
parties will seek to comply in all material respects with the provisions of
applicable federal securities laws.
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
4.1 We shall pay no fee or other compensation to you under this
Agreement except as provided on Schedule F, if attached.
4.2 We shall prepare and be responsible for filing 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.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence, registration and qualification of the Trust's shares of the
Portfolios.
4.3 We shall use reasonable efforts to provide you, on a timely basis,
with such information about the Trust, the Portfolios and each Adviser, in such
form as you may reasonably require, as you shall reasonably request in
connection with the preparation of disclosure documents and annual and
semi-annual reports pertaining to the Contracts.
4.4 At your option, we shall provide you, at our expense, with either:
(i) for each Contract owner who is invested through the Account in a subaccount
corresponding to a Portfolio ("designated subaccount"), one copy of each of the
following documents on each occasion that such document is required by law or
regulation to be delivered to such Contract owner who is invested in a
designated subaccount: the Trust's current prospectus, annual report,
semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing, pertaining specifically to
the Portfolios ("Designated Portfolio Documents"); or (ii) a camera ready copy
of such Designated Portfolio Documents in a form suitable for printing and from
which information relating to series of the Trust other than the Portfolios has
been deleted to the extent practicable. In connection with clause (ii) of this
paragraph, we will pay for proportional printing costs for such Designated
Portfolio Documents in order to provide one copy for each Contract owner who is
invested in a designated subaccount on each occasion that such document is
required by law or regulation to be delivered to such Contract owner, and
provided the appropriate documentation is provided and approved by us. We shall
provide you with a copy of the Trust's current statement of additional
information, including any amendments or supplements, in a form suitable for you
to duplicate. The expenses of furnishing, including mailing, to Contract owners
the documents referred to in this paragraph shall be borne by you. For each of
the documents provided to you in accordance with clause (i) of this paragraph
4.4, we shall provide you, upon your request and at your expense, additional
copies. In no event shall we be responsible for the costs of printing or
delivery of Designated Portfolio Documents to potential or new Contract owners
or the delivery of Designated Portfolio Documents to existing contract owners.
4.5 We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall reasonably require
for distribution to Contract owners who are invested in a designated subaccount.
You shall bear the costs of distributing proxy materials (or similar materials
such as voting solicitation instructions) to Contract owners.
4.6 You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
5. Voting
5.1 All Participating Insurance Companies shall have the obligations
and responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
5.2 If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance with
the instructions received from Contract owners; and (iii) vote Trust shares for
which no instructions have been received in the same proportion as Trust shares
of such Portfolio for which instructions have been received; so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. You reserve the
right to vote Trust shares held in any Account in your own right, to the extent
permitted by law.
5.3 So long as, and to the extent that, the SEC interprets the 1940 Act
to require pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and you shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by us.
With respect to each Account, you will vote shares of each Portfolio of the
Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. Sales Material, Information and Trademarks
6.1 For purposes of this Section 6, "Sales literature or other
Promotional material" includes, but is not limited to, portions of the following
that use any logo or other trademark related to the Trust, or Underwriter or its
affiliates, or refer to the Trust: 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, electronic communication 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 or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees in
any media, and disclosure documents, shareholder reports and proxy materials.
6.2 You shall furnish, or cause to be furnished to us or our designee,
at least one complete copy of each registration statement, prospectus, statement
of additional information, private placement memorandum, retirement plan
disclosure information or other disclosure documents or similar information, as
applicable (collectively "Disclosure Documents"), as well as any report,
solicitation for voting instructions, Sales literature or other Promotional
materials, and all amendments to any of the above that relate to the Contracts
or the Accounts prior to its first use. You shall furnish, or shall cause to be
furnished, to us or our designee each piece of Sales literature or other
Promotional material in which the Trust or an Adviser is named, at least ten
(10) Business Days prior to its proposed use. No such material shall be used
unless we or our designee approve such material and its proposed use.
6.3 You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser, other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Trust shares (as such registration statement and prospectus
may be amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in Sales literature
or other Promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee. You shall send us a complete copy of
each Disclosure Document and item of Sales literature or other Promotional
materials in its final form within twenty (20) days of its first use.
6.4 We shall not give any information or make any representations or
statements on behalf of you or concerning you, the Accounts or the Contracts
other than information or representations, including naming you as a Trust
shareholder, contained in and accurately derived from Disclosure Documents for
the Contracts (as such Disclosure Documents may be amended or supplemented from
time to time), or in materials approved by you for distribution, including Sales
literature or other Promotional materials, except as required by legal process
or regulatory authorities or with your written permission.
6.5 Except as provided in Section 6.2, you shall not use any
designation comprised in whole or part of the names or marks "Franklin" or
"Xxxxxxxxx" or any logo or other trademark relating to the Trust or the
Underwriter without prior written consent, and upon termination of this
Agreement for any reason, you shall cease all use of any such name or xxxx as
soon as reasonably practicable.
6.6 You shall furnish to us ten (10) Business Days prior to its first
submission to the SEC or its staff, any request or filing for no-action
assurance or exemptive relief naming, pertaining to, or affecting, the Trust,
the Underwriter or any of the Portfolios.
7. Indemnification
7.1 Indemnification By You
7.1.1 You agree to indemnify and hold harmless the
Underwriter, the Trust and each of its Trustees, officers, employees and agents
and each person, if any, who controls the Trust within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" and individually the
"Indemnified Party" for purposes of this Section 7) against any and all losses,
claims, damages, fines, liabilities (including amounts paid in settlement with
your written consent, which consent shall not be unreasonably withheld) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, fines, liability or expense and reasonable legal
counsel fees incurred in connection therewith) (collectively, "Losses"), to
which the Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses are related to
the sale or acquisition of shares of the Trust or the Contracts and
7.1.1.1 arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in a Disclosure Document for the Contracts or in the Contracts
themselves or in sales literature generated or approved by you on
behalf of the Contracts or Accounts (or any amendment or supplement to
any of the foregoing) (collectively, "Company Documents" for the
purposes of this Section 7), 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 indemnity 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 was accurately
derived from written information furnished to you by or on behalf of
the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
7.1.1.2 arise out of or result from statements or
representations (other than statements or representations contained in
and accurately derived from Trust Documents as defined below in Section
7.2) or wrongful conduct of you or persons under your control, with
respect to the sale or acquisition of the Contracts or Trust shares; or
7.1.1.3 arise out of or result from any untrue
statement or alleged untrue statement of a material fact contained in
Trust Documents as defined below in Section 7.2 or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if
such statement or omission was made in reliance upon and accurately
derived from written information furnished to the Trust by or on behalf
of you; or
7.1.1.4 arise out of or result from any failure by
you to provide the services or furnish the materials required under the
terms of this Agreement;
7.1.1.5 arise out of or result from any material
breach of any representation and/or warranty made by you in this
Agreement or arise out of or result from any other material breach of
this Agreement by you; or
7.1.1.6 arise out of or result from a Contract
failing to be considered a life insurance policy or an annuity
Contract, whichever is appropriate, under applicable provisions of the
Code thereby depriving the Trust of its compliance with Section 817(h)
of the Code.
7.1.2 You shall not be liable under this indemnification
provision with respect to any Losses 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 Trust or Underwriter,
whichever is applicable. You shall also not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified you 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 you of any such claim shall not relieve
you 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,
you shall be entitled to participate, at your own expense, in the defense of
such action. Unless the Indemnified Party releases you from any further
obligations under this Section 7.1, you also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from you to such party of your election to assume the defense
thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and you 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.
7.1.3 The Indemnified Parties will promptly notify you of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.
7.2 Indemnification By The Underwriter
7.2.1 The Underwriter agrees to indemnify and hold harmless
you, and each of your directors and officers and each person, if any, who
controls you within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually an "Indemnified Party" for purposes of
this Section 7.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses") to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the shares of
the Trust or the Contracts and:
7.2.1.1 arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in the Registration Statement, prospectus or sales literature of the
Trust (or any amendment or supplement to any of the foregoing)
(collectively, the "Trust Documents") 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 of
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to us by or on behalf of you 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
7.2.1.2 arise out of or as a result of statements or
representations (other than statements or representations contained in
the Disclosure Documents or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Trust, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or
Trust shares; or
7.2.1.3 arise out of any untrue statement or alleged
untrue statement of a material fact contained in a Disclosure Document
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 you by or on behalf of the Trust; or
7.2.1.4 arise as a result of any failure by us to
provide the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the qualification representation specified
above in Section 2.2.7 and the diversification requirements specified
above in Section 2.2.8); or
7.2.1.5 arise out of or result from any material
breach of any representation and/or warranty made by the Underwriter in
this Agreement or arise out of or result from any other material breach
of this Agreement by the Underwriter; as limited by and in accordance
with the provisions of Sections 7.2.2 and 7.2.3 hereof.
7.2.2 The Underwriter shall not be liable under this
indemnification provision with respect to any Losses 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 you or the
Accounts, whichever is applicable.
7.2.3 The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter will be entitled to
participate, at its own expense, in the defense thereof. Unless the Indemnified
Party releases the Underwriter from any further obligations under this Section
7.2, the Underwriter also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume the defense
thereof, the Indemnified Party shall bear the expenses of any additional counsel
retained by it, and the Underwriter will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.2.4 You agree promptly to notify the Underwriter of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with the issuance or sale of the Contracts or the
operation of each Account.
7.3 Indemnification By The Trust
7.3.1 The Trust agrees to indemnify and hold harmless you, and
each of your directors and officers and each person, if any, who controls you
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Trust, which consent shall not be unreasonably withheld) or
litigation (including 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 result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations of
the Trust, and 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; as
limited by and in accordance with the provisions of Sections 7.3.2 and 7.3.3
hereof. It is understood and expressly stipulated that neither the holders of
shares of the Trust nor any Trustee, officer, agent or employee of the Trust
shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
7.3.2 The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against any Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
you, the Trust, the Underwriter or each Account, whichever is applicable.
7.3.3 The Trust 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 Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims 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 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. Unless the Indemnified Party releases
the Trust from any further obligations under this Section 7.3, the Trust also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the Trust to such 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 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.
7.3.4 You agree promptly to notify the Trust of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of the Account, or the sale or
acquisition of shares of the Trust.
8. 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 in Schedule G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. Termination
9.1 This Agreement may be terminated by any party in its entirety or
with respect to one, some or all Portfolios for any reason by sixty (60) days
advance written notice delivered to the other parties. This Agreement shall
terminate immediately in the event of its assignment by any party without the
prior written approval of the other parties, or as otherwise required by law.
9.2 This Agreement may be terminated immediately by us upon
written notice to you if:
9.2.1 (i) you breach any of the representations and warranties
made in this Agreement; or (ii) you inform us that any of such
representations and warranties may no longer be true or might not be
true in the future; or (iii) any of such representations and warranties
were not true on the effective date of this Agreement, are at any time
no longer true, or have not been true during any time since the
effective date of this Agreement; or
9.2.2 either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that you have suffered a material adverse change in your
business, operations, financial condition or prospects since the date
of this Agreement or are the subject of material adverse publicity; or
9.2.3 you give us the written notice specified above in
Section 3.3 and at the same time you give us such notice there was no
notice of termination outstanding under any other provision of this
Agreement; provided, however, that any termination under this Section
9.2.3 shall be effective forty-five (45) days after the notice
specified in Section 3.3 was given.
9.3 If this Agreement is terminated with respect to any Portfolio for
any reason, except as required by the Shared Funding Order, we may, as mutually
agreed, and pursuant to the terms and conditions of this Agreement, continue to
make available additional shares of any Portfolio for any or all Contracts or
Accounts existing on the effective date of termination of this Agreement. Upon
liquidation of a Portfolio, or if this Agreement is terminated with respect to
any Portfolio by the Trust's Board of Trustee's in the exercise of its duties
and it determines it is a necessary and appropriate remedy for a material breach
of the Agreement, including a violation of laws, the Trust may involuntarily
redeem, at its option in kind or for cash, shares of any Portfolio, for any or
all Contracts or Accounts existing on the effective date of termination of this
Agreement. If this Agreement is terminated as required by the Shared Funding
Order, its provisions shall govern.
9.4 The provisions of Sections 2 (Representations and Warranties) and 7
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall survive the termination of this
Agreement, as long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 9.3, except that we shall have no further obligation
to sell Trust shares with respect to Contracts issued after termination.
9.5 You shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to your assets held in the Account) except:
(i) as necessary to implement Contract owner initiated or approved transactions;
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption"); or (iii) as permitted by an order of the SEC
pursuant to Section 26(b) of the 1940 Act. Upon request, you shall promptly
furnish to us the opinion of your counsel (which counsel shall be reasonably
satisfactory to us) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, you shall not prevent
Contract owners from allocating payments to any Portfolio that has been
available under a Contract without first giving us ninety (90) days advance
written notice of your intention to do so.
10. Miscellaneous
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions of this
Agreement or otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 This Agreement shall be construed and its provisions interpreted
under and in accordance with the laws of the State of California. It shall also
be subject to the provisions of the federal securities laws and the rules and
regulations thereunder, to any orders of the SEC on behalf of the Trust granting
it exemptive relief, and to the conditions of such orders. We shall promptly
forward copies of any such orders to you.
10.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
10.6 The parties to this Agreement agree that the assets and
liabilities of each Portfolio of the Trust are separate and distinct from the
assets and liabilities of each other Portfolio. No Portfolio shall be liable or
shall be charged for any debt, obligation or liability of any other Portfolio.
10.7 Each party to this Agreement shall cooperate with each other party
and all appropriate governmental authorities (including without limitation the
SEC, the NASD, 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.
10.8 Each party shall treat as confidential all information of the
other party which the parties agree in writing is confidential ("Confidential
Information"). Except as permitted by this Agreement or as required by
appropriate governmental authority (including, without limitation, the SEC, the
NASD, or state securities and insurance regulators) the receiving party shall
not disclose or use Confidential Information of the other party before it enters
the public domain, without the express written consent of the party providing
the Confidential Information.
10.9 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 to this Agreement are
entitled to under state and federal laws.
10.10 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided above in
Section 3.3.
10.11 Neither this Agreement nor any rights or obligations created by
it may be assigned by any party without the prior written approval of the other
parties.
10.12 No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, each of the parties have caused their duly
authorized officers to execute this Agreement.
The Company: Allstate Life Insurance Company of New York
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxx Pas
Title: Assistant Vice President
Distributor for the Company: Allstate Distributors, Inc.
---------------------------
By:
-------------------------------
Name: Xxxx X. Xxxxxx
Title: President
The Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
Only on behalf of each
Portfolio listed on
Schedule C hereof.
By:
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
The Underwriter: Franklin Xxxxxxxxx Distributors, Inc.
By:
------------------------------
Name:
Title:
Schedule A
The Company and its Distributor
Allstate Life Insurance Company of New York
0000 Xxxxxxx Xxxx, X0X
Xxxxxxxxxx, XX 00000
An New York insurance company.
Allstate Distributors, LLC.
0000 Xxxxxxx Xxxx, X0X
Xxxxxxxxxx, XX 00000
An Illinois corporation.
ALFS, Inc.
0000 Xxxxxxx Xxxx, X0X
Xxxxxxxxxx, XX 00000
An Illinois corporation.
Schedule B
Accounts of the Company
1. Name: Glenbrook Life and Annuity Company Variable
Annuity Account
Date Established: December 15, 1992
SEC Registration Number: 811-7632
2. Name: Allstate Life of New York Separate Account A
Date Established: December 15, 1995
SEC Registration Number: 811-07467
3. Name: Glenbrook Life Multi-Manager Variable Account
Date Established: January 15, 1996
SEC Registration Number: 811-07467
4. Name: Glenbrook Life Variable Life Separate account A
Date Established: January 15, 1996
SEC Registration Number: 811-07467
Schedule C
Available Portfolios and Classes of Shares of the Trust; Investment Advisers
Franklin Xxxxxxxxx Variable Insurance Products Trust Investment Adviser
Class 1 and Class 2 shares:
Franklin Growth and Income Securities Fund Franklin Advisers, Inc.
Franklin Small Cap Fund Franklin Advisers, Inc.
Franklin Small Cap Value Securities Fund Franklin Advisers, Inc.
Mutual Shares Securities Fund Franklin Mutual Advisers, LLC
Templeton Developing Markets Securities Fund Xxxxxxxxx Asset Management Ltd.
Templeton Foreign Securities Fund Xxxxxxxxx Investment Counsel, LLC
Templeton Global Income Securities Fund Franklin Advisers, Inc.
Schedule D
Contracts of the Company
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
Insurance Product Name Separate Account Name
# Company Registered Y/N Registered Y/N Classes of Shares and Portfolios
1933 Act #, State Form ID 1940 Act #
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
01 Allstate Allstate Advisor Allstate Life of New York Class 2 Shares:
--------------
Life Yes Separate Account A Franklin Growth and Income Securities Fund
Insurance 333-72017 Yes Franklin Small Cap Fund
Company PA126NY 811-07467 Franklin Small Cap Value Securities Fund
of New Mutual Shares Securities Fund
York Xxxxxxxxx Developing Markets Securities Fund
Xxxxxxxxx Foreign Securities Fund
Xxxxxxxxx Global Income Fund
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
02 Allstate Allstate Advisor Plus Allstate Life of New York Class 2 Shares:
--------------
Life Yes Separate Account A Franklin Growth and Income Securities Fund
Insurance 333-96115 Yes Franklin Small Cap Fund
Company PA128NY 811-07467 Franklin Small Cap Value Securities Fund
of New Mutual Shares Securities Fund
York Xxxxxxxxx Developing Markets Securities Fund
Xxxxxxxxx Foreign Securities Fund
Xxxxxxxxx Global Income Fund
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
03 Allstate Allstate Advisor Preferred Allstate Life of New York Class 2 Shares:
--------------
Life Yes Separate Account A Franklin Growth and Income Securities Fund
Insurance 333-31288 Yes Franklin Small Cap Fund
Company PA130NY 811-07467 Franklin Small Cap Value Securities Fund
of New Mutual Shares Securities Fund
York Xxxxxxxxx Developing Markets Securities Fund
Xxxxxxxxx Foreign Securities Fund
Xxxxxxxxx Global Income Fund
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
04 Allstate Allstate Advisor Apex Allstate Life of New York Class 2 Shares:
--------------
Life Yes Separate Account A Franklin Growth and Income Securities Fund
Insurance ??? Yes Franklin Small Cap Fund
Company TBD 811-07467 Franklin Small Cap Value Securities Fund
of New Mutual Shares Securities Fund
York Xxxxxxxxx Developing Markets Securities Fund
Xxxxxxxxx Foreign Securities Fund
Xxxxxxxxx Global Income Fund
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
05 Allstate Provider Variable Annuity Allstate Life of New York Class 2 Shares:
--------------
Life Yes Separate Account A Templeton Growth Securities Fund
Insurance 333-94785 Yes Xxxxxxxxx Foreign Securities Fund
Company NYLU 448 811-07467 Xxxxxxxxx Developing Markets Securities Fund
of New Mutual Share Securities Fund
York Franklin Small Cap Fund
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
06 Allstate Allstate Custom Portfolio Allstate Life of New York Class 2 Shares:
--------------
Life Variable Annuity Separate Account A Templeton Asset Strategy Fund
Insurance Yes Yes Xxxxxxxxx Foreign Securities Fund
Company 333-94785 811-07467
of New NYLU 448
York
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
07 Allstate Provider Ultra NY Allstate Life of New York Class 2 Shares:
---------------
Life Yes Separate Account A Franklin Small Cap Fund
Insurance 333-81592 Yes Franklin Technology Securities Fund
Company NYLU 515 811-07467 Mutual Shares Securities
of New Xxxxxxxxx Developing Markets Securities Fund
York Xxxxxxxxx Foreign Securities Fund
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
08 Allstate Allstate Custom Portfolio Allstate Life of New York Class 2 Shares:
---------------
Life Plus Variable Annuity Separate Account A Templeton Global Asset Allocation Fund
Insurance Yes Yes Xxxxxxxxx Foreign Securities Fund
Company 333-81592 811-07467
of New NYLU 515
York
------- ----------- ------------------------------ ------------------------------- ----------------------------------------------
Schedule E
Other Portfolios Available under the Contracts
Allstate Advisor Series
Xxxxxx VT The Xxxxxx Xxxxxx Fund of Boston - Class XX Xxxxxx VT Global Asset
Allocation Fund - Class XX Xxxxxx VT Growth and Income Fund - Class XX Xxxxxx VT
Health Sciences Fund - Class XX Xxxxxx VT High Yield Fund - Class XX Xxxxxx VT
Income Fund - Class XX Xxxxxx VT International Growth Fund - Class XX Xxxxxx VT
Investors Fund - Class XX Xxxxxx VT Money Market Fund - Class XX Xxxxxx VT New
Opportunities Fund - Class XX Xxxxxx VT New Value Fund - Class XX Xxxxxx VT
Research Fund - Class XX Xxxxxx VT Utilities Growth and Income Fund - Class XX
Xxxxxx VT Vista Fund - Class XX Xxxxxx VT Voyager Fund - Class IB
LSA Aggressive Growth Fund
LSA Focused Equity Fund
LSA Mid Cap Value Fund
Xxxxxxxxxxx Aggressive Growth Fund/VA - Service Class Xxxxxxxxxxx Global
Securities Fund/VA - Service Class Xxxxxxxxxxx High Income Fund/VA - Service
Class Xxxxxxxxxxx Main Street Growth & Income Fund/VA - Service Class
Xxxxxxxxxxx Main Street Small Cap Fund/VA - Service Class Xxxxxxxxxxx Multiple
Strategies Fund/VA - Service Class Xxxxxxxxxxx Strategic Bond Fund/VA - Service
Class
Xxx Xxxxxx LIT Emerging Growth Portfolio, Class II Xxx Xxxxxx LIT Growth and
Income Portfolio, Class II Xxx Xxxxxx UIF Active International Allocation
Portfolio, Class II Xxx Xxxxxx UIF U.S. Real Estate Portfolio, Class II Xxx
Xxxxxx UIF Emerging Markets Debt Portfolio, Class II
Schedule E
Other Portfolios Available under the Contracts (cont.)
Provider Variable Annuity NY
AIM V.I. Balanced Fund - Series I
AIM V.I. Diversified Income Fund - Series I
AIM V.I. Government Securities Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. Core Equity Fund - Series I
AIM V.I. International Growth Fund - Series I
AIM V.I. Premier Equity Fund - Series I
The Dreyfus Socially Responsible Growth Fund, Inc.: Initial Shares
Dreyfus Stock Index Fund: Initial Shares
Dreyfus VIF - Growth & Income Portfolio: Initial Shares
Dreyfus VIF - Money Market Portfolio
Fidelity VIP Contrafund Portfolio - Initial Class
Fidelity VIP Equity-Income Portfolio - Initial Class
Fidelity VIP Growth Portfolio - Initial Class
Fidelity VIP High Income Portfolio - Initial Class
Xxxxxxx Xxxxx VIT Capital Growth Fund
Xxxxxxx Sachs VIT CORESM Small Cap Equity Fund
Xxxxxxx Xxxxx VIT CORESM U.S. Equity Fund
Xxxxxxx Sachs VIT International Equity Fund
MFS Emerging Growth Series
MFS Investors Trust Series
MFS New Discovery Series
MFS Research Series
Xxx Xxxxxx UIF Equity Growth Portfolio
Xxx Xxxxxx UIF Core Plus Portfolio
Xxx Xxxxxx UIF Global Value Equity Portfolio
Xxx Xxxxxx UIF Mid Cap Value Portfolio
Xxx Xxxxxx UIF Value Portfolio
Xxxxxxxxxxx Aggressive Growth Fund/VA
Xxxxxxxxxxx Capital Appreciation Fund/VA
Xxxxxxxxxxx Global Securities Fund/VA
Xxxxxxxxxxx Main Street Growth & Income Fund/VA
Xxxxxxxxxxx Strategic Bond Fund/VA
Schedule E
Other Portfolios Available under the Contracts (cont.)
Allstate Custom Portfolio Variable Annuity and Allstate Custom Portfolio Plus
Variable Annuity
AIM V.I. Balanced Fund - Series I
AIM V.I. Capital Appreciation Fund - Series I
AIM V.I. Government Securities Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. High Yield - Series I
AIM V.I. International Growth Fund - Series I
AIM V.I. Premier Equity Fund - Series I
Delaware VIP Small Cap Value Series
Delaware VIP Trend Series
The Dreyfus Socially Responsible Growth Fund, Inc.: Initial Shares
Dreyfus Stock Index Fund: Initial Shares
Dreyfus VIF - Appreciation Portfolio: Initial Shares
Fidelity VIP Contrafund Portfolio - Initial Class
Fidelity VIP Equity-Income Portfolio - Initial Class
Fidelity VIP Growth Portfolio - Initial Class
Fidelity VIP Growth Opportunities Portfolio - Initial Class
Fidelity VIP Overseas Portfolio - Initial Class
HSBC Variable Cash Management Fund
HSBC Variable Fixed Income Fund
HSBC Variable Growth and Income Fund
Xxxxxxxxxxx Aggressive Growth Fund/VA
Xxxxxxxxxxx Main Street Growth & Income Fund/VA
Xxxxxxxxxxx Strategic Bond Fund/VA
Templeton Asset Strategy Fund - Class 2
Xxxxxxxxx International Securities Fund - Class 2
Xxxxx Fargo VT Asset Allocation Fund
Xxxxx Fargo VT Equity Income Fund
Xxxxx Fargo VT Growth Fund
Schedule E
Other Portfolios Available under the Contracts (cont.)
Provider Ultra NY
AIM V.I. Aggressive Growth Fund - Series I
AIM V.I. Balanced Fund - Series I
AIM V.I. Capital Appreciation Fund - Series I
AIM V.I. Dent Demographic Trends Fund - Series I
AIM V.I. Diversified Income Fund - Series I
AIM V.I. Growth Fund - Series I
AIM V.I. Core Equity Fund - Series I
AIM V.I. International Growth Fund - Series I
AIM V.I. Reminer Equity Fund - Series I
The Dreyfus Socially Responsible Growth Fund, Inc.: Initial Shares Dreyfus Stock
Index Fund: Initial Shares Dreyfus VIF - Growth & Income Portfolio: Initial
Shares Dreyfus VIF - Money Market Portfolio Fidelity VIP Asset Manager: Growth
Portfolio - Service Class 2 Fidelity VIP Contrafund Portfolio - Service Class 2
Fidelity VIP Equity-Income Portfolio - Service Class 2 Fidelity VIP Growth
Portfolio - Service Class 2 Fidelity VIP High Income Portfolio - Service Class 2
Xxxxxxx Xxxxx VIT CORESM Small Cap Equity Fund Xxxxxxx Sachs VIT CORESM U.S.
Equity Fund LSA Diversified Mid Cap Fund (Fidelity) LSA Focused Equity Fund
(Xxxxxx Xxxxxxx) LSA Growth Equity Fund (Xxxxxxx Sachs) MFS Emerging Growth
Series - Service Class MFS Investors Trust Series - Service Class MFS New
Discovery Series - Service Class MFS Research Series - Service Class MFS
Utilities Series - Service Class Xxx Xxxxxx UIF Core Plus Portfolio Xxx Xxxxxx
UIF Global Value Equity Portfolio Xxx Xxxxxx UIF Mid Cap Value Portfolio Xxx
Xxxxxx UIF U.S. Real Estate Portfolio Xxx Xxxxxx UIF Value Portfolio Xxxxxxxxxxx
Aggressive Growth Fund/VA Xxxxxxxxxxx Capital Appreciation Fund/VA Xxxxxxxxxxx
Global Securities Fund/VA Xxxxxxxxxxx Main Street Growth & Income Fund/VA
Xxxxxxxxxxx Strategic Bond Fund/VA Xxxxxx VT Growth and Income Fund - Class XX
Xxxxxx VT Growth Opportunities Fund - Class XX Xxxxxx VT Health Sciences Fund -
Class XX Xxxxxx VT International Growth Fund - Class XX Xxxxxx VT New Value Fund
- Class XX Xxxxxx VT Research Fund - Class IB
Schedule F
Rule 12b-1 Plans
Compensation Schedule
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
Franklin Growth and Income Securities Fund 0.25%
Franklin Small Cap Fund 0.25%
Franklin Small Cap Value Securities Fund 0.25%
Mutual Shares Securities Fund 0.25%
Xxxxxxxxx Developing Markets Securities Fund 0.25%
Xxxxxxxxx Foreign Securities Fund 0.25%
Xxxxxxxxx Global Income Fund 0.25%
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b-1 plan adopted under
the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide any activity or service which is primarily intended
to assist in the promotion, distribution or account servicing of Eligible Shares
("Rule 12b-1 Services") or variable contracts offering Eligible Shares, the
Underwriter, the Trust or their affiliates (collectively, "we") may pay you a
Rule 12b-1 fee. "Rule 12b-1 Services" may include, but are not limited to,
printing of prospectuses and reports used for sales purposes, preparing and
distributing sales literature and related expenses, advertisements, education of
dealers and their representatives, and similar distribution-related expenses,
furnishing personal services to owners of Contracts which may invest in Eligible
Shares ("Contract Owners"), education of Contract Owners, answering routine
inquiries regarding a Portfolio, coordinating responses to Contract Owner
inquiries regarding the Portfolios, maintaining such accounts or providing such
other enhanced services as a Trust Portfolio or Contract may require, or
providing other services eligible for service fees as defined under NASD rules.
Your acceptance of such compensation is your acknowledgment that eligible
services have been rendered. All Rule 12b-1 fees, shall be based on the value of
Eligible Shares owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the Compensation Schedule
stated above. The aggregate annual fees paid pursuant to each Plan shall not
exceed the amounts stated as the "annual maximums" in the Portfolio's
prospectus, unless an increase is approved by shareholders as provided in the
Plan. These maximums shall be a specified percent of the value of a Portfolio's
net assets attributable to Eligible Shares owned by the Company on behalf of its
Accounts (determined in the same manner as the Portfolio uses to compute its net
assets as set forth in its effective Prospectus). The Rule 12b-1 fee will be
paid to you within thirty (30) days after the end of the three-month periods
ending in January, April, July and October.
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
Rule 12b-1 fees paid to you pursuant to the Plans. We shall furnish to the
Trustees, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must
be approved annually by a vote of the Trustees, including the Trustees who are
not interested persons of the Trust and who have no financial interest in the
Plans or any related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares as provided in the Plan, on
sixty (60) days' written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting Agreement between
the Underwriter and the Trust, and/or the management or administration agreement
between Franklin Advisers, Inc. and its affiliates and the Trust. Continuation
of the Plans is also conditioned on Disinterested Trustees being ultimately
responsible for selecting and nominating any new Disinterested Trustees. Under
Rule 12b-1, the Trustees have a duty to request and evaluate, and persons who
are party to any agreement related to a Plan have a duty to furnish, such
information as may reasonably be necessary to an informed determination of
whether the Plan or any agreement should be implemented or continued. Under Rule
12b-1, the Trust is permitted to implement or continue Plans or the provisions
of any agreement relating to such Plans from year-to-year only if, based on
certain legal considerations, the Trustees are able to conclude that the Plans
will benefit each affected Trust Portfolio and class. Absent such yearly
determination, the Plans must be terminated as set forth above. In the event of
the termination of the Plans for any reason, the provisions of this Schedule F
relating to the Plans will also terminate. You agree that your selling
agreements with persons or entities through whom you intend to distribute
Contracts will provide that compensation paid to such persons or entities may be
reduced if a Portfolio's Plan is no longer effective or is no longer applicable
to such Portfolio or class of shares available under the Contracts.
Any obligation assumed by the Trust pursuant to this Agreement shall be limited
in all cases to the assets of the Trust and no person shall seek satisfaction
thereof from shareholders of the Trust. You agree to waive payment of any
amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Trust.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule F, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable statutes,
rules and regulations of all rule 12b-1 fees received from us in the prospectus
of the Contracts.
Schedule G
Addresses for Notices
To the Company: Allstate Life Insurance Company of New York
0000 Xxxxxxx Xxxx, X0X
Xxxxxxxxxx, XX 00000
Attention: General Counsel
To the Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
0 Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Assistant Vice President
To the Underwriter: Franklin Xxxxxxxxx Distributors, Inc.
0 Xxxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Vice President
Schedule H
Shared Funding Order
Templeton Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24018
1999 SEC LEXIS 1887
September 17, 1999
ACTION: Notice of application for an amended order of exemption pursuant to
Section 6(c) of the Investment Company Act of 1940 (the "1940 Act") 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.
TEXT: Summary of Application: Templeton Variable Products Series Fund (the
"Templeton Trust"), Franklin Xxxxxxxxx Variable Insurance Products Trust
(formerly Franklin Valuemark Funds) (the "VIP Trust," and together with the
Templeton Trust, the "Funds"), Xxxxxxxxx Funds Annuity Company ("TFAC") or any
successor to TFAC, and any future open-end investment company for which TFAC or
any affiliate is the administrator, sub-administrator, investment manager,
adviser, principal underwriter, or sponsor ("Future Funds") seek an amended
order of the Commission to (1) add as parties to that order the VIP Trust and
any Future Funds and (2) permit shares of the Funds and Future Funds to be
issued to and held by qualified pension and retirement plans outside the
separate account context.
Applicants: Templeton Variable Products Series Fund, Franklin Xxxxxxxxx
Variable Insurance Products Trust, Xxxxxxxxx Funds Annuity Company or any
successor to TFAC, and any future open-end investment company for which TFAC or
any affiliate is the administrator, sub-administrator, investment manager,
adviser, principal underwriter, or sponsor (collectively, the "Applicants").
Filing Date: The application was filed on July 14, 1999, and amended and
restated on September 17, 1999.
Hearing or Notification of Hearing: An order granting the application will be
issued unless the Commission orders a hearing. Interested persons may request a
hearing by writing to the Secretary of the Commission and serving Applicants
with a copy of the request, personally or by mail. Hearing requests should be
received by the Commission by 5:30 p.m., on October 12, 1999, and should be
accompanied by proof of service on the Applicants in the form of an affidavit
or, for lawyers, a certificate of service. Hearing requests should state the
nature of the writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request notification
by writing to the Secretary of the Commission.
Addresses: Secretary, Securities and Exchange Commission, 000 Xxxxx Xxxxxx,
XX, Xxxxxxxxxx, X.X. 00000-0000.
Applicants: Templeton Variable Products Series Fund and Franklin Xxxxxxxxx
Variable Insurance Products Trust, 000 Xxxxxxxx Xxxxxx Xxxxxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esq.
For Further Information Contact: Xxxxx X. XxXxxxx, Senior Counsel, or Xxxxx
X. Xxxxx, Branch Chief, Office of Insurance Products, Division of Investment
Management, at (000) 000-0000.
Supplementary Information: The following is a summary of the application.
The complete application is available for a fee from the SEC's Public Reference
Branch, 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000-0000 (tel. (202)
000-0000).
Applicants' Representations:
1. Each of the Funds is registered under the 1940 Act as an open-end
management investment company and was organized as a Massachusetts business
trust. The Templeton Trust currently consists of eight separate series, and the
VIP Trust consists of twenty-five separate series. Each Fund's Declaration of
Trust permits the Trustees to create additional series of shares at any time.
The Funds currently serve as the underlying investment medium for variable
annuity contracts and variable life insurance policies issued by various
insurance companies. The Funds have entered into investment management
agreements with certain investment managers ("Investment Managers") directly or
indirectly owned by Franklin Resources, Inc. ("Resources"), a publicly owned
company engaged in the financial services industry through its subsidiaries.
2. TFAC is an indirect, wholly owned subsidiary of Resources. TFAC is the
sole insurance company in the Franklin Xxxxxxxxx organization, and specializes
in the writing of variable annuity contracts. The Templeton Trust has entered
into a Fund Administration Agreement with Franklin Xxxxxxxxx Services, Inc. ("FT
Services"), which replaced TFAC in 1998 as administrator, and FT Services
subcontracts certain services to TFAC. FT Services also serves as administrator
to all series of the VIP Trust. TFAC and FT Services provide certain
administrative facilities and services for the VIP and Templeton Trusts.
3. On November 16, 1993, the Commission issued an order granting exemptive
relief to permit shares of the Templeton Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (Investment Company Act
Release No. 19879, File No. 812-8546) (the "Original Order"). Applicants
incorporate by reference into the application the Application for the Original
Order and each amendment thereto, the Notice of Application for the Original
Order, and the Original Order, to the extent necessary, to supplement the
representations made in the application in support of the requested relief.
Applicants represent that all of the facts asserted in the Application for the
Original Order and any amendments thereto remain true and accurate in all
material respects to the extent that such facts are relevant to any relief on
which Applicants continue to rely. The Original Order allows the Templeton Trust
to offer its shares to insurance companies as the investment vehicle for their
separate accounts supporting variable annuity contracts and variable life
insurance contracts (collectively, the "Variable Contracts"). Applicants state
that the Original Order does not (i) include the VIP Trust or Future Funds as
parties, nor (ii) expressly address the sale of shares of the Funds or any
Future Funds to qualified pension and retirement plans outside the separate
account context including, without limitation, those trusts, plans, accounts,
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(b),
408(k), 414(d), 457(b), 501(c)(18) of the Internal Revenue Code of 1986, as
amended (the "Code"), and any other trust, plan, contract, account or annuity
that is determined to be within the scope of Treasury Regulation
1.817.5(f)(3)(iii) ("Qualified Plans").
4. Separate accounts owning shares of the Funds and their insurance company
depositors are referred to in the application as "Participating Separate
Accounts" and "Participating Insurance Companies," respectively. The use of a
common management investment company as the underlying investment medium for
both variable annuity and variable life insurance separate accounts of a single
insurance company (or of two or more affiliated insurance companies) is referred
to as "mixed funding." The use of a common management investment company as the
underlying investment medium for variable annuity and/or variable life insurance
separate accounts of unaffiliated insurance companies is referred to as "shared
funding."
Applicants' Legal Analysis:
1. Applicants request that the Commission issue an amended order pursuant to
Section 6(c) of the 1940 Act, adding the VIP Trust and Future Funds to the
Original Order and exempting scheduled premium variable life insurance separate
accounts and flexible premium variable life insurance separate accounts of
Participating Insurance Companies (and, to the extent necessary, any principal
underwriter and depositor of such an account) and the Applicants from 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) (and any comparable rule) thereunder, respectively, to the extent
necessary to permit shares of the Funds and any Future Funds to be sold to and
held by Qualified Plans. Applicants submit that the exemptions requested are
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purposes fairly intended by the policy and provisions of
the 1940 Act.
2. The Original Order does not include the VIP Trust or Future Funds as
parties nor expressly address the sale of shares of the Funds or any Future
Funds to Qualified Plans. Applicants propose that the VIP Trust and Future Funds
be added as parties to the Original Order and the Funds and any Future Funds be
permitted to offer and sell their shares to Qualified Plans.
3. Section 6(c) of the 1940 Act provides, in part, that the Commission, by
order upon application, may conditionally or unconditionally exempt any person,
security or transaction, or any class or classes of persons, securities or
transactions from any provisions of the 1940 Act or the rules or regulations
thereunder, if and to the extent that such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the 1940 Act.
4. In connection with the funding of scheduled premium variable life
insurance contracts issued through a separate account registered under the 1940
Act as a unit investment trust ("UIT"), Rule 6e-2(b)(15) provides partial
exemptions from various provisions of the 1940 Act, including the following: (1)
Section 9(a), which makes it unlawful for certain individuals to act in the
capacity of employee, officer, or director for a UIT, by limiting the
application of the eligibility restrictions in Section 9(a) to affiliated
persons directly participating in the management of a registered management
investment company; and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to
the extent that those sections might be deemed to require "pass-through" voting
with respect to an underlying fund's shares, by allowing an insurance company to
disregard the voting instructions of contractowners in certain circumstances.
5. These exemptions are available, however, only where the management
investment company underlying the separate account (the "underlying fund")
offers its shares "exclusively to variable life insurance separate accounts of
the life insurer, or of any affiliated life insurance company." Therefore, Rule
6e-2 does not permit either mixed funding or shared funding because the relief
granted by Rule 6e-2(b)(15) is not available with respect to a scheduled premium
variable life insurance separate account that owns shares of an underlying fund
that also offers its shares to a variable annuity or a flexible premium variable
life insurance separate account of the same company or of any affiliated life
insurance company. Rule 6e-2(b)(15) also does not permit the sale of shares of
the underlying fund to Qualified Plans.
6. In connection with flexible premium variable life insurance contracts
issued through a separate account registered under the 1940 Act as a UIT, Rule
6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act. These exemptions, however, are available only where
the separate account's underlying fund offers its shares "exclusively to
separate accounts of the life insurer, or of any affiliated life insurance
company, offering either scheduled contracts or flexible contracts, or both; or
which also offer their shares to variable annuity separate accounts of the life
insurer or of an affiliated life insurance company." Therefore, Rule 6e-3(T)
permits mixed funding but does not permit shared funding and also does not
permit the sale of shares of the underlying fund to Qualified Plans. As noted
above, the Original Order granted the Templeton Trust exemptive relief to permit
mixed and shared funding, but did not expressly address the sale of its shares
to Qualified Plans.
7. Applicants note that if the Funds were to sell their shares only to
Qualified Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be
necessary. Applicants state that the relief provided for under Rule 6e-2(b)(15)
and Rule 6e-3(T)(b)(15) does not relate to qualified pension and retirement
plans or to a registered investment company's ability to sell its shares to such
plans.
8. Applicants state that changes in the federal tax law have created the
opportunity for each of the Funds to increase its asset base through the sale of
its shares to Qualified Plans. Applicants state that Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
diversification standards on the assets underlying Variable Contracts. Treasury
Regulations generally require that, to meet the diversification requirements,
all of the beneficial interests in the underlying investment company must be
held by the segregated asset accounts of one or more life insurance companies.
Notwithstanding this, Applicants note that the Treasury Regulations also contain
an exception to this requirement that permits trustees of a Qualified Plan to
hold shares of an investment company, the shares of which are also held by
insurance company segregated asset accounts, without adversely affecting the
status of the investment company as an adequately diversified underlying
investment of Variable Contracts issued through such segregated asset accounts
(Treas. Reg. 1.817-5(f)(3)(iii)).
9. Applicants state that the promulgation of Rules 6e-2(b)(15) and
6e-3(T)(b)(15) under the 1940 Act preceded the issuance of these Treasury
Regulations. Thus, Applicants assert that the sale of shares of the same
investment company to both separate accounts and Qualified Plans was not
contemplated at the time of the adoption of Rules 6e-2(b)(15) and
6e-3(T)(b)(15).
10. Section 9(a) provides that it is unlawful for any company to serve as
investment adviser or principal underwriter of any registered open-end
investment company if an affiliated person of that company is subject to a
disqualification enumerated in Section 9(a)(1) or (2). Rules 6e-2(b)(15) and
6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain circumstances,
subject to the limitations on mixed and shared funding. These exemptions limit
the application of the eligibility restrictions to affiliated individuals or
companies that directly participate in the management of the underlying
portfolio investment company.
11. Applicants state that the relief granted in Rule 6e-2(b)(15) and
6e-3(T)(b)(15) from the requirements of Section 9 limits, in effect, the amount
of monitoring of an insurer's personnel that would otherwise be necessary to
ensure compliance with Section 9 to that which is appropriate in light of the
policy and purposes of Section 9. Applicants submit that those Rules recognize
that it is not necessary for the protection of investors or the purposes fairly
intended by the policy and provisions of the 1940 Act to apply the provisions of
Section 9(a) to the many individuals involved in an insurance company complex,
most of whom typically will have no involvement in matters pertaining to
investment companies funding the separate accounts.
12. Applicants to the Original Order previously requested and received relief
from Section 9(a) and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) to the extent
necessary to permit mixed and shared funding. Applicants maintain that the
relief previously granted from Section 9(a) will in no way be affected by the
proposed sale of shares of the Funds to Qualified Plans. Those individuals who
participate in the management or administration of the Funds will remain the
same regardless of which Qualified Plans use such Funds. Applicants maintain
that more broadly applying the requirements of Section 9(a) because of
investment by Qualified Plans would not serve any regulatory purpose. Moreover,
Qualified Plans, unlike separate accounts, are not themselves investment
companies and therefore are not subject to Section 9 of the 1940 Act.
13. Applicants state that Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii)
provide exemptions from the pass-through voting requirement with respect to
several significant matters, assuming the limitations on mixed and shared
funding are observed. Rules 6e-2(b)(15)(iii)(A) and 6e-3(T)(b)(15)(iii)(A)
provide that the insurance company may disregard the voting instructions of its
contractowners with respect to the investments of an underlying fund or any
contract between a fund and its investment adviser, when required to do so by an
insurance regulatory authority (subject to the provisions of paragraphs
(b)(5)(i) and (b)(7)(ii)(A) of the Rules). Rules 6e-2(b)(15)(iii)(B) and
6e-3(T)(b)(15)(iii)(A)(2) provide that the insurance company may disregard
contractowners' voting instructions if the contractowners initiate any change in
such company's investment policies, principal underwriter, or any investment
adviser (provided that disregarding such voting instructions is reasonable and
subject to the other provisions of paragraphs (b)(5)(ii) and (b)(7)(ii)(B) and
(C) of the Rules).
14. Applicants assert that Qualified Plans, which are not registered as
investment companies under the 1940 Act, have no requirement to pass-through the
voting rights to plan participants. Applicants state that applicable law
expressly reserves voting rights to certain specified persons. Under Section
403(a) of the Employment Retirement Income Security Act ("ERISA"), shares of a
fund sold to a Qualified Plan must be held by the trustees of the Qualified
Plan. Section 403(a) also provides that the trustee(s) must have exclusive
authority and discretion to manage and control the Qualified Plan with two
exceptions: (1) when the Qualified Plan expressly provides that the trustee(s)
are subject to the direction of a named fiduciary who is not a trustee, in which
case the trustees are subject to proper directions made in accordance with the
terms of the Qualified Plan and not contrary to ERISA; and (2) when the
authority to manage, acquire or dispose of assets of the Qualified Plan is
delegated to one or more investment managers pursuant to Section 402(c)(3) of
ERISA. Unless one of the two above exceptions stated in Section 403(a) applies,
Qualified Plan trustees have the exclusive authority and responsibility for
voting proxies. Where a named fiduciary to a Qualified Plan appoints an
investment manager, the investment manager has the responsibility to vote the
shares held unless the right to vote such shares is reserved to the trustees or
the named fiduciary. Where a Qualified Plan does not provide participants with
the right to give voting instructions, Applicants do not see any potential for
material irreconcilable conflicts of interest between or among variable contract
holders and Qualified Plan investors with respect to voting of the respective
Fund's shares. Accordingly, Applicants state that, unlike the case with
insurance company separate accounts, the issue of the resolution of material
irreconcilable conflicts with respect to voting is not present with respect to
such Qualified Plans since the Qualified Plans are not entitled to pass-through
voting privileges.
15. Even if a Qualified Plan were to hold a controlling interest in one of
the Funds, Applicants believe that such control would not disadvantage other
investors in such Fund to any greater extent than is the case when any
institutional shareholder holds a majority of the voting securities of any
open-end management investment company. In this regard, Applicants submit that
investment in a Fund by a Qualified Plan will not create any of the voting
complications occasioned by mixed funding or shared funding. Unlike mixed or
shared funding, Qualified Plan investor voting rights cannot be frustrated by
veto rights of insurers or state regulators.
16. Applicants state that some of the Qualified Plans, however, may provide
for the trustee(s), an investment adviser (or advisers), or another named
fiduciary to exercise voting rights in accordance with instructions from
participants. Where a Qualified Plan provides participants with the right to
give voting instructions, Applicants see no reason to believe that participants
in Qualified Plans generally or those in a particular Qualified Plan, either as
a single group or in combination with participants in other Qualified Plans,
would vote in a manner that would disadvantage Variable Contract holders. In
sum, Applicants maintain that the purchase of shares of the Funds by Qualified
Plans that provide voting rights does not present any complications not
otherwise occasioned by mixed or shared funding.
17. Applicants do not believe that the sale of the shares of the Funds to
Qualified Plans will increase the potential for material irreconcilable
conflicts of interest between or among different types of investors. In
particular, Applicants see very little potential for such conflicts beyond that
which would otherwise exist between variable annuity and variable life insurance
contractowners.
18. As noted above, Section 817(h) of the Code imposes certain
diversification standards on the underlying assets of variable contracts held in
an underlying mutual fund. The Code provides that a variable contract shall not
be treated as an annuity contract or life insurance, as applicable, for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the Treasury Department, adequately
diversified.
19. Treasury Department Regulations issued under Section 817(h) provide that,
in order to meet the statutory diversification requirements, all of the
beneficial interests in the investment company must be held by the segregated
asset accounts of one or more insurance companies. However, the Regulations
contain certain exceptions to this requirement, one of which allows shares in an
underlying mutual fund to be held by the trustees of a qualified pension or
retirement plan without adversely affecting the ability of shares in the
underlying fund also to be held by separate accounts of insurance companies in
connection with their variable contracts (Treas. Reg. 1.817-5(f)(3)(iii)). Thus,
Applicants believe that the Treasury Regulations specifically permit "qualified
pension or retirement plans" and separate accounts to invest in the same
underlying fund. For this reason, Applicants have concluded that neither the
Code nor the Treasury Regulations or revenue rulings thereunder presents any
inherent conflict of interest.
20. Applicants note that while there are differences in the manner in which
distributions from Variable Contracts and Qualified Plans are taxed, these
differences will have no impact on the Funds. When distributions are to be made,
and a Separate Account or Qualified Plan is unable to net purchase payments to
make the distributions, the Separate Account and Qualified Plan will redeem
shares of the Funds at their respective net asset value in conformity with Rule
22c-1 under the 1940 Act (without the imposition of any sales charge) to provide
proceeds to meet distribution needs. A Qualified Plan will make distributions in
accordance with the terms of the Qualified Plan.
21. Applicants maintain that it is possible to provide an equitable means of
giving voting rights to Participating Separate Account contractowners and to
Qualified Plans. In connection with any meeting of shareholders, the Funds will
inform each shareholder, including each Participating Insurance Company and
Qualified Plan, of information necessary for the meeting, including their
respective share of ownership in the relevant Fund. Each Participating Insurance
Company will then solicit voting instructions in accordance with Rules 6e-2 and
6e-3(T), as applicable, and its participation agreement with the relevant Fund.
Shares held by Qualified Plans will be voted in accordance with applicable law.
The voting rights provided to Qualified Plans with respect to shares of the
Funds would be no different from the voting rights that are provided to
Qualified Plans with respect to shares of funds sold to the general public.
22. Applicants have concluded that even if there should arise issues with
respect to a state insurance commissioner's veto powers over investment
objectives where the interests of contractowners and the interests of Qualified
Plans are in conflict, the issues can be almost immediately resolved since the
trustees of (or participants in) the Qualified Plans can, on their own, redeem
the shares out of the Funds. Applicants note that state insurance commissioners
have been given the veto power in recognition of the fact that insurance
companies usually cannot simply redeem their separate accounts out of one fund
and invest in another. Generally, time-consuming, complex transactions must be
undertaken to accomplish such redemptions and transfers. Conversely, the
trustees of Qualified Plans or the participants in participant-directed
Qualified Plans can make the decision quickly and redeem their interest in the
Funds and reinvest in another funding vehicle without the same regulatory
impediments faced by separate accounts or, as is the case with most Qualified
Plans, even hold cash pending suitable investment.
23. Applicants also state that they do not see any greater potential for
material irreconcilable conflicts arising between the interests of participants
under Qualified Plans and contractowners of Participating Separate Accounts from
possible future changes in the federal tax laws than that which already exist
between variable annuity contractowners and variable life insurance
contractowners.
24. Applicants state that the sale of shares of the Funds to Qualified Plans
in addition to separate accounts of Participating Insurance Companies will
result in an increased amount of assets available for investment by the Funds.
This may benefit variable contractowners by promoting economies of scale, by
permitting increased safety of investments through greater diversification, and
by making the addition of new portfolios more feasible.
25. Applicants assert that, regardless of the type of shareholders in each
Fund, each Fund's Investment Manager is or would be contractually and otherwise
obligated to manage the Fund solely and exclusively in accordance with that
Fund's investment objectives, policies and restrictions as well as any
guidelines established by the Board of Trustees of such Fund (the "Board"). The
Investment Manager works with a pool of money and (except in a few instances
where this may be required in order to comply with state insurance laws) does
not take into account the identity of the shareholders. Thus, each Fund will be
managed in the same manner as any other mutual fund. Applicants therefore see no
significant legal impediment to permitting the sale of shares of the Funds to
Qualified Plans.
26. Applicants state that the Commission has permitted the amendment of a
substantially similar original order for the purpose of adding a party to the
original order and has permitted open-end management investment companies to
offer their shares directly to Qualified Plan in addition to separate accounts
of affiliated or unaffiliated insurance companies which issue either or both
variable annuity contracts or variable life insurance contracts. Applicants
state that the amended order sought in the application is identical to precedent
with respect to the conditions Applicants propose should be imposed on Qualified
Plans in connection with investment in the Funds.
Applicants' Conditions:
If the requested amended order is granted, Applicants consent to the
following conditions:
1. A majority of the Board of each Fund shall consist of persons who are not
"interested persons" thereof, as defined by Section 2(a)(19) of the 1940 Act,
and the rules thereunder and as modified by any applicable orders of the
Commission, except that if this condition is not met by reason of the death,
disqualification or bona fide resignation of any Board Member or Members, then
the operation of this condition shall be suspended: (a) for a period of 45 days
if the vacancy or vacancies may be filled by the remaining Board Members; (b)
for a period of 60 days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the Commission may
prescribe by order upon application.
2. The Board will monitor their respective Fund for the existence of any
material irreconcilable conflict among the interests of the Variable Contract
owners of all Separate Accounts investing in the Funds and of the Qualified Plan
participants investing in the Funds. The Board will determine what action, if
any, shall be taken in response to such conflicts. 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 laws or regulations, or a public ruling,
private letter ruling, no-action or interpretive 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 the Funds are being managed; (e) a difference in voting
instructions given by variable annuity contract owners, variable life insurance
contract owners, and trustees of Qualified Plans; (f) a decision by an insurer
to disregard the voting instructions of Variable Contract owners; or (g) if
applicable, a decision by a Qualified Plan to disregard the voting instructions
of Qualified Plan participants.
3. Participating Insurance Companies, the Investment Managers, and any
Qualified Plan that executes a fund participation agreement upon becoming an
owner of 10 percent or more of the assets of an Fund (a "Participating Qualified
Plan"), will report any potential or existing conflicts of which it becomes
aware to the Board of any relevant Fund. Participating Insurance Companies, the
Investment Managers and the Participating Qualified Plans will be responsible
for assisting the Board in carrying out its responsibilities under these
conditions by providing the Board with all information reasonably necessary for
the Board to consider any issues raised. This responsibility includes, but is
not limited to, an obligation by each Participating Insurance Company to inform
the Board whenever voting instructions of Contract owners are disregarded and,
if pass-through voting is applicable, an obligation by each Participating
Qualified Plan to inform the Board whenever it has determined to disregard
Qualified Plan participant voting instructions. The responsibility to report
such information and conflicts, and to assist the Board, will be contractual
obligations of all Participating Insurance Companies investing in the Funds
under their agreements governing participation in the Funds, and such agreements
shall provide that these responsibilities will be carried out with a view only
to the interests of the Variable Contract owners. The responsibility to report
such information and conflicts, and to assist the Board, will be contractual
obligations of all Participating Qualified Plans under their agreements
governing participation in the Funds, and such agreements will provide that
their responsibilities will be carried out with a view only to the interests of
Qualified Plan participants.
4. If it is determined by a majority of the Board of a Fund, or by a majority
of the disinterested Board Members, that a material irreconcilable conflict
exists, the relevant Participating Insurance Companies and Participating
Qualified Plans will, at their own expense and to the extent reasonably
practicable as determined by a majority of the disinterested Board Members, take
whatever steps are necessary to remedy or eliminate the material irreconcilable
conflict, which steps could include: (a) in the case of Participating Insurance
Companies, withdrawing the assets allocable to some or all of the Separate
Account s from the Fund or any portfolio thereof and reinvesting such assets in
a different investment medium, including another portfolio of an Fund or another
Fund, 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
annuity contract owners or variable life insurance contract owners of one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected Variable Contract owners the option of making such a
change; (b) in the case of Participating Qualified Plans, withdrawing the assets
allocable to some or all of the Qualified Plans from the Fund and reinvesting
such assets in a different investment medium; and (c) establishing a new
registered management investment company or managed Separate Account. If a
material irreconcilable conflict arises because of a decision by a Participating
Insurance Company to disregard Variable Contract owner voting instructions, and
that decision represents a minority position or would preclude a majority vote,
then the insurer may be required, at the Fund's election, to withdraw the
insurer's Separate Account investment in such Fund, and no charge or penalty
will be imposed as a result of such withdrawal. If a material irreconcilable
conflict arises because of a Participating Qualified Plan's decision to
disregard Qualified Plan participant voting instructions, if applicable, and
that decision represents minority position or would preclude a majority vote,
the Participating Qualified Plan may be required, at the Fund's election, to
withdraw its investment in such Fund, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take remedial action in
the event of a determination by a Board of a material irreconcilable conflict
and to bear the cost of such remedial action will be a contractual obligation of
all Participating Insurance Companies and Participating Qualified Plans under
their agreements governing participation in the Funds, and these
responsibilities will be carried out with a view only to the interest of
Variable Contract owners and Qualified Plan participants.
5. For purposes of Condition 4, a majority of the disinterested Board Members
of the applicable Board will determine whether or not any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the relevant Fund or the Investment Managers be required to establish a new
funding medium for any Contract. No Participating Insurance Company shall be
required by Condition 4 to establish a new funding medium for any Variable
Contract if any offer to do so has been declined by vote of a majority of the
Variable Contract owners materially and adversely affected by the material
irreconcilable conflict. Further, no Participating Qualified Plan shall be
required by Condition 4 to establish a new funding medium for any Participating
Qualified Plan if (a) a majority of Qualified Plan participants materially and
adversely affected by the irreconcilable material conflict vote to decline such
offer, or (b) pursuant to governing Qualified Plan documents and applicable law,
the Participating Qualified Plan makes such decision without a Qualified Plan
participant vote.
6. The determination of the Board of the existence of a material
irreconcilable conflict and its implications will be made known in writing
promptly to all Participating Insurance Companies and Participating Qualified
Plans.
7. Participating Insurance Companies will provide pass-through voting
privileges to Variable Contract owners who invest in registered Separate
Accounts so long as and to the extent that the Commission continues to interpret
the 1940 Act as requiring pass-through voting privileges for Variable Contract
owners. As to Variable Contracts issued by unregistered Separate Accounts,
pass-through voting privileges will be extended to participants to the extent
granted by issuing insurance companies. Each Participating Insurance Company
will also vote shares of the Funds held in its Separate Accounts for which no
voting instructions from Contract owners are timely received, as well as shares
of the Funds which the Participating Insurance Company itself owns, in the same
proportion as those shares of the Funds for which voting instructions from
contract owners are timely received. Participating Insurance Companies will be
responsible for assuring that each of their registered Separate Accounts
participating in the Funds calculates voting privileges in a manner consistent
with other Participating Insurance Companies. The obligation to calculate voting
privileges in a manner consistent with all other registered Separate Accounts
investing in the Funds will be a contractual obligation of all Participating
Insurance Companies under their agreements governing their participation in the
Funds. Each Participating Qualified Plan will vote as required by applicable law
and governing Qualified Plan documents.
8. All reports of potential or existing conflicts received by the Board of a
Fund and all action by such Board with regard to determining the existence of a
conflict, notifying Participating Insurance Companies and Participating
Qualified Plans of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
meetings of such Board or other appropriate records, and such minutes or other
records shall be made available to the Commission upon request.
9. Each Fund will notify all Participating Insurance Companies that separate
disclosure in their respective Separate Account prospectuses may be appropriate
to advise accounts regarding the potential risks of mixed and shared funding.
Each Fund shall disclose in its prospectus that (a) the Fund is intended to be a
funding vehicle for variable annuity and variable life insurance contracts
offered by various insurance companies and for qualified pension and retirement
plans; (b) due to differences of tax treatment and other considerations, the
interests of various Contract owners participating in the Fund and/or the
interests of Qualified Plans investing in the Fund may at some time be in
conflict; and (c) the Board of such Fund will monitor events in order to
identify the existence of any material irreconcilable conflicts and to determine
what action, if any, should be taken in response to any such conflict.
10. Each Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders (which, for these purposes, will be the persons having a
voting interest in the shares of the Funds), and, in particular, the Funds will
either provide for annual shareholder meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings) or comply
with Section 16(c) of the 1940 Act, although the Funds are not the type of trust
described in Section 16(c) of the 1940 Act, as well as with Section 16(a) of the
1940 Act and, if and when applicable, Section 16(b) of the 1940 Act. Further,
each Fund will act in accordance with the Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of Board
Members and with whatever rules the Commission may promulgate with respect
thereto.
11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is amended,
or proposed Rule 6e-3 under the 1940 Act 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 on terms and conditions materially different
from any exemptions granted in the order requested in the application, then the
Funds and/or Participating Insurance Companies and Participating Qualified
Plans, as appropriate, shall take such steps as may be necessary to comply with
such Rules 6e-2 and 6e-3(T), as amended, or proposed Rule 6e-3, as adopted, to
the extent that such Rules are applicable.
12. The Participating Insurance Companies and Participating Qualified Plans
and/or the Investment Managers, at least annually, will submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out obligations imposed upon it by the conditions contained in
the application. Such reports, materials and data will be submitted more
frequently if deemed appropriate by the Board. The obligations of the
Participating Insurance Companies and Participating Qualified Plans to provide
these reports, materials and data to the Board, when the Board so reasonably
requests, shall be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds.
13. If a Qualified Plan should ever become a holder of ten percent or more of
the assets of a Fund, such Qualified Plan will execute a participation agreement
with the Fund that includes the conditions set forth herein to the extent
applicable. A Qualified Plan will execute an application containing an
acknowledgment of this condition upon such Qualified Plan's initial purchase of
the shares of any Fund.
Conclusion:
Applicants assert that, for the reasons summarized above, the requested
exemptions are appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Xxxxxxxxx Variable Products Series Fund, et al.
File No. 812-11698
SECURITIES AND EXCHANGE COMMISSION
Release No. IC-24079
1999 SEC LEXIS 2177
October 13, 1999
ACTION: Order Granting Exemptions
TEXT: Xxxxxxxxx Variable Products Series Fund ("Xxxxxxxxx Trust"), Franklin
Xxxxxxxxx Variable Insurance Products Trust ("VIP Trust"), Xxxxxxxxx Funds
Annuity Company ("TFAC") or any successor to TFAC, and any future open-end
investment company for which TFAC or any affiliate is the administrator,
sub-administrator, investment manager, adviser, principal underwriter, or
sponsor ("Future Funds") filed an application on July 14, 1999, and an amendment
on September 17, 1999 seeking an amended order of the Commission pursuant to
Section 6(c) of the Investment Company Act of 1940 ("1940 Act") exempting them
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). The prior order (Rel. No. IC-19879)
granted exemptive relief to permit shares of the Xxxxxxxxx Trust to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies. The proposed relief
would amend the prior order to add as parties to that order the VIP Trust and
any Future Funds and to permit shares of the Xxxxxxxxx Trust, the VIP Trust, and
Future Funds to be issued to and held by qualified pension and retirement plans
outside the separate account context.
A notice of the filing of the application was issued on September 17, 1999
(Rel. No. IC-24018). The notice gave interested persons an opportunity to
request a hearing and stated that an order granting the application would be
issued unless a hearing should be ordered. No request for a hearing has been
filed, and the Commission has not ordered a hearing.
The matter has been considered, and it is found that granting the requested
exemptions is appropriate in the public interest and consistent with the
protection of investors and the purposes intended by the policy and provisions
of the 1940 Act.
Accordingly,
IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the requested
exemptions from 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, be, and hereby are, granted,
effective forthwith.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Exhibit 8(c)
PARTICIPATION AGREEMENT
Among
LSA VARIABLE SERIES TRUST,
LSA ASSET MANAGEMENT LLC
And
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT (the "Agreement"), made and entered into as of
the first day of May 2002, by and among Allstate Life Insurance Company of New
York (hereinafter the "Company"), on its own behalf and on behalf of each
separate account of the Company named in Schedule 1 to this Agreement
(collectively, the "Accounts"), LSA Variable Series Trust (the "Fund") and LSA
Asset Management LLC (the "Manager").
WHEREAS, the Fund is an open-end management investment company
and is available to act as the investment vehicle for separate accounts now in
existence or to be established in the future for variable life insurance
policies, variable annuity contracts and other tax-deferred products offered by
insurance companies (the "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "Portfolio", (collectively, the
"Portfolios") and each representing the interests in a particular managed pool
of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities
and Exchange Commission (the "SEC"), dated October 4, 1999 (File No. 812-11656)
(hereinafter, the "Order") granting relief to the Fund, the Manager and any
subsequently registered open-end investment companies that in the future are
advised by the Manager, or by any entity controlling, controlled by, or under
common control with the Manager. Specifically, the Order provides exemptions
from Section 15(a) of the 1940 Act and Rule 18f-2 thereunder, subject to the
conditions set forth in the application, to permit investment advisers other
than the Manager, to serve and act as an investment sub-adviser to one or more
portfolios of the Fund (the "Adviser(s)") pursuant to written agreements between
the Manager and each Adviser that have been approved by the Board of Trustees of
the Fund (the "Board") but which have not been approved by a vote of a majority
of the outstanding voting securities of each portfolio. The Order also provides
exemptions from: certain registration statement disclosure requirements of Items
3, 6(a)(1)(ii) and 15(a)(3) of Form N1-A and Item 3 of Form N-14; certain proxy
statement disclosure requirements of Items 22(a)(3)(iv), (c)(1)(ii),
(c)(1)(iii), (c)(8) and (c)(9) of Schedule 14A under the Securities Exchange Act
of 1934, as amended; certain semi-annual reporting disclosure requirements of
Item 48 of Form N-SAR; and, certain financial statement disclosure requirements
of Sections 6-07(2)(a), (b), and (c) of Regulation S-X which may be deemed to
require various disclosures regarding advisory fees paid to the Advisers;
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") and its shares are registered under the Securities Act of 1933, as
amended (the "1933 Act"):
WHEREAS, the Manager is duly registered as an investment
adviser under the Investment Advisers Act of 1940:
WHEREAS, the Company has registered or will register certain
variable annuity and/or life insurance contracts under the 1933 Act (the
"Contracts") (unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly
existing segregated asset accounts, established by resolution of the Board of
Directors of the Company, to set aside and invest assets attributable to the
Contracts and the Accounts;
WHEREAS, the Company has registered or will register the
Accounts as unit investment trusts under the 1940 Act (unless an exemption from
registration is available);
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios (as
named in Schedule 2 to this Agreement and as may be amended from time to time by
mutual consent of the parties) on behalf of the Accounts to fund the Contracts
(as named in Schedule 3 to this Agreement and as may be amended from time to
time by mutual consent of the parties) and the Fund is authorized to sell such
shares to the Accounts at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the
Fund, the Manager and the Company agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares of the Fund which the
Company orders on behalf of the Account, executing such orders on a daily basis
at the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Fund. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:30 a.m. Eastern
Standard 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 net asset value pursuant to the rules of the SEC.
1.2. The Company will pay for Fund shares on the next Business Day after it
places an order to purchase Fund shares in accordance with Section 1.1. Payment
shall be in federal funds transmitted by wire or by a credit for any shares
redeemed.
1.3 The Fund agrees to make Fund shares available for purchase at the applicable
net asset value per share by the Company for its Accounts (as named in Schedule
1 to this Agreement and as may be amended from time to time by mutual consent of
the parties) on those days on which the Fund calculates its net asset value
pursuant to the rules of the SEC; provided, however, that the Board may refuse
to sell shares of any Portfolio to any person, or suspend or terminate the
offering of shares of any Portfolio if such action is required by law or by
regulatory authorities having jurisdiction or is, in the sole discretion of the
Board, acting in good faith and in light of their fiduciary duties under federal
and any applicable state laws, in the best interests of the shareholders of any
Portfolio.
1.4 The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Fund for receipt of requests for
redemption and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives written (or facsimile) notice of such request
for redemption by 9:30 a.m. Eastern Standard Time on the next following Business
Day. Payment shall be made within the time period specified in the Fund's
prospectus or statement of additional information, in federal funds transmitted
by wire to the Company's account as designated by the Company in writing from
time to time.
1.5 The Company shall pay for the Fund shares on the next Business Day after an
order to purchase shares is made in accordance with the provisions of Section
1.4. Payment shall be in federal funds transmitted by wire pursuant to the
instructions of the Fund's treasurer or by a credit for any shares redeemed.
1.6 The Company agrees to purchase and redeem the shares of the Portfolios named
In Schedule 2 offered by the Fund's then current prospectus and statement of
additional information in accordance with the provisions of such prospectus and
statement of additional information.
1.7 Net Asset Value. The Fund shall use its best efforts to inform the Company
of the net asset value per share for each Portfolio available to the Company by
6:30 p.m. Eastern Standard Time or as soon as reasonably practicable after the
net asset value per share for such Portfolio is calculated. The Fund shall
calculate such net asset value in accordance with the prospectus for such
Portfolio. In the event that net asset values are not communicated to the
Company by such time, the Company agrees to use its best efforts to include the
net asset value when received in its next business cycle for purposes of
calculating purchase orders and requests for redemption. However, if net asset
values are not available for an inclusion in the next business cycle and
purchase orders/redemptions are not able to be calculated and available to the
Company to execute within the time-frame identified in Section 2.3 (a), the Fund
shall reimburse and make the Company whole for any losses incurred as a result
of such delays.
1.8 Pricing Errors. Any material errors in the calculation of the net asset
value, dividends or capital gain information shall be reported to the Fund
promptly upon discovery by the Company. An error shall be deemed "material"
based on the Company's interpretation of the SEC's position and policy with
regard to materiality, as it may be modified from time to time. Neither the
Fund, the Manager, nor any of their affiliates shall be liable for any
information provided to the Company pursuant to this Agreement which information
is based on incorrect information supplied by or on behalf of the Company or any
other Participating Company to the Fund or the Manager. The Fund shall make the
Company whole for any payments or adjustments to the number of shares in the
Account that are reasonably demonstrated to be required as a result of pricing
errors.
ARTICILE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that sale of the Contracts shall comply in all material respects with state
insurance suitability requirements. The Company further represents and warrants
that 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 segregated asset account under laws
of the State of New York 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.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act, duly authorized for issuance
and sold in compliance with the applicable laws of the State of Delaware and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 0000 Xxx. The Fund shall amend the registration
statement for its shares under the 1933 Act and the 1940 Act from time to time
as required in order to effect the continuous offering of its shares. The Fund
shall register and qualify the shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the Fund.
2.3 The Fund represents that it is currently qualified as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and that it will make every effort to maintain such qualification
(under Subchapter M or any successor or similar provision) and that it will
notify the Company immediately upon having a reasonable basis for believing that
it has ceased to so qualify or that it might not so qualify in the future.
2.4 The Company represents that the Contracts are currently treated as life
insurance policies or annuity contracts, under applicable provisions of the Code
and that it will make every effort to maintain such treatment and that it will
notify the Fund immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so treated
in the future.
2.5 The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have its Board, a majority of whom are not interested persons of
the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6 The Fund makes no representation as to whether any aspect of Its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states except
that the Fund represents that the Fund's investment policies, fees and expenses
are and shall at all times remain in compliance with the applicable laws of the
State of Delaware and the Fund represents that its operations are and shall at
all times remain in material compliance with the applicable laws of the State of
Delaware to the extent required to perform this Agreement.
2.7 The Fund represents that it is lawfully organized and validly existing under
the laws of the State of Delaware and that it does and will comply in all
material respects with the 0000 Xxx.
2.8 The Manager represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
compliance in all material respects with the laws of its state of domicile and
any applicable state and federal securities laws. The Manager further represents
that it will make reasonable efforts to verify that all subadvisers are
similarly registered.
2.9 The Fund represents and warrants that its trustees, officers, employees, and
other individuals/entities, if any, dealing with the money and/or securities of
the Fund are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in an amount not less than
the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid
blanket fidelity bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.10 The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities, if any, dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount not less $5 million. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Manager in the event that such coverage no longer
applies.
ARTICLE III. Sales Material, Prospectuses and Other Reports
3.1 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material in
which the Fund or the Manager is named, at least five Business Days prior to its
use. No such material shall be used if the Fund or its designee reasonably
objects to such use within five Business Days after receipt of such material.
3.2 Except with the express permission of the Fund, the Company shall not give
any information or make any representations or statements on behalf of the Fund
or concerning the Fund in connection with the sale of the Contracts other than
the information or representations contained in the registration statement or
prospectus for the Fund shares, as such registration statement and prospectus
may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional material
approved by the Fund or its designee.
3.3 For purposes of this Article III, the phrase "sales literature or other
promotional material" shall mean 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 billboard
or electronic media), and sales literature (such as brochures, circulars, market
letters and form letters), distributed or made generally available to customers
or the public.
3.4 The Fund shall provide a copy of its current prospectus within a reasonable
period of its effective filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the prospectus for the Fund printed together in
one document (such printing to be at the Company's expense). The Manager shall
be permitted to review and approve the typeset form of the Fund's prospectus
prior to such printing.
3.5 The Fund or the Manager shall provide the Company with either: (i) a copy of
the Fund's proxy material, reports to shareholders, other information relating
to the Fund necessary to prepare financial reports, and other communications to
shareholders for printing and distribution to Contract owners at the Company's
expense, or (ii) camera ready and/or printed copies, if appropriate, of such
material for distribution to Contract owners at the Company's expense, within a
reasonable period of the filing date for definitive copies of such material. The
Manager shall be permitted to review and approve the typeset form of such proxy
material, shareholder reports and communications prior to such printing.
ARTICLE IV. Fees and Expenses
4.1 The Fund and Manager shall pay no fee or other compensation to the Company
under this Agreement, and the Company shall pay no fee or other compensation to
the Fund or Manager, except as provided herein.
4.2 All expenses incident to performance by each party of its
respective duties under this Agreement shall be paid by that party. The Fund
shall ensure that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent advisable by
the Fund, in accordance with applicable state laws prior to their sale. The Fund
shall bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, and the preparation of all statements
and notices required by any federal or state law.
4.3 The Fund, at its expense, shall provide the Company with copies of its proxy
statements, reports to shareholders, and other communications (except for
prospectuses and statements of additional information, which are covered in
section 3.4) to shareholders in such quantity as the Company shall reasonably
require for distributing to Contract owners. The Fund shall bear the expense of
mailing such proxy materials in the event the proxy vote is a result of actions
initiated by the Fund.
4.4 In the event the Fund adds one or more additional Portfolios and the parties
desire to make such Portfolios available to the respective Contract owners as an
underlying investment medium, a new Schedule 3 which shall be an amendment to
this Agreement shall be executed by the parties authorizing the issuance of
shares of the new Portfolios to the particular Account. The amendment may also
provide for the sharing of expenses for the establishment of new Portfolios
among Participating Insurance Companies desiring to invest in such Portfolios
and the provision of funds as the initial investment in the new Portfolios.
4.5 Except as provided in this Section 4.5, all expenses of preparing, setting
in type and printing and distributing Fund prospectuses and statements of
additional information shall be the expense of the Company. For prospectuses and
statements of additional information, or supplements thereto, provided by the
Company to its existing owners of Contracts who currently own shares of one or
more of the Fund's Portfolios, in order to update disclosure as required by the
1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund.
If the Company chooses to receive camera-ready film or computer diskettes in
lieu of receiving printed copies of the Fund's prospectus, the Fund shall bear
the cost of typesetting to provide the Fund's prospectus to the Company in the
format in which the Fund is accustomed to formatting prospectuses, and the
Company shall bear the expense of adjusting or changing the format to conform
with any of its prospectuses. In such event, the Fund will reimburse the Company
in an amount equal to the product of x and y where x is the number of such
prospectuses distributed to owners of the Contracts who currently own shares of
one or more of the Fund's Portfolios, and y is the Fund's per unit cost of
typesetting and printing the Fund's prospectus. The same procedure shall be
followed with respect to the Fund's statement of additional information. The
Company agrees to provide the Fund or its designee with such information as may
be reasonably requested by the Fund to assure that the Fund's expenses do not
include the cost of printing, typesetting, and distributing any prospectuses or
statements of additional information other than those actually distributed to
existing owners of the Contracts who currently own shares of one or more of the
Fund's Portfolios.
ARTICLE V. Conditions of the Order: Applicable Law
---------------------------------------
5.1 The Company has reviewed a copy of the Order, and in particular, has
reviewed the conditions to the requested relief set forth therein. The Company
agrees to be bound by the responsibilities of a Participating Insurance Company
as set forth in the Order.
5.2 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Delaware.
5.3 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 Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE VI. Diversification
6.1 The Fund will at all times invest money from the Contracts in such a manner
as to ensure that the Contracts will be treated as variable contracts under the
Code and the regulations issued thereunder. Without limiting the scope of the
foregoing, the Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations. In the even of a breach of
this Article VI by the Fund, it will take all reasonable steps (a) to notify
Company of such breach and (b) to adequately diversify the Fund so as to achieve
compliance within the grace period afforded by Regulation 817-5. The Fund shall
provide the Company information reasonably requested in relation to Section
817(h) diversification requirements, including quarterly reports and annual
certifications.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. 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 laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance.
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by Variable Insurance Product owners; or (f) a decision by a Participating
Insurance Company to disregard the voting instructions of contract owners. The
Board shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the Fund and each
member of the Board and officers, and each Adviser and each director and officer
of each Adviser, and each person, if any, who controls the Fund or the Adviser
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually, "Indemnified Party", for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration statement or
prospectus 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 Fund for use in the registration statement or
prospectus for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other than
statements or representations contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the Company, or
persons under its control and other than statements or representations
authorized by the Fund or an Adviser) or unlawful conduct of the Company or
persons under its control, with respect to the sale or distribution of the
Contracts or Fund shares; or
(iii)arise out of or as a result of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was made
in reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the services and
furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Sections 8.1(b) and 8.1
(c) hereof.
8.1(b) The Company shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement.
8.1(c) The Company shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the Company in writing within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the Company of any such claim shall not relieve
the Company from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provisions. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to participate, at its own
expense, in the defense of such action. The Company also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2 Indemnification by the Manager
8.2(a). The Manager agrees, with respect to each Portfolio that it manages, to
indemnify and hold harmless the Company and each of its directors and
officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually, "Indemnified Party," for purposes of this
Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Adviser) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of shares of the Portfolio that it
manages or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Fund by or on
behalf of the Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Contracts not supplied by the Fund or persons under its control
and other than statements or representations authorized by the
Company) or unlawful conduct of the Fund or Manager(s) or persons
under their control, with respect to the sale or distribution of
the Con-tracts or Portfolio shares; or
(iii)arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, 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 Fund; or
(iv) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Manager in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Manager; as limited by and in
accordance with the provisions of Section 8.2(b) and 8.2(c)
hereof. 8.2(b). The Manager shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against
an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement.
8.2(c) The Manager 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 Manager 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 Manager of any such claim shall not relieve
the Manager 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 Manager will be entitled to participate, at its own
expense, in the defense thereof. The Manager also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Manager to such party of the Manager'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 Manager 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.
8.2(d). The Company agrees promptly to notify the Manager 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. 8.3 Indemnification by the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (hereinafter collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence (except for
failure to comply with Section 6.1 of this Agreement for which the standard is
negligence), bad faith or willful misconduct of the Board or any member thereof,
are related to the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement (including any failure to comply with Section 6.1 of
this Agreement); or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Fund;
8.3(b). The Fund 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 may arise from such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified
Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement.
8.3(c). The Fund 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 Fund 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 Fund of any such claim shall not relieve the
Fund from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Fund will be entitled to participate, at its own expense, in the defense
thereof. The Fund also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Fund to such party of the Fund'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 Fund 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.
8.3(d). The Company agrees promptly to notify the Fund of the commencement of
any litigation or proceedings against it or any of its respective officers or
directors in connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of either Account, or the sale or
acquisition of shares of the Fund.
ARTICLE IX. Termination
9.1 This Agreement shall terminate with respect to some or all Portfolios:
(a) at the option of any party upon six months advance written notice
to the other parties at the address specified in Section X of
this Agreement; or
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements
of its Contracts or are not appropriate funding vehicles for the
Contracts, as determined by the Company reasonably and in good
faith. Prompt written notice of the election to terminate for
such cause and an explanation of such cause shall be furnished by
the Company.
9.2. It is understood and agreed that the right of any party hereto to terminate
this Agreement pursuant to Section 9.1(a) may be exercised for cause or for no
cause.
ARTICLE X. 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 parties to this Agreement.
If to the Fund:
LSA Variable Series Trust
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
If to the Manager:
LSA Asset Management LLC
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
If to the Company:
Allstate Life Insurance Company of New York
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
ATTN: Law Department, J5B
ARTICLE XI. Miscellaneous
11.1 Subject to the requirements of legal process and regulatory authority, each
party hereto shall treat as confidential the names and addresses of the owners
of the Contracts and all information reasonably identified as confidential in
writing by any other party hereto and, except as permitted by the Agreement,
shall not disclose, disseminate or utilize such names and addresses and other
confidential information without the express written consent of the affected
party until such time as it may come into the public domain.
11.2 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.
11.3 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
11.4 If any provision of this Agreement shall be held or made invalid by a court
decision, status, rule, or otherwise, the remainder of the Agreement shall not
be affected thereby.
11.5 Each party hereto shall cooperate with all appropriate governmental
authorities (including without limitation the SEC, the National Association of
Securities Dealers, Inc. 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. Each party hereto shall promptly notify the other parties
to this Agreement, by written notice to the addresses specified in Section V, of
any such investigation or inquiry.
11.6 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.
11.7 It is understood by the parties that this Agreement is not an exclusive
arrangement.
11.8 The Company and the Manager each understand and agree that the obligations
of the Fund under this Agreement are not binding upon any shareholder of the
Fund personally, but bind only the Fund and the Fund's property; the Company and
the Manager separately represent that each has notice of the provisions of the
Declaration of Trust of the Fund disclaiming shareholder liability for acts or
obligations of the Fund.
11.9 This Agreement shall not be assigned by any party hereto without the prior
written consent of all the parties.
11.10 This Agreement sets forth the entire agreement between the parties and
supercedes all prior communications, agreements and understandings, oral or
written, between the parties regarding the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name and on its behalf by its duly
authorized representative as of the day and year above written.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By:____________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title:__________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name and on its behalf by its duly
authorized representative as of the day and year above written.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By: ___________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title: __________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name and on its behalf by its duly
authorized representative as of the day and year above written.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By: ___________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title: __________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
Schedule 1
Separate Accounts
Allstate Life of New York Separate Account A
Allstate Life of New York Variable Annuity Account II
Schedule 2
Authorized Portfolios
LSA Variable Series Trust Aggressive Growth Fund
LSA Variable Series Trust Diversified Mid-Cap Fund
LSA Variable Series Trust Focused Equity Fund
LSA Variable Series Trust Growth Equity Fund
Schedule 3
Contracts
Allstate Provider Ultra Variable Annuity
Allstate Variable Annuity II
Allstate Preferred Client Variable Annuity
Allstate Variable Annuity 3
Allstate Variable Annuity 3 Asset Manager
Exhibit 8(d)
AMENDMENT NO. 1
To
PARTICIPATION AGREEMENT
Among
LSA VARIABLE SERIES TRUST,
LSA ASSET MANAGEMENT LLC
And
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT (the "Agreement"), made and entered into as of the first day
of June 2002, by and among Allstate Life Insurance Company of New York
(hereinafter the "Company"), on its own behalf and on behalf of one or more of
its separate accounts, LSA Variable Series Trust (the "Fund") and LSA Asset
Management LLC (the "Manager").
WHEREAS, effective May 1, 2002, the parties hereto entered into a
Participation Agreement ("Participation Agreement") which describes, among other
things, the respective duties and obligations of the Company, the Fund and the
Manager; and
WHEREAS, the parties agree that the Participation Agreement should be
amended in accordance with the terms of this Agreement; NOW, THEREFORE, in
consideration of their mutual promises, the Fund, the Manager and the Company
agree as follows:
Section 1. Amendment to Article VII of Participation Agreement
1.1 Unless otherwise indicated, defined terms used in this Agreement
shall have the meanings ascribed to them in the Participation Agreement.
1.2 The parties agree that, effective as of the date of this
Agreement, Article VII of the Participation Agreement is hereby deleted in
its entirety and is replaced with the following section, which now shall be
deemed Article VII of such agreement:
ARTICLE VII. Potential Material Irreconcilable Conflicts
7.1 The parties acknowledge that the Fund's shares may be made
available for investment to other Participating Insurance Companies that
are affiliated with the Company, and that the separate accounts of such
companies may serve as investment vehicles for both variable life insurance
policies and variable annuity contracts. In such event, the trustees
("Trustees") of the Fund will monitor the Fund for the existence of any
material irreconcilable conflict between the interests of the contract
owners of all Participating Insurance Companies. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by
any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a
public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Portfolio are
being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a
decision by a Participating Insurance Company to disregard the voting
instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists
and the implications thereof.
7.2 The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Board. The Company will assist the
Board in carrying out its specified responsibilities under this Article VII
by providing the Board with all information reasonably necessary for the
Board to consider any issues raised including, but not limited to,
information regarding a decision by the Company to disregard Contract owner
voting instructions.
7.3 If it is determined by a majority of the Trustees, or a majority
of the Board's disinterested Trustees, that a material irreconcilable
conflict exists that affects the interests of Contract owners, the Company
shall, in cooperation with other Participating Insurance Companies whose
contract owners are also affected, at its expense and to the extent
reasonably practicable (as determined by the Board) take whatever steps are
necessary or appropriate to remedy or eliminate the irreconcilable material
conflict, which steps could include: (a) withdrawing the assets allocable
to some or all of the Accounts from the Fund or any Portfolio and
reinvesting such assets in a different investment medium including, but not
limited to, another Portfolio of the Fund, or submitting the question of
whether or not 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; or (b)
establishing a new registered management investment company or managed
separate account.
7.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account; 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 Fund gives written notice that this
provision is being implemented. Until the end of such six (6) month period,
the Fund shall continue to accept and implement orders by the Company for
the purchase and redemption of shares of the Fund.
7.5 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 affected Account's investment in the Fund and terminate this Agreement
with respect to such Account within six (6) months after the Board informs
the Company in writing that it has 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 disinterested Trustees. Until the end of such six (6) month period, the
Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Company be required to establish a new funding medium for
the Contracts if an offer to do so has been declined by a vote of a
majority of Contract owners materially adversely affected by the
irreconcilable material conflict. In the event that the Board determines
that any proposed action does not adequately remedy any irreconcilable
material conflict, then the Company will withdraw the Account's investment
in the Fund and terminate this Agreement within six (6) months after the
Board informs 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.
7.7 The Company shall at least annually submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out the duties imposed upon it in accordance with the
requirements of this Article VII and, upon request, such reports, material
and data shall be submitted more frequently and, in any other format, if
deemed appropriate by the Board.
7.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provided exemptive relief from any provision of
the 1940 Act or the rules promulgated thereunder with respect to mixed or
shared funding on terms and conditions materially different from those
contained in this Article VII, then the Fund 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 may be applicable.
Section 2. Miscellaneous
2.1 The captions in this Agreement are included for convenience of
reference only and do not define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
2.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all such
counterparts, taken together, shall constitute one and the same instrument.
2.3 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.
2.4 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, to which the parties hereto are entitled
under applicable state and federal laws.
2.5 This Agreement sets forth the entire agreement and understanding
between the parties and supercedes all prior communications, agreements and
understandings, oral or written, between the parties regarding the subject
matter hereof. In the event of any conflict between the terms of this
Agreement and the Participation Agreement, then the terms of this Agreement
shall supercede such conflicting terms of the Participation Agreement.
[the remainder of this page is intentionally blank]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name, and on its behalf, by its
duly authorized representative as of the day and year first above written.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By:
-----------------------------------------------
-----------------------------------------------
Title: Assistant Vice President
-----------------------------------------------
LSA VARIABLE SERIES TRUST
By:
-----------------------------------------------
-----------------------------------------------
Title: President
-----------------------------------------------
LSA ASSET MANAGEMENT LLC
By:
-----------------------------------------------
-----------------------------------------------
Title: Chief Operating Officer
-----------------------------------------------
Exhibit 8(e)
AMENDMENT NO. 2
To
PARTICIPATION AGREEMENT
Among
LSA VARIABLE SERIES TRUST,
LSA ASSET MANAGEMENT LLC
And
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT (the "Agreement"), made and entered into as of the ___
day of _____ 2002, by and among Allstate Life Insurance Company of New York
(hereinafter the "Company"), on its own behalf and on behalf of one or more of
its separate accounts, LSA Variable Series Trust (the "Fund") and LSA Asset
Management LLC (the "Manager").
WHEREAS, effective May 1, 2002, the parties hereto entered into a
participation agreement ("Participation Agreement") which describes, among other
things, the respective duties and obligations of the Company, the Fund and the
Manager; and
WHEREAS, the Participation Agreement was amended by Amendment
No. 1 thereto effective as of June 1, 2002;
WHEREAS, the parties agree that the Participation Agreement should be
further amended in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of their mutual promises, the Fund,
the Manager and the Company agree as follows:
Section 1. Amendment to Schedule 1, Schedule 2 & Schedule 3
------------------------------------------------
1.1 Unless otherwise indicated, defined terms used in this Agreement
shall have the meanings ascribed to them in the Participation Agreement.
1.2 The parties agree that, effective as of the date of this Agreement,
Schedule 1, Schedule 2 and Schedule 3 of the Participation Agreement are hereby
deleted in their entirety and are hereby replaced with the following schedules:
Schedule 1
Separate Accounts
Allstate Life of New York Separate Account A
Allstate Life of New York Variable Annuity Account II
Allstate Life of New York Variable Account A
* * * * *
Schedule 2
Authorized Portfolios
1. LSA Variable Series Trust Aggressive Growth Fund*
2. LSA Variable Series Trust Diversified Mid-Cap Fund
3. LSA Variable Series Trust Focused Equity Fund*
4. LSA Variable Series Trust Growth Equity Fund
5. LSA Variable Series Trust Mid Cap Value Fund
* Previously made available as an underlying separate account investment option.
* * * * *
Schedule 3
Contracts
Allstate Provider Ultra Variable Annuity
Allstate Variable Annuity II
Allstate Preferred Client Variable Annuity
Allstate Variable Annuity 3
Allstate Variable Annuity 3 Asset Manager
Allstate Advisor
Allstate Advisor Plus
Allstate Advisor Preferred
Allstate Advisor Apex
* * * * *
Section 2. Miscellaneous
2.1 The captions in this Agreement are included for convenience of
reference only and do not define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
2.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all such
counterparts, taken together, shall constitute one and the same instrument.
2.3 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.
2.4 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, to which the parties hereto are entitled under
applicable state and federal laws.
[remainder of page intentionally left blank]
2.5 This Agreement sets forth the entire agreement and understanding
between the parties and supercedes all prior communications, agreements and
understandings, oral or written, between the parties regarding the subject
matter hereof. In the event of any conflict between the terms of this Agreement
and the Participation Agreement, then the terms of this Agreement shall
supercede such conflicting terms of the Participation Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and ratified in its name, and on its behalf, by its
duly authorized representative as of the day and year first above written.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By:____________________________________
Title: __________________________________
LSA VARIABLE SERIES TRUST
By: ___________________________________
Title:__________________________________
LSA ASSET MANAGEMENT LLC
By: ___________________________________
Title: __________________________________
Exhibit 8(f)
PARTICIPATION AGREEMENT
Among
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS,
XXXXXXXXXXX FUNDS, INC.
and
ALLSTATE LIFE INSURANCE COMPANY of NEW YORK
THIS AGREEMENT (the "Agreement"), made and entered into as of
the 8th day of October, 2002 by and among Allstate Life Insurance Company of New
York (hereinafter the "Company"), on its own behalf and on behalf of each
separate account of the Company named in Schedule 1 to this Agreement, as may be
amended from time to time by mutual consent (hereinafter collectively the
"Accounts"), Xxxxxxxxxxx Variable Account Funds (hereinafter the "Fund") and
OppenheimerFunds, Inc. (hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company
and is available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies, variable annuity contracts and other tax-deferred products
(collectively, the "Variable Insurance Products") offered by insurance companies
(hereinafter "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into
several series of shares, each designated a "Portfolio", and each representing
the interests in a particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities
and Exchange Commission (the "SEC"), dated July 16, 1986 (File No. 812-6324)
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 Investment Company Act of 1940, as amended,
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies (hereinafter the
"Mixed and Shared Funding Exemptive Order")
WHEREAS, the Fund is registered as an open-end management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment
adviser under the federal Investment Advisers Act of 1940;
WHEREAS, the Company has registered or will register certain
variable annuity and/or life insurance contracts under the 1933 Act (hereinafter
"Contracts") (unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly
existing segregated asset accounts, established by resolution of the Board of
Directors of the Company, to set aside and invest assets attributable to the
aforesaid variable contracts (the Separate Account(s) covered by the Agreement
are specified in Schedule 1 attached hereto, as may be modified by mutual
consent from time to time);
WHEREAS, the Company has registered or will register the
Accounts as unit investment trusts under the 1940 Act (unless an exemption from
registration is available);
WHEREAS, to the extent permitted by applicable insurance laws
and regulations, the Company intends to purchase shares in the Portfolios (the
Portfolios covered by this Agreement are specified in Schedule 2 attached hereto
as may be modified by mutual consent from time to time), on behalf of the
Accounts to fund the Contracts, and the Fund is authorized to sell such shares
to unit investment trusts such as the Accounts at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Adviser and the Company agree as follows:
ARTICLE I. Purchase and Redemption of Fund Shares
--------------------------------------
1.1. The Fund agrees to sell to the Company those shares of
the Fund which the Company orders on behalf of the Accounts, executing such
orders on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the order for the shares of the Fund. For purposes
of this Section 1.1, the Company shall be the designee of the Fund for receipt
of such orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives written (or facsimile)
notice of such order by 9:30 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 net asset value pursuant
to the rules of the SEC.
1.2. The Company shall pay for Fund shares by 2:00 P.M. New
York time on the next Business Day after it places an order to purchase Fund
shares in accordance with Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire or by a credit for any shares redeemed.
1.3. The Fund agrees to make Fund shares available for
purchase by the Company for their separate Accounts listed in Schedule 1 on
those days on which the Fund calculates its net asset value pursuant to rules of
the SEC; provided, however, that the Board of Trustees of the Fund (hereinafter
the "Trustees") may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Trustees, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, in the best
interests of the shareholders of any Portfolio (including without limitation
purchase orders that individually or together with other contemporaneous orders
represent large transactions in shares of any Portfolio held for a relatively
brief period of time). Such shares shall be purchased at the applicable net
asset value per share, increased by any initial sales charge, if the Fund's
prospectus then in effect imposes such a charge on such purchases.
1.4. The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption, reduced by any redemption fee or
deferred sales charge, if the Fund's prospectus in effect as of the date of such
redemption imposes such a fee or charge on such redemptions. For purposes of
this Section 1.4, the Company shall be the designee of the Fund for receipt of
requests for redemption and receipt by such designee shall constitute receipt by
the Fund; provided that the Fund receives written (or facsimile) notice of such
request for redemption by 9:30 a.m. New York time on the next following Business
Day; however the Company undertakes to use its best efforts to provide such
notice to the Fund by no later than 9:00 A.M. New York time on the next
following Business Day. Payment shall be made within the time period specified
in the Fund's prospectus or statement of additional information, provided,
however, that if the Fund does not pay for the Fund shares that are redeemed on
the next Business Day after a request to redeem shares is made, then the Fund
shall apply any such delay in redemptions uniformly to all holders of shares of
that Portfolio. Payment shall be in federal funds transmitted by wire to the
Company's bank accounts as designated by the Company in writing from time to
time.
1.5. The Company agrees to purchase and redeem the shares of
the Portfolios named in Schedule 2 offered by the then current prospectus and
statement of additional information of the Fund in accordance with the
provisions of such prospectus and statement of additional information. The
Company shall not permit any person other than a Contract owner to give
instructions to the Company which would require the Company to redeem or
exchange shares of the Fund.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the securities deemed to be
issued by the Accounts under the Contracts are or will be registered under the
1933 Act (unless an exemption from registration is available) and, that the
Contracts will be issued, offered and sold in compliance in all material
respects with all applicable federal and state laws and regulations, including
without limitation state insurance suitability requirements and National
Association of Securities Dealers, Inc. ("NASD") conduct rules. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable state law and that it has legally and
validly established the Accounts prior to the issuance or sale of units thereof
as a segregated asset account and has registered the Accounts as unit investment
trusts in accordance with the provisions of the 1940 Act (unless an exemption
from registration is available) to serve as segregated investment accounts for
the Contracts, and that it will maintain such registration for so long as any
Contracts are outstanding or until registration is no longer required under
federal and state securities laws. The Company shall amend the registration
statement under the 1933 Act for the Contracts and the registration statement
under the 1940 Act for the Accounts from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be required
by applicable law. The Company shall register and qualify the Contracts for sale
in accordance with the securities laws of the various states only if and to the
extent deemed necessary by the Company.
2.2. The Company represents and warrants, for purposes other than
diversification under Section 817 of the Internal Revenue Code of 1986 as
amended (the "Code"), that the Contracts are currently and at the time of
issuance will be treated as life insurance or annuity contracts under applicable
provisions of the Code and the regulations issued thereunder, and that it will
make every effort to maintain such treatment and that it will notify the Fund
and the Adviser immediately upon having a reasonable basis for believing that
the Contracts have ceased to be so treated or that they might not be so treated
in the future. In addition, the Company represents and warrants that the
Accounts are a "segregated asset accounts" and that interests in the Accounts
are offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Code and the
regulations issued thereunder (and any amendments or other modifications to such
section or such regulations (and any revenue rulings, revenue procedures,
notices and other published announcements of the Internal Revenue Service
interpreting these provisions). The Company shall continue to meet such
definitional requirements, and it will notify the Fund and the Adviser
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future. The Company
represents and warrants that it will not purchase Fund shares with assets
derived from tax-qualified retirement plans except indirectly, through Contracts
purchased in connection with such plans.
2.3. Subject to Section 2.5 hereof, the Company represents and warrants
that the Contracts are currently and at the time of issuance will be treated as
life insurance or annuity contracts under applicable provisions of the Code and
that it will make every effort to maintain such treatment and that it will
notify the Fund and the Adviser immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
2.4. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized for
issuance and sold in accordance with applicable state and federal law and that
the Fund is and shall remain registered under the 1940 Act for as long as the
Fund shares are sold. The Fund shall amend the registration statement for its
shares under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its shares. The Fund shall register
and qualify the shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Fund.
2.5. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable contracts
under the Code and the regulations issued thereunder. Without limiting the scope
of the foregoing, the Fund represents and warrants that each Portfolio of the
Fund will comply with Section 817(h) of the Code and Treasury Regulation
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any amendments or other modifications
to such Section or Regulations (and any revenue rulings, revenue procedures,
notices, and other published announcements of the Internal Revenue Service
interpreting these provisions). In the event the Fund should fail to so qualify,
it will take all reasonable steps (a) to notify the Company of such breach and
(b) to resume compliance with such diversification requirement within the grace
period afforded by Treasury Regulation 1.817.5. The Fund and Adviser represent
that each Portfolio is qualified as a Regulated Investment Company under
Subchapter M of the Code and that it will maintain such qualification (under
Subchapter M or any successor 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.
2.6. If the Contracts purchase shares of a series and class of the Fund
that have adopted a plan under Rule 12b-1 under the 1940 Act to finance
distribution expenses (a "12b-1 Plan"), the Company agrees to provide the
Trustees any information as may be reasonably necessary for the Trustees to
review the Fund's 12b-1 Plan or Plans.
2.7. The Fund represents that it is lawfully organized and validly existing
under the laws of the Commonwealth of Massachusetts and that it does and will
comply with applicable provisions of the 0000 Xxx.
2.8. The Adviser represents and warrants that it is and will remain duly
registered under all applicable federal and state securities laws and that it
shall perform its obligations for the Fund in compliance with any applicable
state and federal securities laws.
2.9. The Fund and Adviser each represent and warrant that all of its
respective directors, trustees, officers, employees, investment advisers, and
transfer agent of the Fund are and shall continue to be at all times covered by
a blanket fidelity bond (which may, at the Fund's election, be in the form of a
joint insured bond) or similar coverage for the benefit of the Fund in an amount
not less than the minimal coverage as required currently by Section 17(g) and
Rule 17g-1 of the 1940 Act or related provisions as may be promulgated from time
to time. The aforesaid Bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable insurance company. The Adviser agrees to make
all reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Company in the event
that such coverage no longer applies.
2.10. The Company represents and warrants that all of its directors,
officers, employees,agents, investment advisers, and other individuals and
entities dealing with the money and/or securities of the Fund are covered by a
blanket fidelity bond or similar coverage in an amount not less than the
equivalent of U.S. $10 million. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable insurance company.
The Company agrees that any amount received under such bond in connection with
claims that derive from arrangements described in this Agreement will be paid by
the Company for the benefit of the Fund. The Company agrees to make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, and agrees to notify the Fund and the Adviser in
the event that such coverage no longer applies.
2.11. The Fund and the Adviser represent that they will make a good faith
effort to (a) materially comply with any applicable state insurance law
restrictions with which the Fund must comply to perform its obligations under
this Agreement, provided, however, that the Company provide specific
notification of such restrictions to the Fund and the Adviser in advance and in
writing,; and (b) furnish information to the Company about the Fund not
otherwise available to the Company which is required by state insurance law to
enable the Company to obtain the authority needed to issue the Contracts in any
applicable state.
ARTICLE III. Sales Material, Prospectuses and Other Reports
----------------------------------------------
3.1. The Company shall furnish,
or shall cause to be furnished, to the Fund or its designee, each piece of sales
literature or other promotional material in which the Fund or the Adviser is
named, at least ten Business Days prior to its use. No such material shall be
used if the Fund or its designee reasonably object to such use within ten
Business Days after receipt of such material. "Business Day" shall mean any day
in which the New York Stock Exchange is open for trading and in which the Fund
calculates its net asset value pursuant to the rules of the Securities and
Exchange Commission.
3.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sale
literature or other promotional material approved by the Fund or its designee,
except with the permission of the Fund.
3.3. For purposes of this Article III, the phrase "sales literature or
other promotional material" means 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 billboard
or electronic media), and sales literature (such as brochures, circulars, market
letters and form letters), distributed or made generally available to customers
or the public.
3.4. The Fund shall provide a copy of its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). The Adviser shall be
permitted to review and approve the typeset form of the Fund's Prospectus prior
to such printing.
3.5. The Fund or the Adviser shall provide the Company with either: (i) a
copy of the Fund's proxy material, reports to shareholders, other information
relating to the Fund necessary to prepare financial reports, and other
communications to shareholders for printing and distribution to Contract owners
at the Company's expense, or (ii) camera ready and/or printed copies, if
appropriate, of such material for distribution to Contract owners at the
Company' expense, within a reasonable period of the filing date for definitive
copies of such material. The Adviser shall be permitted to review and approve
the typeset form of such proxy material, shareholder reports and communications
prior to such printing.
3.6. In the event a meeting of shareholders of the Fund (or any Portfolio)
is called by the Trustees, the Company shall: (i) solicit voting instructions
from Contract owners; (ii) vote the Portfolio(s) shares held in the Account in
accordance with instructions received from Contract owners; (iii) vote Portfolio
shares held in the Account for which no instructions have been received, as well
as Portfolio shares held by the Company, in the same proportion as Portfolio(s)
shares for which instructions have been received from Contract owners, so long
as and to the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners; and (iv) take
responsibility for assuring that the Accounts calculate voting privileges in a
manner consistent with other Participating Insurance Companies. The Fund and
Adviser agree to assist the Company and the other Participating Insurance
Companies in carrying out this responsibility.
ARTICLE IV. Fees and Expenses
4.1. The Fund and Adviser shall pay no fee or other compensation to the
Company under this agreement, and the Company shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein.
4.2. All expenses incident to performance by each party of its respective
duties under this Agreement shall be paid by that party. The Fund shall see to
it that all its shares are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear
the expenses for the cost of registration and qualification of the Fund's
shares, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, and the preparation of all statements
and notices required by any federal or state law.
4.3. The Company shall bear the expenses of typesetting, printing and
distributing the Fund's prospectus, proxy materials and reports to owners of
Contracts issued by the Company.
4.4. In the event the Fund adds one or more additional Portfolios and the
parties desire to make such Portfolios available to the respective Contract
owners as an underlying investment medium, a new Schedule 2 or an amendment to
this Agreement shall be executed by the parties authorizing the issuance of
shares of the new Portfolios to the particular Accounts. The amendment may also
provide for the sharing of expenses for the establishment of new Portfolios
among Participating Insurance Companies desiring to invest in such Portfolios
and the provision of funds as the initial investment in the new Portfolios.
ARTICLE V. Potential Conflicts
5.1. The Board of Trustees of the Fund (the "Board") will monitor the Fund
for the existence of any material irreconcilable conflict between the interests
of the Contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private
letter ruling, no-action or interpretative letter, or any similar
action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant
proceeding;
(d) the manner in which the investments of any Portfolio are being
managed;
(e) a difference in voting instructions given by participating
insurance companies or 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 Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and
the implications thereof.
5.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. The Company agrees to be bound by the responsibilities
of a participating insurance company as set forth in the Mixed and Shared
Funding Exemptive Order, including without limitation the requirement that the
Company report any potential or existing conflicts of which it is aware to the
Board. The Company will assist the Board in carrying out its responsibilities in
monitoring such conflicts under the Mixed and Shared Funding Exemptive Order, by
providing the Board in a timely manner with all information reasonably necessary
for the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever Contract owner
voting instructions are disregarded and by confirming in writing, at the Fund's
request, that the Company are unaware of any such potential or existing material
irreconcilable conflicts.
5.3. If it is determined by a majority of the Board, or a majority of its
disinterested 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 disinterested Trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to and
including:
(1) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such
assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the
question whether such segregation should be 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 accounts.
The Company's obligations under this Section 5.3 shall not depend on whether
other affected participating insurance companies fulfill a similar obligation.
5.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
could conflict with the majority of Contract owner instructions, the Company may
be required, at the Fund's election, to withdraw the Accounts' investment in the
Fund and terminate this Agreement; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of the six month period the Fund shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Fund.
5.5. 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
Accounts' investment in the Fund and terminate this Agreement within six months
after the Board informs the Company in writing that it has 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 disinterested members of the Board. Until the end of the foregoing six month
period, the Fund shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Fund, subject to applicable
regulatory limitation.
5.6. For purposes of Sections 5.3 through 5.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 5.3 to establish a new funding
medium for 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 Board determines that any proposed
action does not adequately remedy any irreconcilable material conflict, then the
Company will withdraw the particular Accounts' investment in the Fund and
terminate this Agreement within six (6) months after the Board informs 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 members of the Board.
ARTICLE VI. Applicable Law
6.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
6.2. This Agreement shall be subject to the provisions of the 1933 Act, the
Securities Exchange Act of 1934 and the 1940 Act, and the rules and regulations
and rulings thereunder, including such exemption from those statutes, rules and
regulations as the Securities and Exchange Commission may grant (including, but
not limited to, the Mixed and Shared Funding Exemptive Order) and the terms
hereof shall be interpreted and construed in accordance therewith, provided
however that the term "Registration Statement or Prospectus for the Variable
Contracts" and terms of similar import shall include
(i) any offering circular or similar document and sales literature or
other promotional materials used to offer and/or sell the
variable Contracts in compliance with the private offering
exemption in the 1933 Act and applicable federal and state laws
and regulations, and
(ii) the term "Registration Statement" and "Prospectus" as defined in
the 1933 Act.
ARTICLE VII. Termination
7.1 This Agreement shall terminate:
(a) at the option of any party upon six month's advance written
notice to the other parties;
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements
of its Contracts or are not appropriate funding vehicles for the
Contracts, as determined by the Company reasonably and in good
faith. Prompt notice of the election to terminate for such cause
and an explanation of such cause shall be furnished by the
Company;
(c) as provided in Article V;
(d) at the option of the Fund or the Adviser upon institution of
formal proceedings against the Company (or its parent) by the
NASD, the SEC, the insurance commission of any state or any other
regulatory body having jurisdiction over that party, which would
have a material adverse effect on the Company's ability to
perform its obligations under this Agreement;
(e) at the option of the Company upon institution of formal
proceedings against the Fund or the Adviser (or its parent) by
the NASD, the SEC, or any state securities or insurance
department or any other regulatory body having jurisdiction over
that party, which would have a material adverse effect on the
Adviser's or the Fund's ability to perform its obligations under
this Agreement;
(f) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals or the vote of the Contract owners
having an interest in the Account (or any subaccount) to
substitute the shares of another investment company for the
corresponding Portfolio shares of the Fund in accordance with the
terms of the Contracts for which those Portfolio shares have been
selected to serve as the underlying investment media. The Company
will give 45 days prior written notice to the Fund of the date of
any proposed vote or other action taken to replace the Fund's
shares;
(g) at the option of the Company or the Fund upon a determination by
a majority of the Board, or a majority of the disinterested Board
members, that an irreconcilable material conflict exists among
the interests of (i) all Contract owners of variable insurance
products of all separate accounts or (ii) the interests of the
Participating Insurance Companies investing in the Fund as
delineated in Article VII of this Agreement;
(h) at the option of the Company if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code, or
under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify;
(i) at the option of the Company if the Fund fails to meet the
diversification requirements specified in section 2.5 hereof or
if the Company reasonably believes that the Fund will fail to
meet such requirements;
(j) at the option of any party to this Agreement, upon another
party's failure to cure a material breach of any provision of
this Agreement within thirty days after written notice thereof;
(k) at the option of the Company, if the Company determines in its
sole judgment exercised in good faith, that either the Fund or
the Adviser has suffered a material adverse change in its
business, operations or financial condition since the date of
this Agreement or is the subject of material adverse publicity
which is likely to have a material adverse impact upon the
business and operations of the Company;
(l) at the option of the Fund or the Adviser, if the Fund or Adviser
respectively, shall determine in its sole judgment exercised in
good faith, that the Company has suffered a material adverse
change in its business, operations or financial condition since
the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon
the business and operations of the Fund or the Adviser; or
(m) subject to the Fund's compliance with Section 2.5 hereof, at the
option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable requirements of
federal and/or state law.
7.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 7.1(a) may be exercised for cause
or for no cause.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
(a). The Company agrees to indemnify and hold harmless the Fund
and the Adviser, each member of their Board of Trustees or
Board of Directors, each of their officers and each person,
if any, who controls the Fund within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or
litigation (including reasonable legal and other expenses),
to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar
as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to
the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the registration statement, prospectus or statement
of additional information for the Contracts or
contained in sales literature or other promotional
material for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances which they
were made; provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity
with information furnished to the Company by or on
behalf of the Fund or the Adviser for use in the
registration statement, prospectus or statement of
additional information for the Contracts or sales
literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations by or on behalf of the Company (other
than statements or representations contained in the
Fund registration statement, Fund prospectus or sales
literature or other promotional material of the Fund
not supplied by the Company or persons under its
control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or
distribution of the Contracts or Fund shares, provided
any such statement or representation or such wrongful
conduct was not made in reliance upon and in conformity
with information furnished in writing, via fax or via
electronic means, to the Company by or on behalf of the
Advisor or the Fund; or
(iii)arise out of any untrue statement or alleged untrue
statement of a material fact contained in the Fund
registration statement, Fund prospectus, statement of
additional information or sales literature or other
promotional material of the Fund or any amendment
thereof or supplement thereto or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, if such
statement or omission was made in reliance upon
information furnished in writing, via fax or via
electronic means, to the Fund or the Adviser by or on
behalf of the Company or persons under its control; or
(iv) arise out of or result from any material breach of this
Agreement by the Company.
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company may
otherwise have.
(b). The Company 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
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.
8.2. Indemnification by Adviser and Fund
8.2(a)(1). The Adviser agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Adviser) or litigation (including reasonable legal
and other expenses) to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration
statement, prospectus, statement of additional information or sales
literature of the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were made;
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 in writing, via fax or via electronic means, to
the Adviser or the Fund by or on behalf of the Company for use in the
Fund registration statement, prospectus or statement of additional
information, or sales literature or other promotional material for the
Contracts or of the Fund; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Contracts or in
the Contract registration statement, the Contract prospectus,
statement of additional information, or sales literature or other
promotional material for the Contracts not supplied by the Adviser or
the Fund or persons under the control of the Adviser or the Fund
respectively) or wrongful conduct of the Adviser or persons under its
control, with respect to the sale or distribution of the Contracts,
provided any such statement or representation or such wrongful conduct
was not made in reliance upon and in conformity with information
furnished in writing, via fax or via electronic means, to the Adviser
or the Fund by or on behalf of the Company; or
(iii)arise out of any untrue statement or allegedly 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 in light of the circumstances in which they
were made, if such statement or omission was made in reliance upon
information furnished in writing, via fax or via electronic means, to
the Company by or on behalf of the Fund or persons under the control
of the Adviser; or
(iv) arise out of or result from any material breach of this Agreement by
the Adviser;
except to the extent provided in Sections 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Adviser may
otherwise have.
8.2(a)(2) The Fund agrees to indemnify and hold harmless the Indemnified
Parties [as defined in Section 8.2(a)(1)] against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Fund) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any statute,
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the operations of the Fund or the sale or acquisition of the Fund's
shares and:
(i) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of any material fact or (b) the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading, if
such fact, statement or omission is contained in the registration
statement for the Fund or the Contracts, or in the prospectus or
statement of additional information for the Contracts or the Fund, or
in any amendment to any of the foregoing, or in sales literature or
other promotional material for the Contracts or of the Fund, provided,
however, that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement, fact or omission or such alleged
statement, fact or omission was made in reliance upon and in
conformity with information furnished in writing, via fax or via
electronic means, to the Adviser or the Fund by or on behalf of the
Indemnified Party; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Contracts or in
the Contract registration statement, the Contract prospectus,
statement of additional information, or sales literature or other
promotional material for the Contracts not supplied by the Adviser or
the Fund or persons under the control of the Adviser or the Fund
respectively) or wrongful conduct of the Fund or persons under its
control with respect to the sale or distribution of Contracts,
provided any such statement or representation or such wrongful conduct
was not made in reliance upon and in conformity with information
furnished in writing, via fax or via electronic means, to the Adviser
or the Fund by or on behalf of the Company; or
(iii)arise out of or result from any material breach of this Agreement by
the Fund (including a failure to comply with the diversification
requirements specified in Section 2.5 of this Agreement);
except to the extent provided in Section 8.2(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Fund may
otherwise have.
(b). The Fund and 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.
8.3 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.3) shall not be liable
under the indemnification provisions of this Article VIII with respect to any
claim made against a party entitled to indemnification under this Article VIII
("indemnified party" for the purpose of this Section 8.3) unless such
indemnified party shall have notified the indemnifying party in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
indemnified party (or after such party shall have received notice of such
service on any designated agent), but failure to notify the indemnifying party
of any such claim shall not relieve the indemnifying party from any liability
which it may have to the indemnified party against whom such action is brought
under the indemnification provisions of this Article VIII, except to the extent
that the failure to notify results in the failure of actual notice to the
indemnifying party and such indemnifying party is damaged solely as a result of
failure to give such notice. In case any such action is brought against the
indemnified party, the indemnifying party will be entitled to participate, at
its own expense, in the defense thereof. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party's election to assume the defense thereof, the
indemnified party shall bear the fees and expenses of any additional counsel
retained by it, and the indemnifying party will not be liable to such party
under this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. A
successor by law of the parties to this Agreement shall be entitled to the
benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement. ARTICLE IX. 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 to the other party. If to
the Fund:
Xxxxxxxxxxx Variable Account Funds
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
If to the Adviser:
OppenheimerFunds, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
If to the Company:
Allstate Life Insurance Company of New York
0000 Xxxxxxx Xxxx, X0X
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx Pas
ARTICLE X. Miscellaneous
10.1. The Company represents and warrants that any Contracts
eligible to purchase shares of the Fund and offered and/or sold in private
placements will comply in all material respects with the exemptions from the
registration requirements of the 1933 Act and applicable federal and state laws
and regulations.
10.2. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by (i) this Agreement and (ii) by Title V, Subtitle A of the
Xxxxx-Xxxxx-Xxxxxx Act and by regulations adopted thereunder by regulators
having jurisdiction over the parties hereto, shall not disclose, disseminate or
utilize such names and addresses and other confidential information without the
express written consent of the affected party until such time as it may come
into the public domain.
10.3. The captions in this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
10.4. This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and the
same instrument.
10.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
10.6. Each party hereto shall cooperate with, and promptly
notify each other party and all appropriate governmental authorities (including
without limitation the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc. 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.
10.7. The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.8. It is understood by the parties that this Agreement
is not an exclusive arrangement in any respect.
10.9. The Company and the Adviser each understand and agree
that the obligations of the Fund under this Agreement are not binding upon any
Trustee or shareholder of the Fund personally, but bind only the Fund with
respect to the Portfolio and the Portfolio's property; the Company and the
Adviser each represent that it has notice of the provisions of the Declaration
of Trust of the Fund disclaiming Trustee and shareholder liability for acts or
obligations of the Fund.
10.10. This Agreement shall not be assigned by any party
hereto without the prior written consent of all the parties. Notwithstanding the
foregoing or anything to the contrary set forth in this Agreement, the Adviser
may transfer or assign its rights, duties and obligations hereunder or interest
herein to any entity owned, directly or indirectly, by Xxxxxxxxxxx Acquisition
Corp. (the Adviser's parent corporation) or to a successor in interest pursuant
to a merger, reorganization, stock sale, asset sale or other transaction,
without the consent of the Company, as long as (i) that assignee agrees to
assume all the obligations imposed on the Adviser by this Agreement, and (ii)
the Fund consents to that assignment.
10.11. This Agreement sets forth the entire agreement between
the parties and supercedes all prior communications, agreements and
understandings, oral or written, between the parties regarding the subject
matter hereof.
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 as of the date specified
below.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
By: __________________________________
Xxxxxxx X. Xxxxxx Pas
Title: Assistant Vice President
Date: ________________________________
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS
By: __________________________________
Xxxxxx X. Xxxx
Title: Secretary
Date: ________________________________
OPPENHEIMERFUNDS, INC.
By
----------------------------------
Xxxxxx X. Xxxx
Title: Senior Vice President
Date: ________________________________
SCHEDULE 1
Separate Accounts Products
Allstate Life of New York Separate Account A Select Directions NY
Allstate Custom Portfolio NY
Allstate Provider NY
Allstate Custom Portfolio Plus NY
Provider Ultra NY
Allstate Advisor
Allstate Advisor Plus
Allstate Advisor Preferred
Allstate Advisor Apex
Allstate Life of New York Variable Life LBL Cash Value VUL NY
Separate Account A LBL Death Benefit VUL NY
SCHEDULE 2
Portfolios of Xxxxxxxxxxx Variable Account Funds shown below do not include
service class shares unless expressly indicated:
Aggressive Growth Fund/VA
Bond Fund/VA
Capital Appreciation Fund/VA
Global Securities Fund/VA
High Income Fund/VA
Main Street Small Cap Fund/VA
Multiple Strategies Fund/VA
Strategic Bond Fund/VA
Aggressive Growth Fund/VA - Service Class Global Securities Fund/VA - Service
Class High Income Fund/VA - Service Class International Growth Fund/VA - Service
Class Main Street Growth & Income Fund/VA - Service Class Main Street Small Cap
Fund/VA - Service Class Multiple Strategies Fund/VA - Service Class Strategic
Bond Fund/VA - Service Class
Exhibit 8(h)
AMENDMENT NO. 1
---------------
To The
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
And
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
WHEREAS, Allstate Life Insurance Company of New York ("Company"), Xxx Xxxxxx
Life Investment Trust ("Fund"), Xxx Xxxxxx Funds Inc. ("Underwriter") and Xxx
Xxxxxx Asset Management Inc. ("Adviser") have previously entered into a
Participation Agreement dated March 26, 1998 ("Agreement"); and
WHEREAS, the Fund has agreed to provide Class I Shares to the separate accounts
listed in Schedule A of the Agreement; and
WHEREAS, each of the parties hereto desires to amend and restate Schedule B to
the Agreement.
NOW, THEREFORE, each of the parties hereby amends the Agreement as follows:
1. Schedule A is hereby amended and restated, and replaced in its
entirety by the Schedule A attached ----------- ---------- hereto.
2. Schedule B is hereby amended and restated, and replaced in its
entirety by the Schedule B attached ----------- ---------- hereto.
3. All capitalized terms used in this Amendment No. 1 shall have the
meaning assigned in the Agreement. Except as set forth in this
Amendment No. 1, no other modifications or changes are made to the
Agreement.
4. This Amendment No. 1 may be executed in one or more counterparts, each
of which shall be deemed an original and all of which together will be
deemed one and the same document.
IN WITNESS WHEREOF, each of the parties have caused this Amendment No. 1 to be
executed in their names and on their behalf and through their duly authorized
offices, as of this 1st day of May, 2002.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
-----------------------------------------
By: Xxxxxxx X. Xxxxxx Pas Title: Assistant Vice President
XXX XXXXXX LIFE INVESTMENT TRUST
-----------------------------------------
By: Title:
XXX XXXXXX FUNDS INC.
-----------------------------
By: Title:
XXX XXXXXX ASSET MANAGEMENT INC.
----------------------------------
By: Title:
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
Name of Separate Account and Form Numbers and Names of Contracts
Date Established by Board of Directors Funded by Separate Account
ALLSTATE LIFE OF NEW YORK Allstate Variable Annuity II
SEPARATE ACCOUNT II NYLU 233
May 18, 1990
Allstate Preferred Client
NYLU 471
Allstate Variable Annuity 3 Asset Manager
NYLU 436
Allstate Select Directions NY
NYLU 445
SCHEDULE B
PARTICIPATING XXX XXXXXX LIFE INVESTMENT TRUST PORTFOLIOS
Xxxxxxxx Portfolio - Class I Shares
Emerging Growth Portfolio - Class I Shares
Government Portfolio - Class I Shares
Money Market Portfolio - Class I Shares
May 1, 2002
Exhibit 8(i)
AMENDMENT NO. 2
---------------
To The
PARTICIPATION AGREEMENT
Among
XXX XXXXXX LIFE INVESTMENT TRUST,
XXX XXXXXX FUNDS INC.,
XXX XXXXXX ASSET MANAGEMENT INC.,
And
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
WHEREAS, Allstate Life Insurance Company of New York ("Company"), Xxx Xxxxxx
Life Investment Trust ("Fund"), Xxx Xxxxxx Funds Inc. ("Underwriter") and Xxx
Xxxxxx Asset Management Inc. ("Adviser") have previously entered into a
Participation Agreement dated June 18, 2001 ("Agreement"); and
WHEREAS, the Fund has agreed to provide Class II Shares to the separate accounts
listed in Schedule A of the Agreement; and
WHEREAS, each of the parties hereto desires to amend and restate Schedule A and
B to the Agreement.
NOW, THEREFORE, each of the parties hereby amends the Agreement as follows:
1. Schedule A is hereby amended and restated, and replaced in its entirety by
the Schedule A attached ----------- ---------- hereto.
2. Schedule B is hereby amended and restated, and replaced in its entirety by
the Schedule B attached ----------- ---------- hereto.
3. All capitalized terms used in this Amendment No. 2 shall have the meaning
assigned in the Agreement. Except as set forth in this Amendment No. 2, no
other modifications or changes are made to the Agreement.
4. This Amendment No. 2 may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together will be deemed
one and the same document.
IN WITNESS WHEREOF, each of the parties have caused this Amendment No. 1 to be
executed in their names and on their behalf and through their duly authorized
offices, as of this 8th day of October, 2002.
ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK
-----------------------------------------
By: Xxxxxxx X. Xxxxxx Pas Title: Assistant Vice President
XXX XXXXXX LIFE INVESTMENT TRUST
-----------------------------------------
By: Title:
XXX XXXXXX FUNDS INC.
----------------------------------------
By: Title:
XXX XXXXXX ASSET MANAGEMENT INC.
----------------------------------
By: Title:
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
Name of Separate Account and Form Numbers and Names of Contracts
Date Established by Board of Directors Funded by Separate Account
ALLSTATE LIFE OF NEW YORK Allstate Variable Annuity 3
SEPARATE ACCOUNT II NYLU 492
May 18, 1990
ALLSTATE LIFE OF NEW YORK Allstate Advisor
SEPARATE ACCOUNT A PA126NY
December 21, 1995 Allstate Advisor Plus
XX000XX
Xxxxxxxx Advisor Preferred
PA 130NY
Allstate Advisor Apex
TBD
SCHEDULE B
PARTICIPATING XXX XXXXXX LIFE INVESTMENT TRUST PORTFOLIOS
Xxxxxxxx Portfolio - Class II Shares
Emerging Growth Portfolio - Class II Shares
Growth and Income - Class II Share
October 8, 2002
