PARTICIPATION AGREEMENT
Among
XXXXXX INSTITUTIONAL PRODUCTS TRUST
XXXXXX LLC
and
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into this _____ day of August, 2001
by and among THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK, (hereinafter the
"Insurance Company"), a New York stock life insurance company, on its own behalf
and on behalf of each segregated asset account of the Insurance Company set
forth on Schedule A hereto as may be amended from time to time (each such
account hereinafter referred to as the "Account"), XXXXXX INSTITUTIONAL PRODUCTS
TRUST, a Delaware business trust (the "Trust") and XXXXXX LLC, a Nevada limited
liability company("Xxxxxx").
WHEREAS, the Trust engages in business as an open-end management
investment company and is available to act as the investment vehicle for
variable annuity and life insurance contracts to be offered by separate accounts
of insurance companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance Companies")
and for qualified retirement and pension plans ("Qualified Plans"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission (the "Commission"), dated April 24, 1996 (File No.
812-9852), granting Participating Insurance Companies and their 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, (the "1940 Act") and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Trust to be sold to and held by Qualified Plans and by
variable annuity and variable life insurance separate accounts
of life insurance companies that may or may not be affiliated with one another
(the "Mixed and Shared Funding Exemptive Order"); and
WHEREAS, the Trust is registered as an open-end management investment
company under the 1940 Act and the offering of its shares is registered under
the Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Xxxxxx is duly registered as an investment adviser under the
Investment Advisers Act of 1940 and any applicable state securities law; and
WHEREAS, the Insurance Company has registered under the 1933 Act, or
will register under the 1933 Act, or will not register under the 1933 Act in
reliance upon an exemption certain variable annuity or variable life insurance
contracts identified by the form number(s) listed on Schedule B to this
Agreement, as amended from time to time hereafter by mutual written agreement of
all the parties hereto (the "Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the board of directors of the
Insurance Company on the date shown for that Account on Schedule A hereto, to
set aside and invest assets attributable to the Contracts; and
WHEREAS, the Insurance Company has registered or will register or will
not register in reliance upon an exemption each Account as a unit investment
trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Insurance Company intends to purchase shares in the Funds at
net asset value on behalf of each Account to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Insurance Company, the Trust and Xxxxxx agree as follows:
ARTICLE I. SALE OF TRUST SHARES
1.1. The Trust agrees to sell to the Insurance Company those shares of
the Trust which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Trust or its designee of
the order for the shares of the Trust. For purposes of this Section 1.1, the
Insurance Company shall be the designee of the Trust for receipt of such orders
from the Accounts and receipt by such designee shall constitute receipt by the
Trust; provided that the Trust receives notice of such order by INSURANCE
COMPANY, on the next following
2
Business Day. In this Agreement, "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 Commission.
1.2. The Trust agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its Accounts
on those days on which the Trust calculates its Funds' net asset values pursuant
to rules of the Commission and the Trust shall use reasonable efforts to
calculate its Funds' net asset values on each day on which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the trustees of the
Trust may refuse to sell shares of any Fund to any person, or suspend or
terminate the offering of shares of any Fund if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole discretion
of the trustees of the Trust acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of that Fund.
1.3. The Trust agrees that shares of the Trust will be sold only to
Accounts of Participating Insurance Companies and to Qualified Plans. No shares
of any Fund will be sold to the general public.
1.4. The Trust will not sell its shares to any insurance company or
separate account unless an agreement containing provisions substantially the
same as Sections 2.4, 3.4, 3.5, and Sections 7.1 - 7.7 of this Agreement is in
effect to govern such sales.
1.5. The Trust agrees to redeem, on the Insurance Company's request,
any full or fractional shares of the Trust held by the Account, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Trust or its designee of the request for redemption. However, if one or more
Funds has determined to settle redemption transactions for all of its
shareholders on a delayed basis (more than one business day, but in no event
more than seven Business Days, after the date on which the redemption order is
received, unless otherwise permitted by an order of the Commission under Section
22(e) of the 1940 Act), the Trust shall be permitted to delay sending redemption
proceeds to the Insurance Company by the same number of days that the Trust is
delaying sending redemption proceeds to the other shareholders of the Fund. For
purposes of this Section 1.5, the Insurance Company shall be the designee of the
Trust for receipt of requests for redemption from each Account and receipt by
that designee shall constitute receipt by the Trust; provided that the Trust
receives
3
notice of the request for redemption by INSURANCE COMPANY, on the next
following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the shares of
each Fund offered by the then-current prospectus of the Trust in accordance with
the provisions of that prospectus. The Insurance Company agrees that all net
amounts available under the Contracts shall be invested in the Trust, or in the
Insurance Company's general account, provided that such amounts may also be
invested in an investment company other than the Trust if (a) the other
investment company, or series thereof, has investment objectives or policies
that are substantially different from the investment objectives and policies of
any Fund of the Trust in which the Account may invest; or (b) the other
investment company was available as a funding vehicle for the Contracts prior to
the date of this Agreement and the Insurance Company so informs the Trust and
Xxxxxx Associates prior to their signing this Agreement; or (c) the Trust and
Xxxxxx Associates consent in advance in writing to the use of the other
investment company.
1.7. The Insurance Company shall pay for Trust shares by 2:00 p.m.
Eastern Time, on the next Business Day after an order to purchase Trust shares
is made in accordance with the provisions of Section 1.1 hereof. Payment shall
be in federal funds transmitted by wire. For the purpose of Sections 2.9 and
2.10, upon receipt by the Trust of the federal funds so wired, such funds shall
cease to be the responsibility of the Insurance Company and shall become the
responsibility of the Trust. Payment of net redemption proceeds (aggregate
redemptions of a Fund's shares by an Account minus aggregate purchases of that
Fund's shares by that Account) of less than $1 million for a given Business Day
will be made by wiring federal funds to the Insurance Company normally on the
next Business Day after receipt of the redemption request. Payment of net
redemption proceeds of $1 million or more will be by wiring federal funds
normally within three Business Days after receipt of the redemption request.
However, payment may be postponed under unusual circumstances, such as when
normal trading is not taking place on the New York Stock Exchange, an emergency
as defined by the Securities and Exchange Commission exists, or as permitted by
the Securities and Exchange Commission.
1.8. Issuance and transfer of the Trust's shares will be by book entry
only. Stock certificates will not be issued to the Insurance Company or any
Account. Shares ordered from the Trust will be recorded in an appropriate title
for each Account or the appropriate subaccount of each Account.
1.9. The Trust shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Insurance
4
Company of any income, dividends or capital gain distributions payable on the
Funds' shares. The Insurance Company hereby elects to receive all income
dividends and capital gain distributions payable on a Fund's shares in
additional shares of that Fund. The Insurance Company reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash. The Trust shall notify the Insurance Company of the
number of shares issued as payment of dividends and distributions.
1.10. The Trust shall make the net asset value per share for each Fund
available to the Insurance Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make those per-share net asset values available by 7:00 p.m.,
Eastern Standard Time.
ARTICLE II. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
2.1. The Insurance Company represents, warrants and agrees that the
offerings of the Contracts are, or will be, registered under the 1933 Act or
exempt from registration 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 the sale of the Contracts shall comply in all material
respects with applicable state insurance suitability requirements. The Insurance
Company further represents that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under Section 4240 of the New York Insurance Code and has
registered, or warrants and agrees that prior to any issuance or sale of the
Contracts it will register or is exempt from registration, the 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 Trust warrants and agrees that Trust shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sale in compliance with the laws of the State of Delaware and all
applicable federal securities laws and that the Trust is and shall remain
registered under the 1940 Act. The Trust warrants and agrees that it shall amend
the registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Trust or Xxxxxx.
5
2.3. The Trust 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 warrants and agrees that it will make all reasonable
efforts to maintain its qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Insurance 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 Insurance Company represents that the Contracts are currently
treated as annuity or life insurance contracts under applicable provisions of
the Code and warrants and agrees that it will make every effort to maintain such
treatment and that it will notify the Trust and Xxxxxx 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 Trust may elect to make payments to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, the Trust
undertakes to have a board of trustees, a majority of whom are not interested
persons of the Trust, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Trust makes no representation or warranties as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) complies or will comply with the insurance laws or
regulations of the various states.
2.7. The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Delaware and represents, warrants and
agrees that it does and will comply in all material respects with the 1940 Act.
2.8. Xxxxxx represents that it is and warrants that it shall remain
duly registered as an investment adviser under all applicable federal and state
securities laws and agrees that it shall perform its obligations for the Trust
in compliance in all material respects with the laws of the State of Colorado
and any applicable state and federal securities laws.
2.9. The Trust and Xxxxxx represent and warrant that all of their
officers, employees, investment advisers, investment sub-advisers, and other
individuals or entities described in Rule 17g-1 under the 1940 Act dealing with
the money and/or securities of the Trust are, and shall continue to be at all
times, covered by a
6
blanket fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the minimum coverage required currently by Rule 17g-1 under
the 1940 Act or related provisions as may be promulgated from time to time. That
fidelity bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
2.10. The Insurance Company represents and warrants that all of its
officers, employees, investment advisers, and other individuals or entities
described in Rule 17g-1 under the 1940 Act are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust, in an amount not less than the minimum coverage required currently
for entities subject to the requirements of Rule 17g-1 of the 1940 Act or
related provisions or may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11. The Insurance Company warrants and represents that it shall at
all times remain in compliance with all federal and state laws, rules and
regulations, including, but not limited to those laws, rule and regulations
regarding the electronic delivery and recordkeeping relating to its and the
underlying Funds' product disclosure, shareholder communications, proxies and
distribution.
ARTICLE III. DISCLOSURE DOCUMENTS AND VOTING
3.1. Xxxxxx shall electronically provide the Insurance Company in .pdf
format (at the Insurance Company's expense) with as many copies of the Trust's
current prospectus and any supplements to the prospectus as the Insurance
Company may reasonably request. If requested by the Insurance Company in lieu
thereof, the Trust shall provide such documentation (including a final copy of
the new prospectus as set in type at the Trust's expense) and other assistance
as is reasonably necessary in order for the Insurance Company once each year (or
more frequently if the prospectus for the Trust is amended) to have the
prospectus for the Contracts and the Trust's prospectus printed together in one
document (at the Insurance Company's expense).
3.2. The Trust's prospectus shall state that the Statement of
Additional Information for the Trust (the "SAI") is available from the Trust,
and Xxxxxx (or the Trust), at its expense, shall print and provide the SAI free
of charge to the Insurance Company (in addition to providing it to the Insurance
Company electronically in .pdf format) and to any owner of a Contract or
prospective owner who requests the SAI.
7
3.3. The Trust, at its expense, shall provide the Insurance Company
with copies of its proxy material, reports to shareholders and other
communications to shareholders in such quantity as the Insurance Company shall
reasonably require for distributing to Contract owners, and electronically in
.pdf format.
3.4. If and to the extent required by law, the Insurance Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Trust shares in accordance with 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
that Fund for which instructions have been received;
so long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners. The
Insurance Company reserves the right to vote Trust shares held in any segregated
asset account in its own right, to the extent permitted by law. Participating
Insurance Companies shall be responsible for assuring that each of their
separate accounts participating in the Trust calculates voting privileges in a
manner consistent with the standards set forth on Schedule C attached hereto and
incorporated herein by this reference, which standards will also be provided to
the other Participating Insurance Companies. The Insurance Company shall fulfill
its obligation under, and abide by the terms and conditions of, the Mixed and
Shared Funding Exemptive Order.
3.5. The Trust will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings (except insofar as the Commission may interpret
Section 16 of the 1940 Act not to require such meetings) or, as the Trust
currently intends, comply with Section 16(c) of the 1940 Act (although the Trust
is not one of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act
in accordance with the Commission's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Insurance Company shall furnish, or shall cause to be
furnished, to the Trust or its designee, each piece of sales
8
literature or other promotional material in which the Trust, a sub-adviser of
one of the Funds, or Xxxxxx is named, at least fifteen calendar days prior to
its use. No such material shall be used if the Trust or its designee objects to
such use within ten calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the Trust's registration statement, prospectus or
SAI, as that registration statement, prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved by the Trust or
its designee or by Xxxxxx, except with the permission of the Trust or Xxxxxx.
4.3. The Trust, Xxxxxx, or its designee shall furnish, or shall cause
to be furnished, to the Insurance Company or its designee, each piece of sales
literature or other promotional material in which the Insurance Company or the
Account is named at least fifteen calendar days prior to its use. No such
material shall be used if the Insurance Company or its designee objects to such
use within ten calendar days after receipt of that material.
4.4. The Trust and Xxxxxx shall not give any information or make any
representations on behalf of the Insurance Company or concerning the Insurance
Company, any Account, or the Contracts other than the information or
representations contained in a registration statement, prospectus or statement
of additional information for the Contracts, as that registration statement,
prospectus or statement of additional information may be amended or supplemented
from time to time, or in published reports for any Account which are in the
public domain or approved by the Insurance Company for distribution to Contract
owners, or in sales literature or other promotional material approved by the
Insurance Company or its designee, except with the permission of the Insurance
Company.
4.5. The Trust will electronically provide to the Insurance Company in
.pdf format at least one complete copy of each registration statement,
prospectus, statement of additional information, report, proxy statement, piece
of sales literature or other promotional material, application for exemption,
request for no-action letter, and any amendment to any of the above, that relate
to the Trust or its shares, contemporaneously with the filing of the document
with the Commission, the National Association of Securities Dealers, Inc.
("NASD"), or other regulatory authorities.
9
4.6. The Insurance Company will provide to the Trust at least one
complete copy of each registration statement, prospectus, statement of
additional information, report, solicitation for voting instructions, piece of
sales literature and other promotional material, application for exemption,
request for no-action letter, and any amendment to any of the above, that
relates to the Contracts or the Account, contemporaneously with the filing of
the document with the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements,
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media, sales literature (I.E., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, shareholder
newsletters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials or
other communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other party
will make available to the other party's independent auditors and/or
representative of the appropriate regulatory agencies, all records, data and
access to operating procedures that may be reasonably requested.
ARTICLE V. FEES AND EXPENSES
5.1. The Trust and Xxxxxx shall pay no fee or other compensation to the
Insurance Company under this agreement, except as set forth in Section 5.4 and
except that if the Trust or any Fund adopts and implements a plan pursuant to
Rule 12b-1 to finance distribution expenses, Xxxxxx or the Trust may make
payments to the Insurance Company in amounts consistent with that 12b-1 plan,
subject to review by the trustees of the Trust.
5.2. All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall see to it that any
offering of its shares is registered and that all of its shares are authorized
for issuance in accordance with applicable federal law and, if and to the extent
deemed advisable by the Trust or Xxxxxx, in accordance with applicable state
laws prior to their sale. The Trust shall bear the cost of registration and
10
qualification of the Trust's shares, preparation and filing of the Trust's
prospectus and registration statement, proxy materials and reports, setting the
prospectus in type, setting in type and printing the proxy materials and reports
to shareholders, the preparation of all statements and notices required by any
federal or state law, and all taxes on the issuance or transfer of the Trust's
shares.
5.3. The Insurance Company shall bear the expenses, if any, of printing
and distributing to Contract owners the Contract prospectuses and of
distributing to Contract owners the Trust's prospectus, proxy materials and
reports.
5.4. The Insurance Company bears the responsibility and correlative
expense for administrative and support services for Contract owners. Xxxxxx
recognizes the Insurance Company as the sole shareholder of shares of the Trust
issued under this Agreement. From time to time, Xxxxxx may pay amounts from its
past profits to the Insurance Company for providing certain administrative
services for the Trust or for providing other services that relate to the Trust.
In consideration of the savings resulting from such arrangement, and to
compensate the Insurance Company for its costs, Xxxxxx agrees to pay to the
Insurance Company an amount equal to __ basis points (____%) per annum of the
average aggregate amount invested by the Insurance Company in the Trust under
this Agreement. The parties agree that such payments are for administrative
services and investor support services, and do not constitute payment for
investment advisory, distribution or other services. Payment of such amounts by
Xxxxxx shall not increase the fees paid by the Trust or its shareholders.
ARTICLE VI. DIVERSIFICATION
6.1. The Trust will comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5 relating to the diversification requirements for variable
annuity, endowment, modified endowment or life insurance contracts and any
amendments or other modifications to that Section or Regulation at all times
necessary to satisfy those requirements.
11
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The trustees of the Trust will monitor the Trust for the existence
of any material irreconcilable conflict between the interests of the variable
Contract owners of all separate accounts investing in the Trust and the
participants of all Qualified Plans investing in the Trust. 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 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 any Fund are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The trustees of
the Trust shall promptly inform the Insurance Company if they determine that an
irreconcilable material conflict exists and the implications thereof. The
trustees of the Trust shall have sole authority to determine whether an
irreconcilable material conflict exists and their determination shall be binding
upon the Insurance Company.
7.2. The Insurance Company and Xxxxxx each will report promptly any
potential or existing conflicts of which it is aware to the trustees of the
Trust. The Insurance Company and Xxxxxx each will assist the trustees of the
Trust in carrying out their responsibilities under the Mixed and Shared Funding
Exemptive Order, by providing the trustees of the Trust with all information
reasonably necessary for them to consider any issues raised. This includes, but
is not limited to, an obligation by the Insurance Company to inform the trustees
of the Trust whenever Contract owner voting instructions are to be disregarded.
These responsibilities shall be carried out by the Insurance Company with a view
only to the interests of the Contract owners and by Xxxxxx with a view only to
the interests of Contract holders and Qualified Plan participants.
7.3. If it is determined by a majority of the trustees of the Trust, or
a majority of the trustees who are not interested persons of the Trust, any of
its Funds, or Xxxxxx (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Insurance Company and/or other Participating
Insurance Companies or Qualified Plans that have executed participation
agreements shall, at their expense and to the extent reasonably practicable (as
determined by a majority of the Independent Trustees), take whatever steps are
necessary to remedy or
12
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Trust or any Fund and reinvesting those assets in a different investment
medium, including (but not limited to) another Fund of the Trust, or submitting
the question whether such segregation should be implemented to a vote of all
affected variable contract owners and, as appropriate, segregating the assets of
any appropriate group (E.G., 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
variable contract owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account and obtaining any necessary approvals or orders of the Commission in
connection therewith.
7.4. If a material irreconcilable conflict arises because of a decision
by the Insurance Company to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a majority vote,
the Insurance Company may be required, at the Trust's election, to withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to that 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 Independent Trustees. Any such
withdrawal and termination must take place within six (6) months after the Trust
gives written notice that this provision is being implemented, and, until the
end of that six month period, the Trust shall continue to accept and implement
orders by the Insurance Company for the purchase (and redemption) of shares of
the Trust.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Insurance Company
conflicts with the majority of other state regulators, then the Insurance
Company will withdraw the affected Account's investment in the Trust and
terminate this Agreement with respect to that Account within six months after
the trustees of the Trust inform the Insurance Company in writing that they have
determined that the state insurance regulator's decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the Independent Trustees.
Until the end of the foregoing six month period, the Trust shall continue to
accept and implement orders by the Insurance Company for the purchase (and
redemption) of shares of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the Independent Trustees shall determine
13
whether any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Trust be required to establish a new funding
medium for the Contracts. The Insurance Company shall not be required by Section
7.3 to establish a new funding medium for the Contracts if an offer to do so has
been declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that the trustees
of the Trust determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Insurance Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the trustees of the Trust inform the Insurance Company in writing
of the foregoing determination, provided, however, that the withdrawal and
termination shall be limited to the extent required by the material
irreconcilable conflict, as determined by a majority of the Independent
Trustees.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Mixed and Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to those Sections are contained in
the Rule(s) as so amended or adopted.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE INSURANCE COMPANY
8.1(a). The Insurance Company agrees to indemnify and hold harmless the
Trust and each trustee, officer, employee or agent of the Trust, and each
person, if any, who controls the Trust 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 Insurance 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,
acquisition, or redemption of the Trust's shares or the Contracts and:
14
(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 in writing to the Insurance Company by or on behalf
of the Trust 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 shares of
the Trust;
(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 Trust not supplied by the Insurance Company,
or persons under its control) or wrongful conduct of the
Insurance Company or persons under its control, with respect
to the sale or distribution of the Contracts or Trust Shares;
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Trust or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished in writing to the Trust by
or on behalf of the Insurance Company;
15
(iv) arise as a result of any failure by the Insurance 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, warranty or agreement made by the Insurance
Company in this Agreement or arise out of or result from any
other material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of Sections 8.1(b) and
8.1(c) hereof.
8.1(b). The Insurance 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 that
may arise from that Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of that Indemnified Party's duties or by reason of
that Indemnified Party's reckless disregard of obligations or duties under this
Agreement or to the Trust, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless that Indemnified Party shall have notified the Insurance 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 that
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to the extent
that the Insurance Company has been prejudiced by such failure to give notice.
In addition, any failure by the Indemnified Party to notify the Insurance
Company of any such claim shall not relieve the Insurance Company from any
liability which it may have to the Indemnified Party against whom the action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Insurance Company
shall be entitled to participate, at its own expense, in the defense of the
action. The Insurance Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action; PROVIDED,
HOWEVER, that if the Indemnified Party shall have reasonably concluded that
there may be defenses available to it which are different from or additional to
those available to
16
the Insurance Company, the Insurance Company shall not have the right to assume
said defense, but shall pay the costs and expenses thereof (except that in no
event shall the Insurance Company be liable for the fees and expenses of more
than one counsel for Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances). After notice from the Insurance
Company to the Indemnified Party of the Insurance Company's election to assume
the defense thereof, and in the absence of such a reasonable conclusion that
there may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Insurance Company will not be liable to that
party under this Agreement for any legal or other expenses subsequently incurred
by the party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Insurance
Company of the commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Trust's shares or the Contracts or
the operation of the Trust.
8.2. INDEMNIFICATION BY XXXXXX
8.2(a). Xxxxxx agrees to indemnify and hold harmless the Insurance
Company and each of its directors, officers, employees or agents, and each
person, if any, who controls the Insurance 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 Xxxxxx) or litigation
(including reasonable legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale, acquisition or redemption of
the Trust'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 or prospectus or sales literature of
the Trust (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or
17
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if the statement or omission or
alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to Xxxxxx or
the Trust by or on behalf of the Insurance Company for use in
the registration statement or prospectus for the Trust or in
sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Trust
shares;
(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 Xxxxxx or persons
under its control) or wrongful conduct of the Trust, Xxxxxx or
persons under their control, with respect to the sale or
distribution of the Contracts or shares of the Trust;
(iii) arise out 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 in writing to the Insurance Company by or on behalf
of the Trust;
(iv) arise as a result of any failure by the Trust 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 diversification
requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any
representation, warranty or agreement made by Xxxxxx in this
Agreement or
18
arise out of or result from any other material breach of this
Agreement by Xxxxxx;
as limited by and in accordance with the provisions of Sections 8.2(b) and
8.2(c) hereof.
8.2(b) Xxxxxx 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 that may arise from the Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of the Indemnified Party's duties or by reason of the Indemnified Party's
reckless disregard of obligations and duties under this Agreement or to the
Insurance Company or the Account, whichever is applicable.
8.2(c) Xxxxxx shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified Xxxxxx 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 the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any designated
agent). Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve Xxxxxx of its obligations
hereunder except to the extent that Xxxxxx has been prejudiced by such failure
to give notice. In addition, any failure by the Indemnified Party to notify
Xxxxxx of any such claim shall not relieve Xxxxxx 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, Xxxxxx will be entitled to participate,
at its own expense, in the defense thereof. Xxxxxx also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action; PROVIDED, HOWEVER, that if the Indemnified Party shall have reasonably
concluded that there may be defenses available to it which are different from or
additional to those available to Xxxxxx, Xxxxxx shall not have the right to
assume said defense, but shall pay the costs and expenses thereof (except that
in no event shall Xxxxxx be liable for the fees and expenses of more than one
counsel for Indemnified Parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances). After notice from Xxxxxx to the
Indemnified Party of Xxxxxx'x election to assume the defense thereof, and in the
absence of such a reasonable conclusion that there may be different or
additional defenses available to the Indemnified Party, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
Xxxxxx will
19
not be liable to that party under this Agreement for any legal or other expenses
subsequently incurred by that party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.2(d) The Insurance Company agrees to notify Xxxxxx promptly 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 the Account.
8.3 INDEMNIFICATION BY THE TRUST
8.3(a). The Trust agrees to indemnify and hold harmless the Insurance
Company, and each of its directors, officers, employees and agents, and each
person, if any, who controls the Insurance Company within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 8.3) against any and all losses, claims, damages, liabilities (including
reasonable legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as those losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith or willful misconduct of
any trustee(s) of the Trust, are related to the operations of the Trust and:
(i) arise as a result of any failure by the Trust to provide
the services and furnish the materials under the terms of this
Agreement (including a failure to comply with the
diversification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any material breach of any
representation, warranty or agreement 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 8.3(b) and
8.3(c) hereof.
8.3(b). The Trust 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 that may arise from the
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of the Indemnified Party's duties or by reason of the
20
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Insurance Company, the Trust, Xxxxxx or the Account,
whichever is applicable.
8.3(c). The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless the
Indemnified Party shall have notified the Trust in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Indemnified Party (or after
the Indemnified Party shall have received notice of such service on any
designated agent). Notwithstanding the foregoing, the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Trust of its
obligations hereunder except to the extent that the Trust has been prejudiced by
such failure to give notice. In addition, any failure by the Indemnified Party
to notify the Trust of any such claim shall not relieve the Trust from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Trust will be
entitled to participate, at its own expense, in the defense thereof. The Trust
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action; PROVIDED, HOWEVER, that if the Indemnified
Party shall have reasonably concluded that there may be defenses available to it
which are different from or additional to those available to the Trust, the
Trust shall not have the right to assume said defense, but shall pay the costs
and expenses thereof (except that in no event shall the Trust be liable for the
fees and expenses of more than one counsel for Indemnified Parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances).
After notice from the Trust to the Indemnified Party of the Trust's election to
assume the defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Trust will not be liable to that party under
this Agreement for any legal or other expenses subsequently incurred by that
party independently in connection with the defense thereof other than reasonable
costs of investigation.
8.3(d). The Insurance Company and Xxxxxx agree promptly to notify the
Trust 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, the operation of the Account, or the sale or
acquisition of shares of the Trust.
21
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 Acts, and the rules and regulations and rulings thereunder,
including any exemptions from those statutes, rules and regulations the
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.
ARTICLE X. TERMINATION
10.1. This Agreement shall terminate:
(a) at the option of any party upon six month advance written
notice to the other parties; or
(b) at the option of the Insurance Company to the extent that
shares of Funds are not reasonably available to meet the
requirements of the Contracts as determined by the Insurance
Company, provided, however, that such a termination shall
apply only to the Fund(s) not reasonably available. Prompt
written notice of the election to terminate for such cause
shall be furnished by the Insurance Company to the Trust and
Xxxxxx; or
(c) at the option of the Trust or Xxxxxx, in the event that
formal administrative proceedings are instituted against the
Insurance Company by the NASD, the Commission, an insurance
commissioner or any other regulatory body regarding the
Insurance Company's duties under this Agreement or related to
the sale of the Contracts, the operation of any Account, or
the purchase of the Trust's shares, provided, however, that
the Trust determines in its sole judgment exercised in good
faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Insurance
Company to perform its obligations under this Agreement; or
(d) at the option of the Insurance Company in the event that
formal administrative proceedings are instituted against the
Trust or Xxxxxx by the NASD, the Commission, or any state
securities or insurance department or any other regulatory
body, provided,
22
however, that the Insurance Company determines in its sole
judgement exercised in good faith, that any such
administrative proceedings will have a material adverse effect
upon the ability of the Trust or Xxxxxx to perform its
obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the
Contract owners having an interest in that Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Fund shares in accordance with
the terms of the Contracts for which those Fund shares had
been selected to serve as the underlying investment media. The
Insurance Company will give at least 30 days' prior written
notice to the Trust of the date of any proposed vote to
replace the Trust's shares; or
(f) at the option of the Insurance Company, in the event any
of the Trust's shares are not registered, issued or sold in
accordance with applicable state and/or federal law or
exemptions therefrom, or such law precludes the use of those
shares as the underlying investment media of the Contracts
issued or to be issued by the Insurance Company; or
(g) at the option of the Insurance Company, if the Trust
ceases to qualify as a regulated investment company under
Subchapter M of the Code or under any successor or similar
provision, or if the Insurance Company reasonably believes
that the Trust may fail to so qualify; or
(h) at the option of the Insurance Company, if the Trust fails
to meet the diversification requirements specified in Article
VI hereof; or
(i) at the option of either the Trust or Xxxxxx, if (1) the
Trust or Xxxxxx, respectively, shall determine, in their sole
judgment reasonably exercised in good faith, that the
Insurance Company has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and that material adverse change or
material adverse publicity will have a material adverse impact
upon the business and operations of either the Trust or
Xxxxxx, (2) the Trust or Xxxxxx shall notify the Insurance
Company in writing of that determination and its intent to
terminate this Agreement, and (3) after considering the
actions taken by the Insurance Company and any other changes
in circumstances since the giving of such a notice, the
determination of the Trust or
23
Xxxxxx shall continue to apply on the sixtieth (60th) day
following the giving of that notice, which sixtieth day shall
be the effective date of termination; or
(j) at the option of the Insurance Company, if (1) the
Insurance Company shall determine, in its sole judgment
reasonably exercised in good faith, that either the Trust or
Xxxxxx has suffered a material adverse change in its business
or financial condition or is the subject of material adverse
publicity and that material adverse change or material adverse
publicity will have a material adverse impact upon the
business and operations of the Insurance Company, (2) the
Insurance Company shall notify the Trust and Xxxxxx in writing
of the determination and its intent to terminate the
Agreement, and (3) after considering the actions taken by the
Trust and/or Xxxxxx and any other changes in circumstances
since the giving of such a notice, the determination shall
continue to apply on the sixtieth (60th) day following the
giving of the notice, which sixtieth day shall be the
effective date of termination.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3. No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice shall
set forth the basis for the termination. Furthermore,
(a) In the event that any termination is based upon the
provisions of Article VII, or the provision of Section 10.1(a), 10.1(i),
10.1(j), or 10.1(k) of this Agreement, the prior written notice shall be given
in advance of the effective date of termination as required by those provisions;
and
(b) in the event that any termination is based upon the
provisions of Section 10.1(c) or 10.1(d) of this Agreement, the prior written
notice shall be given at least ninety (90) days before the effective date of
termination.
10.4. Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement and for so long as the Trust continues to exist,
the Trust and Xxxxxx shall at the option of the Insurance Company, continue to
make available additional shares of the Trust pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of
24
termination of this Agreement ("Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Trust, redeem investments in the Trust and/or
invest in the Trust upon the making of additional purchase payments under the
Existing Contracts. The parties agree that this Section 10.4 shall not apply to
any terminations under Article VII and the effect of Article VII terminations
shall be governed by Article VII of this Agreement.
10.5. The Insurance Company shall not redeem Trust shares attributable
to the Contracts (as opposed to Trust shares attributable to the Insurance
Company's assets held in the Account) except (i) as necessary to implement
Contract-owner-initiated transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (a "Legally Required Redemption"). Upon request, the Insurance
Company will promptly furnish to the Trust and Xxxxxx the opinion of counsel for
the Insurance Company (which counsel shall be reasonably satisfactory to the
Trust and Xxxxxx) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, the Insurance Company shall
not prevent new Contract owners from allocating payments to a Fund that formerly
was available under the Contracts without first giving the Trust or Xxxxxx 90
days notice of its intention to do so.
25
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of that other party set forth
below or at such other address as the other party may from time to time specify
in writing.
If to the Trust:
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Vice President
If to the Insurance Company:
000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel______________
If to Xxxxxx:
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Vice President
ARTICLE XII. MISCELLANEOUS
12.1. 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
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party unless and until that information may come into the public
domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.4. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
26
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit those
authorities reasonable access to its books and records in connection with any
lawful investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. 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.
12.7. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns; provided, that no party
may assign this Agreement without the prior written consent of the others.
27
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 as of the date specified below.
Insurance Company:
THE AMERICAN LIFE INSURANCE COMPANY OF
NEW YORK
By its authorized officer,
By:
-----------------------------
Title:
--------------------------
Date:
---------------------------
Trust:
XXXXXX INSTITUTIONAL PRODUCTS TRUST
By its authorized officer,
By:
-----------------------------
Title:
--------------------------
Date:
---------------------------
Xxxxxx LLC:
XXXXXX LLC
By its authorized officer,
By:
-----------------------------
Title:
--------------------------
Date:
---------------------------
28
SCHEDULE A
ACCOUNTS
NAME OF ACCOUNT DATE OF RESOLUTION OF INSURANCE
THE AMERICAN SEPARATE ACCOUNT 5 COMPANY'S BOARD WHICH ESTABLISHED
THE ACCOUNT MAY 4, 2001
29
SCHEDULE B
CONTRACTS
1. Contract Form ___________________
3805-FPA-AX
30
SCHEDULE C
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Trust by Xxxxxx Associates, the Trust and
the Insurance Company. The defined terms herein shall have the meanings assigned
in the Participation Agreement except that the term "Insurance Company" shall
also include the department or third party assigned by the Insurance Company to
perform the steps delineated below. Notwithstanding anything contained herein to
the contrary, the Trust shall provide all proxy materials to the Insurance
Company electronically in .pdf format.
1. The number of proxy proposals is given to the Insurance Company by
Xxxxxx as early as possible before the date set by the Trust for the
shareholder meeting to facilitate the establishment of tabulation
procedures. At this time Xxxxxx will inform the Insurance Company of
the Record, Mailing and Meeting dates. This will be done verbally
approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will perform a
"tape run", or other activity, which will generate the names, addresses
and number of units which are attributed to each
contractowner/policyholder (the "Customer") as of the Record Date.
Allowance should be made for account adjustments made after this date
that could affect the status of the Customers' accounts of the Record
Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Insurance Company will use its best efforts to call in
the number of Customers to Xxxxxx, as soon as possible, but no later than one
week after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Insurance Company by the Trust. The
Insurance Company, at its expense, shall produce and personalize the
Voting Instruction cards. Xxxxxx must approve the Card before it is
printed. Allow approximately 2-4 business days for printing information
on the Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed
by the Trust).
31
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
4. During this time, Xxxxxx will develop, produce, and the Trust will pay
for the Notice of Proxy and the Proxy Statement (one document). Printed
and folded notices and statements will be sent to Insurance Company for
insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Insurance Company). Contents of envelope sent to
customers by Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation
agent
d. "Urge buckslip" - optional, but recommended. (This is a
small, single sheet of paper that requests Customers to
vote as quickly as possible and that their vote is
important. One copy will be supplied by the Trust.)
e. Cover letter - optional, supplied by Insurance Company
and reviewed and approved in advance by Xxxxxx.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in charge
at Insurance Company reviews and approves the contents of the mailing
package to ensure correctness and completeness. Copy of this approval
sent to Xxxxxx.
6. Package mailed by the Insurance Company.
* The Trust MUST allow at least a 15-day solicitation
time to the Insurance Company as the shareowner. (A 5-week
period is recommended.) Solicitation time is calculated as
calendar days from (but NOT including) the meeting, counting
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used. An
often used procedure is to sort cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure.
8. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to the Customer with an explanatory letter,
a new Card and return envelope. The
32
mutilated or illegible Card is disregarded and considered to be NOT RECEIVED for
purposes of vote tabulation. Such mutilated or illegible Cards are "hand
verified," I.E., examined as to why they did not complete the system. Any
questions on those Cards are usually remedied individually.
9. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the initial
estimates and the actual vote do not coincide, then an internal audit of that
vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Trust receives the tabulations stated
in terms of a percentage and the number of SHARES.) Xxxxxx must review and
approve tabulation format.
11. Final tabulation in shares is verbally given by the Insurance Company
to Xxxxxx on the morning of the meeting not later than 10:00 a.m.
Denver time. Xxxxxx may request an earlier deadline if required to
calculate the vote in time for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be
required from the Insurance Company as well as an original copy of the final
vote. Xxxxxx will provide a standard form for each Certification.
13. The Insurance Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged
or if otherwise necessary for legal, regulatory, or accounting
purposes, Xxxxxx will be permitted reasonable access to such Cards.
14. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
33
