PARTICIPATION AGREEMENT
AMONG
XXXX XXXXX PARTNERS VARIABLE EQUITY TRUST,
XXXX XXXXX PARTNERS VARIABLE INCOME TRUST,
XXXX XXXXX INVESTOR SERVICES, LLC,
XXXX XXXXX PARTNERS FUND ADVISOR, LLC
AND
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
THIS AGREEMENT, made and entered into this 1st day of November, 2013 by and
among Lincoln Life & Annuity Company of New York, a New York corporation (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account"), and Xxxx Xxxxx
Partners Variable Equity Trust, a Maryland Statutory Trust and Xxxx Xxxxx
Partners Variable Income Trust, a Maryland Statutory Trust (each a "Fund",
collectively the "Funds"), Xxxx Xxxxx Investor Services, LLC, a Maryland limited
liability company (the "Distributor"), and Xxxx Xxxxx Partners Fund Advisor,
LLC, a Maryland limited liability company (the "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts (collectively, the "Contracts") to be offered by insurance companies
that have entered into participation agreements with the Fund, the Adviser and
the Distributor (each, a "Participating Insurance Company" and collectively, the
"Participating Insurance Companies"), and (ii) the investment vehicle for
certain qualified pension and retirement plans ("Qualified Plans") for which the
shares of the Fund are either held by Participating Insurance Companies on
behalf of the
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Qualified Plans through omnibus accounts or are held by Qualified Plans without
any financial intermediary through direct accounts on the books of the Fund;
WHEREAS, the beneficial interests in the Fund are divided into several
series of shares, (each designated a "Portfolio") and, in certain cases classes
of shares, which represent the interest in a particular managed portfolio of
securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission (the "SEC"), granting the Participating Insurance Companies and
variable annuity and variable 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, (the "1940 Act" which for the purposes of this Agreement includes
the rules and regulations thereunder, all as amended from time to time, as may
apply to a Fund or any Portfolio or Class thereof, including pursuant to any
exemptive, interpretive or other relief or guidance issued by the Commission or
the staff of the Commission under such 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 (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 (the "1933 Act");
WHEREAS, the Distributor is duly registered as a broker-dealer under the
Securities Exchange Act of 1934 (the "Exchange Act") and any applicable state
securities law;
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Distributor is a distributor of shares of the Portfolios of
the Fund;
WHEREAS, the Company has registered or will register certain Contracts
under the 1933 Act, or such Contracts are or will be exempt from registration
thereunder;
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WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company to set aside and invest assets attributable to one or more Contracts;
WHEREAS, each Account is or will be registered as an investment company
under the 1940 Act, or the Account is or will be exempt from registration under
the 1940 Act;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intend to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Contracts, and
WHEREAS, the parties intend that this agreement will supersede all prior
agreements among the parties or their predecessor entities with respect to the
subject matter of this agreement.
NOW, THEREFORE, in consideration of their mutual promises the Company, the
Fund and the Distributor agree as follows:
SALE OF FUND SHARES
The Fund agrees to sell to the Company those shares of the Fund which
each Account orders, 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
Fund shares. 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: (i) the orders are
received by the Company (or their designee) in good order prior to the time the
net asset value of each Portfolio is priced in accordance with its Prospectus(1)
(generally at the close of regular trading on the New York Stock Exchange (the
"NYSE") at 4:00 p.m. Eastern Time), and (ii) the Fund receives notice of such
order by 10:00 a.m. Eastern Time on
-----------------------
(1) The term "Prospectus" as used herein, refers to the prospectus and related
statement of additional information (the "Statement of Additional Information")
incorporated therein by reference (each as amended or supplemented) on file with
the SEC at the time in question.
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the next following "Business Day." "Business Day" shall mean any day on which
the NYSE is open for regular trading and on which the Fund calculates its net
asset value pursuant to the rules of the SEC. If, on any Business Day, the
Company determines that it is unable to meet the 10:00 a.m. time stated
immediately above due to a systems error, then the Company shall immediately
notify the Fund of such systems error. Provided that notice is received prior to
10:00 a.m. and the Fund determines that no harm will be caused to existing
shareholders or the Fund's investment program, the Fund will allow The Company
additional time to notify the Fund of purchase orders.
The Fund agrees to make its shares available indefinitely for purchase at
the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the SEC and the Fund shall use its best efforts to calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (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 any regulatory
authority 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, necessary in the best interest of the shareholders of
such Portfolio.
The Fund, the Adviser and the Distributor agree that shares of the Fund
will be sold only to Participating Insurance Companies and their separate
accounts and, in accordance with the terms of the Mixed and Shared Funding
Exemptive Order, certain Qualified Plans. No shares of any Portfolio will be
sold to the general public.
The Fund will not sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the same as
Articles I, III, V, VI and Section 2.5 of Article II of this Agreement is in
effect to govern such sales.
The Fund agrees to redeem for cash, on 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
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Section 1.5, the Company shall be the designee of the Fund for receipt of
requests for redemption from the Account and receipt by such designee shall
constitute receipt by the Fund, provided that: (i) the orders are received by
the Company (or its designee) in good order prior to the time the net asset
value of each Portfolio is priced in accordance with its Prospectus (generally
at the close of regular trading on the NYSE at 4:00 p.m. Eastern Time), and (ii)
provided that the Fund receives notice of such request for redemption by 10:00
a.m. Eastern Time on the next following "Business Day." If, on any Business Day,
the Company determines that it is unable to meet the 10:00 a.m. time stated
immediately above due to a systems error, then the Company shall immediately
notify the Fund of such systems error. Provided that notice is received prior to
10:00 a.m. and the Fund determines that no harm will be caused to existing
shareholders or the Fund's investment program, and the Fund will allow The
Company additional time to notify the Fund of purchase orders. The Fund may
impose redemption fees, as described in the Prospectus.
The Company agrees to purchase and redeem the shares of each Portfolio
offered by the then current Prospectus of the Fund and in accordance with the
provisions of such Prospectus. The Company agrees that all net amounts available
under the Contracts which are listed on Schedule A attached hereto and
incorporated herein by this reference, as such Schedule A may be amended from
time to time hereafter by mutual written agreement of all the parties hereto,
shall be invested in the Fund, in such other Funds selected by the Company or in
the Company's general account. The Company agrees to comply with the terms of
the Rule 12b-1 Plan described in Section 2.8 hereof. The Company agrees to
comply with the provisions of Rule 22c-2 under the 1940 Act as applicable to the
Fund (including reporting procedures adopted to comply with the Rule).
The Company shall pay for Fund shares on the next "Business Day" after an
order to purchase Fund shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. For
purpose of Sections 2.10 and 2.11, upon receipt by the Fund of the federal funds
so wired, such funds shall cease to be the responsibility of the Company and
shall become the responsibility of the Fund.
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Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
The Fund shall furnish same day notice by wire, telephone (followed by
written confirmation), electronic media or fax to the Company of any income,
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on Portfolio shares in additional shares of the
applicable Portfolio. The Company reserves the right to revoke this election and
to receive all such income dividends and capital gain distributions in cash. The
Fund shall notify the Company of the number of shares so issued as payment of
such dividends and distributions.
The Fund shall provide (electronically or by fax) the closing net asset
value per share for each Portfolio to the Company on a daily basis as soon as
reasonably practical after the closing net asset value per share is calculated
(normally 6:30 p.m. Eastern Time) and shall use its best efforts to make such
net asset value per share available by 7:00 p.m. Eastern Time. In the event that
the Fund is unable to meet the 7:00 p.m. time stated immediately above, then the
Fund shall immediately notify the Company and provide the Company with
additional time to notify the Fund of purchase or redemption orders pursuant to
Sections 1.1 and 1.5, respectively, above. Such additional time shall be equal
to the additional time that the Fund takes to make the closing net asset values
available to the Company. If the Fund provides the Company with the incorrect
closing share net asset value information, the Company, on behalf of the
Account, shall be entitled to a prompt adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value, and the Fund
or the Distributor shall bear the cost of correcting such errors. Upon a final
determination that there has been an error in the calculation of the closing net
asset value, dividend or capital gain, the Fund shall promptly report such error
to the Company.
1.11 The Fund shall, upon request of the Company, provide a manual daily
confirmation of trade activity from the previous "Business Day." Such
confirmation shall include the dollar amount of purchases or redemptions
submitted by the Company for each Portfolio, price per share of each Portfolio,
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and the corresponding total share amount of such purchase or redemption, and
shall be transmitted to the Company on the Business Day following the request.
1.12 The Fund shall, upon request of the Company, provide on a monthly
basis, a screen printed report of the monthly trade activity for the Account
which shall be transmitted to the Company on the "Business Day" following the
request.
1.13 Any material errors in the calculation of the net asset value of the
Fund, dividends or capital gains information shall be reported to the company
immediatley upon discovery. An error shall be deemed "material" based on the
parties intrepretation of the SECs position and policy with respect to
materiality, as it may be modified from time to time. If the Fund provides
inaccurate and material information with respect to the calculation of the net
asset value of the Fund, dividends, or capital gains information, then the
Company will be entitled to: (i) an adjustment to the number of shares purchased
or redeemed by the Fund to reflect the correct net asset value per share, and
(ii) reimbursment by the Distributor for reasonable administrative costs
incurred by the Company with respect to correcting Contract or contract owner
accounts. Neither the Fund, the Distributor, 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 to the Fund or Distributor.
1.14 If transactions in Fund shares are to be entered and settled through
the NSCC's Fund/SERV system, the following provisions shall apply:
(a) Each party to this Agreement represents that it or one of its
affiliates has entered into the Standard Networking Agreement with the NSCC and
it desires to participate in the programs offered by the NSCC Fund/SERV system
which provide (i) an automated process whereby shareholder purchases and
redemptions, exchanges and transactions of mutual fund shares are executed
through the Fund/SERV system, and (ii) a centralized and standardized
communication system for the exchange of customer-level information and account
activity through the Fund/SERV Networking system ("Networking").
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(b) Each party to this Agreement represents that:
(i) it has full power and authority under applicable law, and
has taken all action necessary, to enter into and perform its obligations
with respect to the NSCC, and the performance of its obligations hereunder
does not and will not violate or conflict with any governing documents or
agreements it maintains.
(ii) it has the necessary and adequate personnel, space, data
processing capacity or other operational capability, facilities and
equipment to perform its duties and obligations hereunder in accordance
with the terms of this amendment, in a businesslike and competent manner,
in conformance with all laws, rules and regulations and the Fund's and
Contract's prospectuses and SAIs, and customary industry standards.
(c) For each Fund/SERV transaction, including transactions establishing
accounts with the Underwriter or its affiliates, the Company shall provide the
Funds and Distributor or its affiliates with all information necessary or
appropriate to establish and maintain each Fund/SERV transaction (and any
subsequent changes to such information), which the Company hereby certifies is
and shall remain true and correct. The Company shall maintain documents required
by the Underwriter or the Funds to effect Fund/SERV transactions. Each
instruction shall be deemed to be accompanied by a representation by the Company
that it has received proper authorization from each person whose purchase,
redemption, account transfer or exchange transaction is effected as a result of
such instruction.
(d) Fund/SERV instructions will be transmitted by the Company to the
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NSCC by 9:00 a.m. EST on the next Business Day after the Company receives
such instructions from the Account/Contractholders in accordance with Section
1.1 and 1.5, respectively above. If extenuating circumstances prevent the
Company from providing the instructions by 9:00 a.m. EST on the next Business
Day after the Company receives such instructions from the
Account/Contractholders, the Company may provide the instructions by 10:00 a.m.
EST upon notification to the Funds.
Fund/SERV instructions received in proper form by the Underwriter after the
Cut-Off on any Business Day shall be price protected; however, settlement may be
delayed upon agreement of the parties. The Company warrants that all Fund/SERV
instructions the Company transmits to NSCC for processing were received by the
Company from Account/Contractholder by Close of Trading. The Company shall
transmit payment for purchase of Fund/SERV instructions to NSCC the same
Business Day after receipt of Fund/SERV instructions to purchase shares is made
in accordance with the provisions of Section 1.14 (d) hereof. If Distributor has
not received payment by such date, the purchase may be canceled and the Company
shall be responsible for any losses incurred by the Fund as a result of such
cancellation. Payment of redemptions shall be transmitted via the NSCC to the
Company on the same Business Day as the instructions were transmitted via
Fund/SERV. Daily share balance confirmations will be provided by Trust via the
Fund/SERV networking system.
(e) In the event the Company seeks to correct or cancel a previously
placed Fund/SERV instruction after the Cut-Off, such cancellation or correction
must be approved by the Distributor and will be processed outside of NSCC. The
Distributor shall have complete and sole discretion as to whether or not to
allow the cancellation or correction to be made. The Company agrees to promptly
pay each Fund the amount of any loss incurred by the Fund as a result of such
cancellation or correction.
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(f) The Distributor and the Funds reserve the right, in their sole
discretion, to reject or cancel:
(1) any Fund/SERV instruction for the purchase of shares,
including Fund/SERV instructions that have been confirmed through NSCC;
(2) any Fund/SERV instruction received: (a) in connection with
an Account if such Account's registration is pending with NSCC; and (b) in
connection with an Account prior to receipt of such Account's registration
information.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act, unless exempt from such registration, and that
the Contracts will be issued and sold in compliance in all material respects
with all applicable Federal and State laws and regulations. The Company shall
amend the registration statements for its Contracts under the 1933 Act and 1940
Act from time to time as required to effect the continuous offering of its
Contracts. The Company represents and warrants that it is an insurance company
duly organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof as a
segregated asset account under their domiciliary state insurance laws 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, unless
exempt from such registration. The Company represents and warrants that the
Company and the Account are in compliance with Rule 38a-1 under the 1940 Act
pursuant to the requirements of federal law or of any state insurance
department. The Company represents and warrants that it has implemented controls
designed to prevent, and
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will provide any reasonable assistance requested by the Fund related to the
deterrence of, market timing and/or late trading of shares of the Fund. Further,
the Company represents and warrants that:
(a) The Company has in place an anti-money laundering program ("AML
program") that does now and will continue to comply with applicable laws and
regulations, including the relevant provisions of the Bank Secrecy Act and the
USA PATRIOT Act (Pub. L. No. 107-56 (2001)), as they may be amended, and the
regulations issued thereunder by duly vested regulatory authority and the Rules
of Conduct of the Financial Industry Regulatory Authority ("FINRA") ("Anti-Money
Laundering Law and Regulation").
(b) The Company has, after undertaking reasonable inquiry, no
information or knowledge that (i) any Contract owners of all separate accounts
investing in the Fund, or (ii) any person or entity controlling, controlled by
or under common control with such Contract owners is an individual or entity or
in a country or territory that is on an Office of Foreign Assets Control
("OFAC") list or similar list of sanctioned or prohibited persons maintained by
a U.S. governmental or regulatory body.
(c) The Company has in place policies, procedures and internal
controls reasonably designed (i) to verify the identity of Contract owners, and
(ii) to identify those Contract owners' sources of funds, and has no reason to
believe that any of the invested funds were derived from illegal activities.
(d) The Company will provide the Fund or the Distributor (or their
respective service providers) upon reasonable request any information regarding
specific accounts that may be reasonably necessary for the Fund and its service
providers to fulfill their responsibilities relating to their anti-money
laundering programs or any other information reasonably requested by the Fund or
the Distributor (or their respective service providers) to assist with
compliance with the Anti-Money Laundering Law and Regulation, as may be
permitted by law or regulation.
(e) The Company will promptly notify the Fund and the Distributor
should the Company become aware of any change in the above representations and
warranties to the extent that the change relates to the relationship between the
Company and the Fund and/or Distributor. In addition, the Fund and the
Distributor hereby provide notice to the Company that the Fund and/or the
Distributor
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reserve the right to make inquires of and request additional information from
the Company regarding its AML program.
(f) That the Company understands the requirements of all applicable
laws, rules or regulations relating to bribery and corruption both in the
Company's home jurisdiction and in any other jurisdictions which may have a
connection to the services performed by the Company in connection with this
Agreement. The Company further represents and warrants that it will fully and
faithfully comply with all requirements of such laws, rules or regulations in
connection with all activities under or in any way connected with this Agreement
and such requirements that the Fund or the Distributor may notify to Company.
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 laws of the State of Maryland, as applicable,
and all applicable federal and state securities laws. Further, the Fund
represents and warrants that the Fund is in compliance with Rule 38a-1 under the
1940 Act. 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 or the Distributor. The Fund shall provide to the
Company upon request a list of the various jurisdictions in which the Portfolios
are registered.
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. The parties acknowledge that compliance with Subchapter M is an
essential element of compliance with Section 817(h) of the Code.
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The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and that
it will notify the Funds and the Distributor 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.
The Company represents that the Company does not make the Fund available as
an investment vehicle for any clients of the Company other than through
Contracts.
The Fund represents and warrants that it has adopted, or has caused to be
adopted, written procedures under which (i) financial intermediaries may only
make the Fund available to its Qualified Plan clients if any such financial
intermediary is a Participating Insurance Company, (ii) if any such
Participating Insurance Company requests that the Fund be made available as an
investment vehicle for its Qualified Plan clients (other than through
Contracts), such Participating Insurance Company will be required to represent
in writing that it has adopted Procedures for Qualified Plan Clients, and (iii)
shares of the Fund may only be held by Qualified Plans without a financial
intermediary through direct accounts on the books of the Fund if the Fund has
adopted Procedures for Qualified Plans.
The Funds represent and warrants that each Fund:
(i) qualifies as a look-through entity within the meaning of Treas.Reg.
section 1.817-5(f), and
(ii) shall at all times invest money from the Contracts and conduct its
operations to ensure that: (a) the assets of the Fund are diversified within the
meaning of Treas. Reg. section 1.817-5(b), (b) the Contracts shall be treated as
variable contracts under the Code and the regulations issued thereunder, and(c)
no Contract owner shall be treated as the owner of the assets of an Account
solely due to purchase of shares of a Fund by an Account.
The Funds will notify the Company immediately upon having a reasonable
basis for believing that a Fund is in breach of the foregoing representation and
warranty or that a Fund might be in breach in the future. In addition, the Fund
will immediately take all steps necessary to cure any breach to achieve
compliance with the foregoing representations and warranties.
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The Fund has adopted a Rule 12b-1 Plan under which it makes payments to
finance administrative, service, and distribution expenses with respect to
certain Portfolios. The Fund represents and warrants that its Board, a majority
of whom are not interested persons of the Fund, has approved such Rule 12b-1
Plan to finance administrative, service, and distribution expenses of the Fund's
Portfolios that are subject to a 12b-1 fee, and that any changes to the Fund's
Rule 12b-1 Plan will be approved, in accordance with Rule 12b-1 under the 1940
Act.
If Distributor's payments to Company under Section 2.8 hereof in whole or
in part are financed by a Fund in accordance with a Fund's plan of distribution
adopted pursuant to Rule 12b-1 under the 1940 Act, then in the event of the
termination, cancellation or modification of such 12b-1 plan by a Fund's board
of directors or trustees or shareholders, Company agrees upon notification at
the Distributor's option to waive its right to receive such compensation
pursuant to Section 2.8 hereof until such time, if ever, as Distributor receives
payment.
The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees, expenses and investment policies) complies
with the insurance laws or regulations of 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 laws of its state of domicile, and
the Fund represents that its respective operations are and shall at all times
remain in material compliance with the laws of its state of domicile, to the
extent required to perform this Agreement.
The Distributor represents and warrants that the Distributor is and shall
remain duly registered in all material respects under all applicable federal and
state laws and regulations and that the Distributor shall perform its
obligations for the Fund in compliance in all material respects with the laws of
the State of Maryland, and any applicable state and federal laws and
regulations.
The Adviser represents and warrants that the Adviser is and shall remain
duly registered in all material respects under all applicable federal and state
laws and regulations and that the Adviser shall perform its obligations for the
Fund in compliance in all material respects with the laws of the State of
Maryland, and any applicable state and federal laws and regulations.
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The Fund represents and warrants that its trustees, officers, employees,
and other individuals/entities 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 bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities 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
entities subject to the requirements of 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
bonding company.
Each party to this Agreement will maintain all records required by law,
including records detailing the services it provides. Such records will be
preserved, maintained and made available to the extent required by law and in
accordance with the 1940 Act and the rules thereunder. Upon request by the Fund,
the Adviser or the Distributor, the Company agrees promptly to make copies or,
if required, originals of all records pertaining to the performance of services
under this Agreement available to the Fund, the Adviser or the Distributor, as
the case may be. The Fund agrees that the Company will have the right to
inspect, audit and copy all records pertaining to the performance of services
under this Agreement pursuant to the requirements of any state insurance
department. Each party also agrees promptly to notify the other parties if it
experiences any difficulty in maintaining the records in an accurate and
complete manner. This provision shall survive termination of the Agreement.
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PROSPECTUSES AND PROXY STATEMENTS; VOTING
The Distributor shall provide the Company (at the Company's expense) with
as many copies of the Fund's current Prospectus as the Company may reasonably
request. If requested by the Company in lieu thereof, the Fund shall provide
such documentation (including a final copy of the new Prospectus as set in type
at the Fund's expense - in lieu thereof, such final copy may be provided, if
requested by the Company, electronically or through camera ready film) and other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently, if the Prospectus for the Fund is amended) to have the
prospectus for each Contract and the Fund's Prospectus printed together in one
document (such printing to be at the Company's expense).
The Fund's Prospectus shall state that the Statement of Additional
Information for the Fund is available from the Distributor (or in the Fund's
discretion, the Prospectus shall state that such Statement is available from the
Fund), and the Distributor (or the Fund), at its expense, shall print and
provide such Statement free of charge to the Company and to any owner of a
Contract or prospective owner who requests such Statement.
The Fund, at its expense, shall provide the Company with copies of its
proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
If and to the extent required by the 1940 Act or other applicable law the
Company shall:
(a) solicit voting instructions from Contract owners;
(b) vote Fund shares in accordance with instructions received from
Contract owners; and vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such Portfolio for which
instructions have been received. The Company reserves the right to vote
Fund shares held in any segregated asset account in its own right, to the
extent permitted by law. Each
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Participating Insurance Company shall be responsible for assuring that
each of its separate accounts participating in the Fund calculates voting
privileges in a manner consistent with this Section.
The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders
SALES MATERIAL AND INFORMATION
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 its investment adviser or any of its underwriters is named, at
least fifteen (15) "Business Days" prior to its use. No such material shall be
used if the Fund or its designee objects to such use within fifteen (15)
"Business Days" after receipt of such material.
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 the Distributor or the
designee of either, except with the permission of the Fund or the Distributor or
the designee of either.
The Fund and the Distributor, or the designee of either shall furnish, or
shall cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
Account(s), is named at least fifteen (15) "Business Days" prior to its use. No
such material shall be used if the Company or its designee objects to such use
within fifteen (15) "Business Days" after receipt of such material.
The Fund and the Distributor shall not give any information or make any
representations on behalf of the Company or concerning the Company, an Account,
or the Contracts other than the information or representations contained in a
registration statement or prospectus for the Contracts, as such registration
statement and prospectus may be amended or supplemented from time to time, or in
17
published reports for each Account which are in the public domain or approved by
the Company for distribution to Contract owners, or in sales literature or other
promotional material approved by the Company or its designee, except with the
permission of the Company.
Upon request, the Fund will provide to the Company at least one complete
copy of all registration statements, Prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares.
Upon request, the Company will provide to the Fund at least one complete
copy of all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales literature
and other promotional materials, applications for exemptions, requests for no
action letters, and all amendments to any of the above, that relate to the
Contracts or the Account.
For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
materials published, or designed for use, in a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, or other public media), sales literature,
(I.E., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under the
FINRA rules, the 1940 Act, the 1933 Act, or rules thereunder.
FEES AND EXPENSES
All expenses incident to performance by the Fund under this Agreement shall
be paid by the Fund. The Fund shall see to it that all its shares are registered
and authorized for issuance in accordance
18
with applicable federal law and, if and to the extent deemed 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 material, information statements and reports, setting the
Fund's Prospectus for printing, setting in type and printing the proxy material,
information statements and reports to shareholders, and the preparation of all
statements and notices required by any federal or state law. The Fund shall
bear the cost of printing and distributing the Fund's Prospectus, periodic
reports to shareholders, proxy materials and other shareholder communications to
existing Contract owners. The Company shall see to it that each of the
Contracts and the Accounts are registered and are authorized for issuance in
accordance with applicable federal law. The Company shall bear the expenses for
the cost of registration and qualification of the Contracts and the Accounts,
preparation and filing of the applicable prospectus and registration statements,
setting each Contract prospectus for printing, and the preparation of all
statements and notices required by any federal or state law. In addition, the
Company shall bear the cost of printing and distributing the Fund's Prospectus
to be delivered to prospective Contract owners.
POTENTIAL CONFLICTS
The Board will monitor the Fund for the existence of any material
irreconcilable conflict among 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 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
Portfolio are being managed; (e) a difference in voting instructions given by
variable annuity contract owners and variable life insurance contract owners; or
(f) a decision by an insurer to disregard the voting instructions of Contract
owners.
19
The Board shall promptly inform the Company if they determine that an
irreconcilable material conflict exists and the implications thereof.
The Company will 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 under the Mixed and Shared Funding Exemptive Order, by
providing the Board 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 owners' voting instructions
are disregarded.
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 and other Participating Insurance Companies shall, at their 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 Contract owners of one or more Participating Insurance Companies)
that votes in favor of such segregation, or offering to the affected contract
owners the option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owners' 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 members of the Board. Any such
withdrawal and termination must take place within six (6) months after the Fund
gives written notice that
20
this provision is being implemented, and until the end of that six-month period
the Fund and the Distributor shall continue to accept and implement orders by
the Company for the purchase (and redemption) of Fund shares.
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 members of the Board.
Until the end of the foregoing six-month period, the Fund and the Distributor
shall continue to accept and implement orders by the Company for the purchase
(and redemption) of Fund shares.
For purposes of Sections 6.3 through 6.6 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 6.3 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 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 members
of the Board.
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
21
conditions materially different from those contained in the Mixed and Shared
Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance
Company, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T) as amended, and Rule 6e-3, as adopted, to the extent
such rules are applicable; and (b) Sections 6.1, 6.2, 6.3, 6.4 and 6.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
INDEMNIFICATION
INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless the Fund, the
Adviser and the Distributor and each of its directors, trustees and 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 7.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company, which
consent will not be unreasonably withheld) 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:
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, the Adviser or the Distributor for use
22
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
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 their control) or wrongful conduct of the
Company or persons under their control, with respect to the sale or distribution
of the Contracts or Fund Shares; or
arise out of any untrue statement or alleged untrue
statement of a material fact contained in the registration statement,
Prospectus, or sales literature of the 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
information furnished to the Fund by or on behalf of the Company; or
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
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 7.1(b)
and 7.1(c) hereof.
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 or to the Fund,
whichever is applicable.
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
23
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 provision. In case any such
action is brought against the Indemnified Parties, the Company shall be entitled
to participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the 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.
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 operations of
the Fund.
INDEMNIFICATION BY THE FUND, THE ADVISER AND THE DISTRIBUTOR
The Fund, the Adviser and the Distributor agree to indemnify and hold
harmless the Company and its directors, employees 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 7.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund, 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 are related to the sale
or acquisition of the Fund's shares or the Contracts and:
24
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
Distributor, Adviser or 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 Fund shares; or
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 Distributor or Fund or persons under its control) or wrongful
conduct of the Fund, the Adviser or the Distributor or persons under their
control, with respect to the sale or distribution of the Contracts or Fund
shares; or
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 to the Company by or on behalf of the Fund;
or
arise as a result of any failure by the Fund, the
Adviser or Distributor 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 II of this Agreement); or
25
arise out of or result from any material breach of
any representation and/or warranty made by the Fund, the Adviser or the
Distributor in this Agreement or arise out of or result from any other material
breach of this Agreement by the Fund, the Adviser or the Distributor; as limited
by and in accordance with the provisions of Sections 7.2(b) and 7.2(c) hereof.
The Fund, the Adviser or the Distributor shall not be liable under
this indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or Account, whichever is applicable.
The Fund, the Adviser and the Distributor 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,
the Adviser and the Distributor 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, the Adviser and the Distributor of any
such claim shall not relieve the Fund, the Adviser and the Distributor from any
liability which they 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, the
Adviser and the Distributor will be entitled to participate, at their own
expense, in the defense thereof. The Fund, the Adviser and the Distributor also
shall be entitled to assume the defense thereof with counsel satisfactory to the
party named in the action. After notice from the Fund, the Adviser and the
Distributor to such party of the Fund's, the Adviser's and the Distributor'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, the
Adviser and the Distributor will not be liable to such party under this
Agreement for any legal or other expenses
26
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
The Company agrees promptly to notify the Fund, the Adviser and the
Distributor of the commencement of any material litigation or proceedings that
involves the Fund, the Adviser, and/or the Distributor 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.
APPLICABLE LAW
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of New York.
This Agreement shall be subject to the provisions of the federal securities
laws, and the rules, regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC 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.
TERMINATION
This Agreement shall terminate:
at the option of any party upon six months advance
written notice to the other parties unless otherwise agreed in a separate
written agreement among the parties; or
at the option of the Company if shares of the
Portfolios delineated in Schedule B are not reasonably available to meet the
requirements of the Contracts as determined by the Company; or
at the option of the Fund upon institution of formal
proceedings against the Company by the FINRA, the SEC, the insurance commission
of any state or any other regulatory body regarding the Company's duties under
this Agreement that would have a material adverse impact on the sale of the
Contracts, the administration of the Contracts, the operation of an Account, or
the purchase of Fund shares; or
27
at the option of the Company upon institution of
formal proceedings against the Fund by the FINRA, the SEC, or any state
securities or insurance department or any other regulatory body that would have
a material adverse impact on the Fund or upon the sale or administration of the
Contracts, or upon the operation of the Accounts; or
at the option of the Company upon receipt of any
necessary regulatory approvals and/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 had
been selected to serve as the underlying investment media. The Company will give
thirty (30) days' prior written notice to the Fund of the date of any proposed
vote or other action taken to replace the Fund's shares; or
at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material conflict
exists among the interests of (i) all Contract owners of Contracts of all
separate accounts, or (ii) the interests of the Participating Insurance Company
investing in the Fund as delineated in Article VI of this Agreement; or
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; or
at the option of the Company if the Fund fails to
meet the diversification requirements specified in Article II hereof or the
Company has a reasonable expectation that the Fund will fail to meet these
diversification requirements in the future; or
at the option of any party to this Agreement, upon
another party's material breach of any provision of this Agreement; or
at the option of the Company, if the Company
determines in its sole judgment exercised in good faith, that either the Fund,
the Adviser or the Distributor 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
28
adverse publicity which is likely to have a material adverse impact upon the
business and operations of the Company; or
at the option of the Fund, the Adviser or the
Distributor, if the Fund, the Adviser or the Distributor 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, the Adviser or the Distributor, or
at the option of the Fund in the event any of the
Contracts are not issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice.
NOTICE REQUIREMENT
In the event that any termination of this Agreement is based upon the
provisions of Article VI, such prior written notice shall be given in advance of
the effective date of termination as required by such provisions.
In the event that any termination of this Agreement is based upon the
provisions of Sections 9.1(b) - (d) or 9.1(g) - (i), prompt written notice of
the election to terminate this Agreement for cause shall be furnished by the
party terminating the Agreement to the non-terminating parties, with said
termination to be effective upon receipt of such notice by the non-terminating
parties.
In the event that any termination of this Agreement is based upon the
provisions of Sections 9.1(i) or 9.1(k), prior written notice of the election to
terminate this Agreement for cause shall be furnished by the party terminating
this Agreement to the non-terminating parties. Such prior written notice shall
be given by the party terminating this Agreement to the non-terminating parties
at least thirty (30) days before the effective date of termination.
NO REASON REQUIRED FOR TERMINATION. It is understood and agreed that the
right to terminate this Agreement pursuant to Section 9.1 (a) may be exercised
for any reason or for no reason.
29
EFFECT OF TERMINATION
Notwithstanding any termination pursuant to Section 9.1 of this
Agreement, the Fund may, at its option, or in the event of termination of this
Agreement by the Fund, the Adviser or the Distributor pursuant to Section 9.1
(a) of this Agreement, the Company may require the Fund, the Adviser and the
Distributor to continue to make available additional shares of the Fund for so
long after the termination of this Agreement as the Fund or the Company, if the
Company so requires, desires pursuant to the terms and conditions of this
Agreement as provided in paragraph (b) below for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, if the Fund so elects
to make available additional shares of the Fund, the owners of the Existing
Contracts shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 9.4 shall not apply to any terminations under Article VI and the effect
of such Article VI terminations shall be governed by Article VI of this
Agreement.
In the event of a termination pursuant to Section 9.1 of this
Agreement, the Fund shall promptly notify the Company whether the Fund will
continue to make available shares of the Fund after such termination, except
that, with respect to a termination by the Fund, the Adviser or the Distributor
pursuant to Section 9.1 (a) of this Agreement, the Company shall promptly notify
the Fund whether it wishes the Fund to continue to make available additional
shares of the Fund. If shares of the Fund continue to be made available after
such termination, the provisions of this Agreement shall remain in effect except
for Section 9.1(a) and thereafter the Fund or the Company may terminate the
Agreement, as so continued pursuant to this Section 9.4 upon written notice to
the other party, such notice to be for a period that is reasonable under the
circumstances.
In the event of termination purusant to Section 9.1(l), or such laws
preclude the use of such shares as the underlying investment medium for the
Contracts issued or to be issued by the Company, and if through no fault of the
Company, the need for substitution of Fund shares for the shares
30
of another "registered investment company" arises out of this event, the
expenses of obtaining such an order shall be reimbursed by the Fund. The Fund,
the Adviser and the Distributor shall cooperate fully with the Company in
connection with such application.
SURVIVING PROVISIONS. Each party's obligations under Section 2.12 and
Article VII will survive and will not be affected by any termination of this
Agreement. In addition, with respect to Existing Contracts, all provisions of
this Agreement also will survive and not be affected by any termination of this
Agreement.
NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Xxxx Xxxxx Partners Variable Equity Trust
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxx Xxxxx Partners Variable Income Trust
000 Xxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
Lincoln Life & Annuity Company of New York
0000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Funds Management Operations
31
If to the Distributor:
Xxxx Xxxxx Investor Services, LLC
000 Xxxxx Xxxxxxxx Xxxxx - 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Business Implementation
If to the Adviser:
Xxxx Xxxxx Partners Fund Adviser, LLC
000 Xxxxx Xxxxxxxx Xxxxx - 0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
INFORMATION SHARING.
11.1 The Distributor and the Company, confirm their Agreement for the
sharing of transaction information relating to any and all of the fund families
that may be offered by LMIS from time to time with respect the implementation
and compliance with SEC Rule 22c-2 under the 0000 Xxx.
(a) The Company agrees to provide to the Distributor and/or its designee,
upon written request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN"), or other
government issued identifier ("GII"), if known, of any or all clients of the
Account. The Company also agrees to provide the number of shares, dollar value,
date, name or other identifier (including broker identification number) of any
investment professional(s) associated with the client(s) or Account (if known),
and transaction type (purchase, redemption, transfer or exchange) of every
purchase, redemption, transfer, or exchange of shares held through an account
maintained by the Company during the period covered by the request. Requests
must set forth a specific period, generally not to exceed 90 days from the date
of the request, for which transaction information is sought. The Fund and/or its
designee may request transaction information older than 90 days from the date of
the request as it deems
32
necessary to investigate compliance with policies established by the Fund for
the purpose of eliminating or reducing any dilution of the value of the
outstanding shares issued by the Fund.
(b) The Company agrees to transmit the requested information that is
on its books and records to the Distributor and/or its designee promptly, but in
any event not later than five (5) business days, or as otherwise agreed to by
the parties, after receipt of a request. If the requested information is not on
the Company's books and records, the Company agrees to (i) provide or arrange to
provide to the Fund and/or its designee the requested information pertaining to
shareholders who hold accounts with an indirect intermediary; or (ii) if
directed by the Distributor, block further purchases of Shares from such
indirect intermediary. In such instance, the Company agrees to inform the
Distributor whether it plans to perform (i) or (ii). Responses required by this
paragraph must be communicated in writing and in a format mutually agreed upon
by the parties. To the extent practicable, the format for any transaction
information provided to the distributor should be consistent with the NSCC
Standardized Data Reporting Format. For purposes of this provision, an "indirect
intermediary" has the same meaning as in SEC Rule 22c-2 under the 1940 Act.
(c) The Distributor agrees not to use the information received for
marketing or any other similar purpose without the Company's prior written
consent.
(d) The Company agrees to execute written instructions from the
Distributor to restrict or prohibit further purchases (including shares acquired
by exchanges) of shares by a client that has been identified by the Distributor
as having engaged in transactions of the shares (directly or indirectly through
the intermediary's account) that violates policies established by the Fund.
(e). Instructions must include the TIN, ITIN or GII if known, and the
specific restriction(s) to be executed. If the TIN, ITIN or GII is not known,
the instructions must include an
33
equivalent identifying number of the client(s) or account(s) or other agreed
upon information to which the instruction relates.
(f) The Company agrees to execute instruction as soon as practicable,
but not later than five (5) business days, or as otherwise agreed to by the
parties, after receipt of the instructions by the intermediary.
(g) The Company must provide written confirmation to the Distributor
that instructions have been executed. The Company agrees to provide confirmation
as soon as reasonably practicable, but not later than ten (10) business days
after the instructions have been executed.
(h) The provisions of this Article 11 shall survive termination of
this Agreement for at least 60 days after the termination date.
MISCELLANEOUS
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.
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
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.
Each party hereto shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the FINRA and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
34
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.
Each party will keep confidential any information acquired as a result of
this Agreement regarding the business and affairs of the other parties to this
Agreement and their affiliates.
Subject to the requirements of legal process and regulatory authority, each
party hereto (and on behalf of its affiliates and third party vendors) shall
treat as confidential the names and address of 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 in order to carry out the
specified purposes specified herein, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time as
it may come into public domain without express written consent of the affected
party. In addition, each party (and on behalf of its affiliates and third party
vendors) shall adopt policies and procedures that address administrative,
technical and physical safeguards for the protection of such customer records.
Each party will comply with all applicable laws and regulations aimed at
preventing, detecting, and reporting money laundering and suspicious
transactions. To the extent required by applicable regulation and generally
accepted industry practices, each party shall take all necessary and appropriate
steps to: (i) obtain, verify, and retain information with regard to contract
owner identification, and (ii) maintain records of all contract owner
transactions. The Company will (but only to the extent consistent with
applicable law) take all steps necessary and appropriate to provide the Fund
with any requested information about Contract owners and their accounts in the
event that the Fund shall request such information due to an inquiry or
investigation by any law enforcement, regulatory, or administrative authority.
To the extent permitted by applicable law and regulations, the Company will
notify the Fund of any concerns that the Company may have in connection with any
Contract owners in the context of relevant anti-money laundering laws or
regulations.
35
The Fund agrees to consult with the Company concerning whether any
Portfolio of the Fund qualifies to provide a foreign tax credit pursuant to
Section 853 of the Code.
The Fund, Distributor and Advisor will use reasonable best efforts to
prevent the Fund from engaging, directly or indirectly, in a transaction that,
as of the date the Fund enters into a binding contract to engage in such
transaction, is a "listed transaction" as defined in Treas. Regs. ss.
1.6011-4(b)(2) or successor provision (a "Listed Transaction"). If the Fund
Distributor or Advisor reasonably determines that the Fund has engaged in a
Listed Transaction, it will (i) provide the Company with prompt notice thereof
and (ii) with respect to any such transaction, the Fund will provide the
Company, upon the Company's request, (A) with all information relating to such
Listed Transaction which the Company would need in order to comply with its
disclosure obligations under the Code and applicable regulations and state laws.
In addition, the Fund will promptly notify the Company if the Fund must file (or
has filed) Form 8886 ("Reportable Transaction Disclosure Statement"), or
successor form.
ARTICLE XIII
TERMINATION OF PRIOR AGREEMENTS
13.1 This Agreement supersedes all prior agreements among the parties or
their predecessor entities with respect to the subject matter of this agreement.
The parties agree that all such prior agreements are hereby terminated in their
entirety.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed hereto as of the date specified below.
36
Company:
LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK
By its authorized officer:
By: /s/ Xxxxxx X. Xxxxx
---------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
Date: 11/6/13
Fund:
XXXX XXXXX PARTNERS VARIABLE EQUITY TRUST
By its authorized officer:
By: Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Date: 11/12/13
Fund:
XXXX XXXXX PARTNERS VARIABLE INCOME TRUST
By its authorized officer:
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Date: 11/12/13
Adviser:
XXXX XXXXX PARTNERS FUND ADVISER, LLC
By its authorized officer:
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
Date: 11/12/13
37
Distributor:
XXXX XXXXX INVESTOR SERVICES, LLC
By its authorized officer:
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Director
Date: 11/11/13
38
SCHEDULE A
SEPARATE ACCOUNTS
--------------------------------------------------------------------------------
SEPARATE ACCOUNTS
--------------------------------------------------------------------------------
LLANY Separate Account S for Flexible Premium Variable Life Insurance
--------------------------------------------------------------------------------
Lincoln Life & Annuity Flexible Premium Variable Life Account Z
--------------------------------------------------------------------------------
39
SCHEDULE B
PORTFOLIOS AVAILABLE UNDER THE CONTRACTS
XXXX XXXXX PARTNERS VARIABLE EQUITY TRUST
-------------------------------------------------- --------- -------------------
FUND NAME CLASS CUSIP
-------------------------------------------------- --------- -------------------
ClearBridge Variable Mid Cap Core Portfolio I 00000X000
-------------------------------------------------- --------- -------------------
ClearBridge Variable Mid Cap Core Portfolio II 00000X000
-------------------------------------------------- --------- -------------------
ClearBridge Variable Small Cap Growth Portfolio I 00000X000
-------------------------------------------------- --------- -------------------
ClearBridge Variable Small Cap Growth Portfolio II 00000X000
-------------------------------------------------- --------- -------------------
40
