EXHIBIT (h)(15)(a)
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this _____ day of ______________,
____ by and between XXXXXXX XXXXX VARIABLE INSURANCE TRUST, an unincorporated
business trust formed under the laws of Delaware (the "Trust"), XXXXXXX, SACHS &
CO., a New York limited partnership (the "Distributor"), and AMERICAN
INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK, a New York life insurance
company (the "Company"), on its own behalf and on behalf of each separate
account of the Company identified herein.
WHEREAS, the Trust is a series-type mutual fund offering shares of
beneficial interest (the "Trust shares") consisting of one or more separate
series ("Series") of shares, each such Series representing an interest in a
particular investment portfolio of securities and other assets (a "Fund"), and
which Series may be subdivided into various classes ("Classes") with each such
Class supporting a distinct charge and expense arrangement; and
WHEREAS, the Trust was established for the purpose of serving as an
investment vehicle for insurance company separate accounts supporting variable
annuity contracts and variable life insurance policies to be offered by
insurance companies and may also be utilized by qualified retirement plans; and
WHEREAS, the Trust has obtained an order from the Securities and
Exchange Commission, dated February 2, 1998 (File No. 812-10794), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a), and 15(b) of the 1940 Act (as defined below) and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Shared Trusting Exemptive Order"); and
WHEREAS, the Distributor has the exclusive right to distribute Trust
shares to qualifying investors; and
WHEREAS, the Company desires that the Trust serve as an investment
vehicle for a certain separate account(s) of the Company and the Distributor
desires to sell shares of certain Series and/or Class(es) to such separate
account(s);
NOW, THEREFORE, in consideration of their mutual promises, the Trust,
the Distributor and the Company agree as follows:
ARTICLE I
Additional Definitions
1.1. "Account" -- the separate account of the Company described more
specifically in Schedule 1 to this Agreement. If more than one separate account
is described on Schedule 1, the term shall refer to each separate account so
described.
1
1.2. "Business Day" -- each day that the Trust is open for business
as provided in the Trust's Prospectus.
1.3. "Code" -- the Internal Revenue Code of 1986, as amended, and any
successor thereto.
1.4. "Contracts" -- the class or classes of variable annuity
contracts and/or variable life insurance policies issued by the Company and
described more specifically on Schedule 2 to this Agreement.
1.5. "Contract Owners" -- the owners of the Contracts, as
distinguished from all Product Owners.
1.6. "Participating Account" -- a separate account investing all or a
portion of its assets in the Trust, including the Account.
1.7. "Participating Insurance Company" -- any insurance company
investing in the Trust on its behalf or on behalf of a Participating Account,
including the Company.
1.8. "Participating Plan" -- any qualified retirement plan investing
in the Trust.
1.9. "Participating Investor" -- any Participating Account,
Participating Insurance Company or Participating Plan, including the Account and
the Company.
1.10. "Products" -- variable annuity contracts and variable life
insurance policies supported by Participating Accounts, including the Contracts.
1.11. "Product Owners" -- owners of Products, including Contract
Owners.
1.12. "Trust Board" -- the board of trustees of the Trust.
1.13. "Registration Statement" -- with respect to the Trust shares or
a class of Contracts, the registration statement filed with the SEC to register
such securities under the 1933 Act, or the most recently filed amendment
thereto, in either case in the form in which it was declared or became
effective. The Contracts' Registration Statement for each class of Contracts is
described more specifically on Schedule 2 to this Agreement. The Trust's
Registration Statement is filed on Form N-1A (File No. 333-35883).
1.14. "1940 Act Registration Statement" -- with respect to the Trust
or the Account, the registration statement filed with the SEC to register such
person as an investment company under the 1940 Act, or the most recently filed
amendment thereto. The Account's 1940 Act Registration Statement is described
more specifically on Schedule 2 to this Agreement. The Trust's 1940 Act
Registration Statement is filed on Form N-1A (File No. 811-08361).
1.15. "Prospectus" -- with respect to shares of a Series (or Class) of
the Trust or a class of Contracts, each version of the definitive prospectus or
supplement thereto filed with the SEC pursuant to Rule 497 under the 1933 Act.
With respect to any provision of this Agreement requiring a party to take action
in accordance with a Prospectus, such reference thereto shall be deemed to be to
the version for the applicable Series, Class or Contracts last so filed prior to
the taking of such action. For purposes of Article IX, the term "Prospectus"
shall include any statement of additional information incorporated therein.
2
1.16. "Statement of Additional Information" -- with respect to the
shares of the Trust or a class of Contracts, each version of the definitive
statement of additional information or supplement thereto filed with the SEC
pursuant to Rule 497 under the 1933 Act. With respect to any provision of this
Agreement requiring a party to take action in accordance with a Statement of
Additional Information, such reference thereto shall be deemed to be the last
version so filed prior to the taking of such action.
1.17. "SEC" -- the Securities and Exchange Commission.
1.18. "NASD" -- The National Association of Securities Dealers, Inc.
1.19. "1933 Act" -- the Securities Act of 1933, as amended.
1.20. "1940 Act" -- the Investment Company Act of 1940, as amended.
ARTICLE II
Sale of Trust Shares
2.1. Availability of Shares
(a) The Trust has granted to the Distributor exclusive
authority to distribute the Trust shares and to select which Series or
Classes of Trust shares shall be made available to Participating
Investors. Pursuant to such authority, and subject to Article X hereof,
the Distributor shall make available to the Company for purchase on
behalf of the Account, shares of the Series and Classes listed on
Schedule 3 to this Agreement, such purchases to be effected at net asset
value in accordance with Section 2.3 of this Agreement. Such Series and
Classes shall be made available to the Company in accordance with the
terms and provisions of this Agreement until this Agreement is
terminated pursuant to Article X or the Distributor suspends or
terminates the offering of shares of such Series or Classes in the
circumstances described in Article X.
(b) Notwithstanding clause (a) of this Section 2.1, Series
or Classes of Trust shares in existence now or that may be established
in the future will be made available to the Company only as the
Distributor may so provide, subject to the Distributor's rights set
forth in Article X to suspend or terminate the offering of shares of any
Series or Class or to terminate this Agreement.
(c) The parties acknowledge and agree that: (i) the Trust
may revoke the Distributor's authority pursuant to the terms and
conditions of its distribution agreement with the Distributor; and (ii)
the Trust reserves the right in its sole discretion to refuse to accept
a request for the purchase of Trust shares.
2.2. Redemptions. The Trust shall redeem, at the Company's
request, any full or fractional Trust shares held by the Company on
behalf of the Account, such redemptions to be effected at net asset
value in accordance with Section 2.3 of this Agreement. Notwithstanding
the foregoing, the Trust may delay redemption of Trust shares of any
Series or Class to the extent permitted by the 1940 Act, any rules,
regulations or orders thereunder, or the Prospectus for such Series or
Class.
3
2.3. Purchase and Redemption Procedures
(a) The Trust hereby appoints the Company as an agent of the
Trust for the limited purpose of receiving purchase and redemption
requests on behalf of the Account (but not with respect to any Trust
shares that may be held in the general account of the Company) for
shares of those Series or Classes made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the
Contracts, other transactions relating to the Contracts or the Account
and customary processing of the Contracts. Receipt of any such requests
(or effectuation of such transaction or processing) on any Business Day
by the Company as such limited agent of the Trust prior to the Trust's
close of business as defined from time to time in the applicable
Prospectus for such Series or Class (which as of the date of execution
of this Agreement is defined as the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m. New York Time)) shall constitute
receipt by the Trust on that same Business Day, provided that the Trust
receives actual and sufficient notice of such request by 10:00 a.m. New
York Time on the next following Business Day. Such notice may be
communicated by telephone to the office or person designated for such
notice by the Trust, and shall be confirmed by facsimile.
(b) The Company shall pay for shares of each Series or Class
on the same day that it provides actual notice to the Trust of a
purchase request for such shares. Payment for Series or Class shares
shall be made in Federal funds transmitted to the Trust by wire to be
received by the Trust by 5:00 p.m. New York Time on the day the Trust
receives actual notice of the purchase request for Series or Class
shares (unless the Trust determines and so advises the Company that
sufficient proceeds are available from redemption of shares of other
Series or Classes effected pursuant to redemption requests tendered by
the Company on behalf of the Account). In no event may proceeds from the
redemption of shares requested pursuant to an order received by the
Company after the Trust's close of business on any Business Day be
applied to the payment for shares for which a purchase order was
received prior to the Trust's close of business on such day. If the
issuance of shares is canceled because Federal funds are not timely
received, the Company shall indemnify the respective Fund and
Distributor with respect to all costs, expenses and losses relating
thereto. Upon the Trust's receipt of Federal funds so wired, such funds
shall cease to be the responsibility of the Company and shall become the
responsibility of the Trust. If Federal funds are not received on time,
such funds will be invested, and Series or Class shares purchased
thereby will be issued, as soon as practicable after actual receipt of
such funds but in any event not on the same day that the purchase order
was received.
(c) Payment for Series or Class shares redeemed by the
Account or the Company shall be made in Federal funds transmitted by
wire to the Company or any other person properly designated in writing
by the Company, such funds normally to be transmitted by 6:00 p.m. New
York Time on the next Business Day after the Trust receives actual
notice of the redemption order for Series or Class shares (unless
redemption proceeds are to be applied to the purchase of Trust shares of
other Series or Classes in accordance with Section 2.3(b) of this
Agreement), except that the Trust reserves the right to redeem Series or
Class shares in assets other than cash and to delay payment of
redemption proceeds to the extent permitted by the 1940 Act, any rules
or regulations or orders thereunder, or the applicable Prospectus. The
Trust shall not bear any responsibility whatsoever for the proper
disbursement or crediting of redemption proceeds by the Company; the
Company alone shall be responsible for such action.
4
(d) Any purchase or redemption request for Series or Class
shares held or to be held in the Company's general account shall be
effected at the net asset value per share next determined after the
Trust's actual receipt of such request, provided that, in the case of a
purchase request, payment for Trust shares so requested is received by
the Trust in Federal funds prior to close of business for determination
of such value, as defined from time to time in the Prospectus for such
Series or Class.
(e) Prior to the first purchase of any Trust shares
hereunder, the Company and the Trust shall provide each other with all
information necessary to effect wire transmissions of Federal funds to
the other party and all other designated persons pursuant to such
protocols and security procedures as the parties may agree upon. Should
such information change thereafter, the Trust and the Company, as
applicable, shall notify the other in writing of such changes, observing
the same protocols and security procedures, at least three Business Days
in advance of when such change is to take effect. The Company and the
Trust shall observe customary procedures to protect the confidentiality
and security of such information, but the Trust shall not be liable to
the Company for any breach of security.
(f) The procedures set forth herein are subject to any
additional terms set forth in the applicable Prospectus for the Series
or Class or by the requirements of applicable law.
2.4. Net Asset Value. The Trust shall use its best efforts to inform
the Company of the net asset value per share for each Series or Class available
to the Company on a daily basis as soon as reasonably practicable after the net
asset value per share for such Series or Class is calculated, which should not
be later than 6:30 p.m. New York Time. Under normal conditions the net asset
value will be provided to the Company no later than 6:30 p.m. New York Time. If
the Trust is unable to meet the 6:30 p.m. time stated herein, then the Trust and
the Company shall work cooperatively in good faith to allow, if possible,
additional time for the Company to place orders for the purchase and redemption
of Trust shares, provided that all such orders were received by the Company no
later than the Trust's cut off time set forth in the prospectus. The Trust shall
calculate such net asset value in accordance with the Prospectus for such Series
or Class.
2.5. Dividends and Distributions. The Trust shall furnish same day
notice to the Company as soon as reasonably practicable of any income dividends
or capital gain distributions payable on any Series or Class shares. The
Company, on its behalf and on behalf of the Account, hereby elects to receive
all such dividends and distributions as are payable on any Series or Class
shares in the form of additional shares of that Series or Class. Notwithstanding
this Section 2.5, the Trust shall utilize its best efforts to provide the
Company with at least ten (10) Business Days advance notice of any forthcoming
dividend or capital gain distributions. The Company reserves the right, on its
behalf and on behalf of the Account, to revoke this election and to receive all
such dividends and capital gain distributions in cash. The Trust shall notify
the Company promptly of the number of Series or Class shares so issued as
payment of such dividends and distributions.
2.6. Book Entry. Issuance and transfer of Trust shares shall be by
book entry only. Stock certificates will not be issued to the Company or the
Account. Purchase and redemption orders for Trust shares shall be recorded in an
appropriate ledger for the Account or the appropriate subaccount of the Account.
5
2.7. Pricing Errors. Any material errors in the calculation of net
asset value, dividends or capital gain information shall be reported immediately
upon discovery to the Company. An error shall be deemed "material" based on our
interpretation of the SEC's position and policy with regard to materiality, as
it may be modified from time to time. Neither the Trust, any 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.
2.8. Limits on Purchasers. The Distributor and the Trust shall sell
Trust shares only to insurance companies on behalf of their separate accounts
and to persons or plans ("Qualified Persons") that qualify to purchase shares of
the Trust under Section 817(h) of the Code and the regulations thereunder
without impairing the ability of the Account to consider the portfolio
investments of the Trust as constituting investments of the Account for the
purpose of satisfying the diversification requirements of Section 817(h). The
Distributor and the Trust shall not sell Trust shares to any insurance company
or separate account unless an agreement complying with Article VIII of this
Agreement is in effect to govern such sales. The Company hereby represents and
warrants that it on behalf of the Account are Qualified Persons.
ARTICLE III
Representations and Warranties
3.1. Company. The Company represents and warrants that: (i) the
Company is an insurance company duly organized and in good standing under Texas
insurance law; (ii) the Account is a validly existing separate account, duly
established and maintained in accordance with applicable law; (iii) the
Account's 1940 Act Registration Statement has been filed with the SEC in
accordance with the provisions of the 1940 Act and the Account is duly
registered as a unit investment trust thereunder; (iv) the Contracts'
Registration Statement has been declared effective by the SEC; (v) the Contracts
will be issued in compliance in all material respects with all applicable
Federal and state laws; (vi) the Contracts have been filed, qualified and/or
approved for sale, as applicable, under the insurance laws and regulations of
the states in which the Contracts will be offered; (vii) the Account will
maintain its registration under the 1940 Act and will comply in all material
respects with the 1940 Act; (viii) the Contracts currently are, and at the time
of issuance and for so long as they are outstanding will be, treated as annuity
contracts, life insurance policies, or modified endowment contracts, whichever
is appropriate, under applicable provisions of the Code; and (ix) the Company's
entering into and performing its obligations under this Agreement does not and
will not violate its charter documents or by-laws, rules or regulations, or any
agreement to which it is a party. The Company will notify the Trust promptly if
for any reason it is unable to perform its obligations under this Agreement.
3.2. Trust. The Trust represents and warrants that: (i) the Trust is
an unincorporated business trust duly formed and validly existing under the
Delaware law; (ii) the Trust's 1940 Act Registration Statement has been filed
with the SEC in accordance with the provisions of the 1940 Act and the Trust is
duly registered as an open-end management investment company thereunder; (iii)
the Trust's Registration Statement has been declared effective by the SEC; (iv)
the Trust shares will be issued in compliance in all material respects with all
applicable federal laws; (v) the Trust will remain registered under and will
comply in all material respects with the 1940 Act during the term of this
Agreement; (vi) each Fund of the Trust intends to qualify as a "regulated
investment company" under Subchapter M of the Code and to comply with the
diversification standards prescribed in Section 817(h) of the Code and the
regulations thereunder; and (vii) the investment policies of each Fund are in
material compliance with any investment restrictions set forth on Schedule 4 to
this Agreement. The Trust, however, makes no representation as to whether any
aspect of its operations (including, but not limited to, fees and expenses and
investment policies) otherwise complies with the insurance laws or regulations
of any state.
6
3.3. Distributor. The Distributor represents and warrants that: (i)
the Distributor is a limited partnership duly organized and in good standing
under New York law; (ii) the Distributor is registered as a broker-dealer under
federal and applicable state securities laws and is a member of the NASD; and
(iii) the Distributor is registered as an investment adviser under federal
securities laws.
3.4. Legal Authority. Each party represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein have been duly authorized by all necessary
corporate, partnership or trust action, as applicable, by such party, and, when
so executed and delivered, this Agreement will be the valid and binding
obligation of such party enforceable in accordance with its terms.
3.5. Bonding Requirement. Each party represents and warrants that all
of its directors, officers, partners and employees dealing with the money and/or
securities of the Trust 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 amount required by the applicable rules of the NASD and
the federal securities laws. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company. All
parties shall make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, shall provide evidence thereof
promptly to any other party upon written request therefor, and shall notify the
other parties promptly in the event that such coverage no longer applies.
ARTICLE IV
Regulatory Requirements
4.1. Trust Filings. The Trust shall amend the Trust's Registration
Statement and the Trust's 1940 Act Registration Statement from time to time as
required in order to effect the continuous offering of Trust shares in
compliance with applicable law and to maintain the Trust's registration under
the 1940 Act for so long as Trust shares are sold.
4.2. Contracts Filings. The Company shall amend the Contracts'
Registration Statement and the Account's 1940 Act Registration Statement from
time to time as required in order to effect the continuous offering of the
Contracts in compliance with applicable law or as may otherwise be required by
applicable law, but in any event shall maintain a current effective Contracts'
Registration Statement and the Account's registration under the 1940 Act for so
long as the Contracts are continuing to be issued. The Company shall be
responsible for filing all such Contract forms, applications, marketing
materials and other documents relating to the Contracts and/or the Account with
state insurance commissions, as required or customary, and shall use its best
efforts: (i) to obtain any and all approvals thereof, under applicable state
insurance law, of each state or other jurisdiction in which Contracts are or may
be offered for sale; and (ii) to keep such approvals in effect for so long as
the Contracts are outstanding.
4.3. Voting of Trust Shares. With respect to any matter put to vote
by the holders of Trust shares ("Voting Shares"), the Company will provide
"pass-through" voting privileges to owners of Contracts registered with the SEC
as long as the 1940 Act requires such privileges in such cases. In cases in
which "pass-through" privileges apply, the Company will (i) solicit voting
instructions from Contract Owners of SEC-registered Contracts; (ii) vote Voting
Shares attributable to Contract Owners in accordance with instructions or
proxies timely received from such Contract Owners; and (iii) vote Voting Shares
held by it that are not attributable to reserves for SEC-registered Contracts or
for which it has not received timely voting instructions in the
7
same proportion as instructions received in a timely fashion from Owners of
SEC-registered Contracts. The Company shall be responsible for ensuring that it
calculates "pass-through" votes for the Account in a manner consistent with the
provisions set forth above and with other Participating Insurance Companies.
Neither the Company nor any of its affiliates will in any way recommend action
in connection with, or oppose or interfere with, the solicitation of proxies for
the Trust shares held for such Contract Owners, except with respect to matters
as to which the Company has the right under Rule 6e-2 or 6e-3(T) under the 1940
Act, to vote Voting Shares without regard to voting instructions from Contract
Owners.
4.4. State Insurance Restrictions. The Company acknowledges and
agrees that it is the responsibility of the Company and other Participating
Insurance Companies to determine investment restrictions and any other
restrictions, limitations or requirements under state insurance law applicable
to any Fund or the Trust or the Distributor, and that neither the Trust nor the
Distributor shall bear any responsibility to the Company, other Participating
Insurance Companies or any Product Owners for any such determination or the
correctness of such determination. Schedule 4 sets forth the investment
restrictions that the Company and/or other Participating Insurance Companies
have determined are applicable to any Fund and with which the Trust has agreed
to comply as of the date of this Agreement. The Company shall inform the Trust
of any investment restrictions imposed by state insurance law that the Company
determines may become applicable to the Trust or a Fund from time to time as a
result of the Account's investment therein, other than those set forth on
Schedule 4 to this Agreement. Upon receipt of any such information from the
Company or any other Participating Insurance Company, the Trust shall determine
whether it is in the best interests of shareholders to comply with any such
restrictions. If the Trust determines that it is not in the best interests of
shareholders (it being understood that "shareholders" for this purpose shall
mean Product Owners) to comply with a restriction determined to be applicable by
the Company, the Trust shall so inform the Company, and the Trust and the
Company shall discuss alternative accommodations in the circumstances. If the
Trust determines that it is in the best interests of shareholders to comply with
such restrictions, the Trust and the Company shall amend Schedule 4 to this
Agreement to reflect such restrictions, subject to obtaining any required
shareholder approval thereof.
4.5. Compliance. Except as otherwise provided under this Agreement,
under no circumstances will the Trust, the Distributor or any of their
affiliates (excluding Participating Investors) be held responsible or liable in
any respect for any statements or representations made by them or their legal
advisers to the Company or any Contract Owner concerning the applicability of
any federal or state laws, regulations or other authorities to the activities
contemplated by this Agreement.
4.6. Drafts of Filings. The Trust and the Company shall provide to
each other copies of draft versions of any Registration Statements,
Prospectuses, Statements of Additional Information, periodic and other
shareholder or Contract Owner reports, proxy statements, solicitations for
voting instructions, applications for exemptions, requests for no-action
letters, and all amendments or supplements to any of the above, prepared by or
on behalf of either of them and that mentions the other party by name. Such
drafts shall be provided to the other party sufficiently in advance of filing
such materials with regulatory authorities in order to allow such other party a
reasonable opportunity to review the materials.
4.7. Copies of Filings. The Trust and the Company shall provide to
each other at least one complete copy of all Registration Statements,
Prospectuses, Statements of Additional Information, periodic and other
shareholder or Contract Owner reports, proxy statements, solicitations of voting
instructions, applications for exemptions, requests for no-action letters, and
all amendments or supplements to any of the above, that relate to the Trust, the
Contracts or the Account, as the case may be, promptly after the filing by or on
behalf of each such party of
8
such document with the SEC or other regulatory authorities (it being understood
that this provision is not intended to require the Trust to provide to the
Company copies of any such documents prepared, filed or used by Participating
Investors other than the Company and the Account).
4.8. Regulatory Responses. Each party shall promptly provide to all
other parties copies of responses to no-action requests, notices, orders and
other rulings received by such party with respect to any filing covered by
Section 4.7 of this Agreement.
4.9. Complaints and Proceedings
(a) The Trust and/or the Distributor shall immediately
notify the Company of: (i) the issuance by any court or regulatory body
of any stop order, cease and desist order, or other similar order (but
not including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Trust's
Registration Statement or the Prospectus of any Series or Class; (ii)
any request by the SEC for any amendment to the Trust's Registration
Statement or the Prospectus of any Series or Class; (iii) the initiation
of any proceedings for that purpose or for any other purposes relating
to the registration or offering of the Trust shares; or (iv) any other
action or circumstances that may prevent the lawful offer or sale of
Trust shares or any Class or Series in any state or jurisdiction,
including, without limitation, any circumstance in which (A) such shares
are not registered and, in all material respects, issued and sold in
accordance with applicable state and federal law or (B) such law
precludes the use of such shares as an underlying investment medium for
the Contracts. The Trust will make every reasonable effort to prevent
the issuance of any such stop order, cease and desist order or similar
order and, if any such order is issued, to obtain the lifting thereof at
the earliest possible time.
(b) The Company shall immediately notify the Trust and the
Distributor of: (i) the issuance by any court or regulatory body of any
stop order, cease and desist order, or other similar order (but not
including an order of a regulatory body exempting or approving a
proposed transaction or arrangement) with respect to the Contracts'
Registration Statement or the Contracts' Prospectus; (ii) any request by
the SEC for any amendment to the Contracts' Registration Statement or
Prospectus; (iii) the initiation of any proceedings for that purpose or
for any other purposes relating to the registration or offering of the
Contracts; or (iv) any other action or circumstances that may prevent
the lawful offer or sale of the Contracts or any class of Contracts in
any state or jurisdiction, including, without limitation, any
circumstance in which such Contracts are not registered, qualified and
approved, and, in all material respects, issued and sold in accordance
with applicable state and federal laws. The Company will make every
reasonable effort to prevent the issuance of any such stop order, cease
and desist order or similar order and, if any such order is issued, to
obtain the lifting thereof at the earliest possible time.
(c) Each party shall immediately notify the other parties
when it receives notice, or otherwise becomes aware of, the commencement
of any litigation or proceeding against such party or a person
affiliated therewith in connection with the issuance or sale of Trust
shares or the Contracts.
(d) The Company shall provide to the Trust and the
Distributor any complaints it has received from Contract Owners
pertaining to the Trust or a Fund, and
9
the Trust and Distributor shall each provide to the Company any
complaints it has received from Contract Owners relating to the
Contracts.
4.10. Cooperation. Each party hereto shall cooperate with the other
parties and all appropriate government authorities (including without limitation
the SEC, the NASD and state securities and insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry by any such authority relating to this
Agreement or the transactions contemplated hereby. However, such access shall
not extend to attorney-client privileged information.
ARTICLE V
Sale, Administration and Servicing of the Contracts
5.1. Sale of the Contracts. The Company shall be fully responsible as
to the Trust and the Distributor for the sale and marketing of the Contracts.
The Company shall provide Contracts, the Contracts' and Trust's Prospectuses,
Contracts' and Trust's Statements of Additional Information, and all amendments
or supplements to any of the foregoing to Contract Owners and prospective
Contract Owners, all in accordance with federal and state laws. The Company
shall ensure that all persons offering the Contracts are duly licensed and
registered under applicable insurance and securities laws. The Company shall
ensure that each sale of a Contract satisfies applicable suitability
requirements under insurance and securities laws and regulations, including
without limitation the rules of the NASD. The Company shall adopt and implement
procedures reasonably designed to ensure that information concerning the Trust
and the Distributor that is intended for use only by brokers or agents selling
the Contracts (i.e., information that is not intended for distribution to
Contract Owners or offerees) is so used.
5.2. Administration and Servicing of the Contracts. The Company shall
be fully responsible as to the Trust and the Distributor for the underwriting,
issuance, service and administration of the Contracts and for the administration
of the Account, including, without limitation, the calculation of performance
information for the Contracts, the timely payment of Contract Owner redemption
requests and processing of Contract transactions, and the maintenance of a
service center, such functions to be performed in all respects at a level
commensurate with those standards prevailing in the variable insurance industry.
The Company shall provide to Contract Owners all Trust reports, solicitations
for voting instructions including any related Trust proxy solicitation
materials, and updated Trust Prospectuses as required under the federal
securities laws..
5.3. Customer Complaints. The Company shall promptly address all
customer complaints and resolve such complaints consistent with high ethical
standards and principles of ethical conduct.
5.4. Trust Prospectuses and Reports. In order to enable the Company
to fulfill its obligations under this Agreement and the federal securities laws,
the Trust shall provide the Company with a copy, in camera-ready form or form
otherwise suitable for printing or duplication of: (i) the Trust's Prospectus
for the Series and Classes listed on Schedule 3 and any supplement thereto; (ii)
each Statement of Additional Information and any supplement thereto; (iii) any
Trust proxy soliciting material for such Series or Classes; and (iv) any Trust
periodic shareholder reports. The Trust and the Company may agree upon alternate
arrangements, but in all cases, the Trust reserves the right to approve the
printing of any such material. The Trust shall provide the Company at least 10
days advance written notice when any such material shall become available,
provided, however, that in the case of a supplement, the Trust shall provide the
Company notice reasonable in the circumstances, it being understood that
circumstances surrounding such supplement may not allow for advance notice. The
Company may not alter any
10
material so provided by the Trust or the Distributor (including without
limitation presenting or delivering such material in a different medium, e.g.,
electronic or Internet) without the prior written consent of the Distributor.
5.5. Trust Advertising Material. No piece of marketing, advertising
or sales literature or other promotional material in which the Trust or the
Distributor or the trade name and trademark Xxxxxxx Xxxxx (the "Xxxx") is named
(including, without limitation, material for prospects, existing Contract
Owners, brokers, rating or ranking agencies, or the press, whether in print,
radio, television, video, Internet, or other electronic medium) shall be used by
the Company or any person directly or indirectly authorized by the Company,
including without limitation, underwriters, distributors, and sellers of the
Contracts, except with the prior written consent of the Trust or the
Distributor, as applicable, as to the form, content and medium of such material.
Any such piece shall be furnished to the Trust for such consent prior to its
use. The Trust or the Distributor shall respond to any request for written
consent on a prompt and timely basis, but failure to respond shall not relieve
the Company of the obligation to obtain the prior written consent of the Trust
or the Distributor. After receiving the Trust's or Distributor's consent to the
use of any such material, no further changes may be made without obtaining the
Trust's or Distributor's consent to such changes. The Trust or Distributor may
at any time in its sole discretion revoke such written consent, and upon
notification of such revocation, the Company shall no longer use the material
subject to such revocation. Until further notice to the Company, the Trust has
delegated its rights and responsibilities under this provision to the
Distributor.
5.6. Contracts Advertising Material. No piece of marketing,
advertising or sales literature or other promotional material in which the
Company is named shall be used by the Trust or the Distributor, except with the
prior written consent of the Company. Any such piece shall be furnished to the
Company for such consent prior to its use. The Company shall respond to any
request for written consent on a prompt and timely basis, and failure to respond
to the Trust or the Distributor within three business days shall be deemed as
the Company's consent to the use of such sales or marketing literature. The
Company may at any time in its sole discretion revoke any written consent, and
upon notification of such revocation, neither the Trust nor the Distributor
shall use the material subject to such revocation. The Company, upon prior
written notice to the Trust, may delegate its rights and responsibilities under
this provision to the principal underwriter for the Contracts.
5.7. Trade Names. No party shall use any other party's trade names,
logos, trademarks or service marks, whether registered or unregistered, without
the prior written consent of such other party, or after written consent therefor
has been revoked. The Company shall not use in advertising, publicity or
otherwise the name of the Trust, Distributor, or any of their affiliates nor any
trade name, trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of the Trust, Distributor, or their affiliates
without the prior written consent of the Trust or the Distributor in each
instance. The Company acknowledges that the Distributor owns all right, title
and interest in and to the Xxxx and the registrations thereof. The Company shall
use the Xxxx intact and shall not modify or alter the Xxxx. Upon termination of
this Agreement, the Company or its successor (to the extent and as soon as it
lawfully can) will cease the use of the Xxxx.
5.8. Representations by Company. Except with the prior written
consent of the Trust, the Company shall not give any information or make any
representations or statements about the Trust or the Funds nor shall it
authorize or allow any other person to do so except information or
representations contained in the Trust's Registration Statement or the Trust's
Prospectuses or in reports or proxy statements for the Trust, or in sales
literature or other
11
promotional material approved in writing by the Trust or its designee in
accordance with this Article V, or in published reports or statements of the
Trust in the public domain.
5.9. Representations by Trust. Except with the prior written consent
of the Company, the Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account
or the Contracts other than the information or representations contained in the
Contracts' Registration Statement or Contracts' Prospectus or in published
reports of the Account which are in the public domain or in sales literature or
other promotional material approved in writing by the Company in accordance with
this Article V.
5.10. Advertising. For purposes of this Article V, the phrase "sales
literature or other promotional material" includes, but is not limited to, any
material constituting sales literature or advertising under the NASD rules, the
1940 Act or the 1933 Act.
ARTICLE VI
Compliance with Code
6.1. Section 817(h). Each Fund of the Trust shall comply with Section
817(h) of the Code and the regulations issued thereunder to the extent
applicable to the Fund as an investment company underlying the Account, and the
Trust shall notify the Company immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
6.2. Subchapter M. Each Fund of the Trust shall maintain the
qualification of the Fund as a regulated investment company (under Subchapter M
or any successor or similar provision), and the Trust shall notify the Company
immediately upon having a reasonable basis for believing that a Fund has ceased
to so qualify or that it might not so qualify in the future.
6.3. Contracts. The Company shall ensure the continued treatment of
the Contracts as annuity contracts, life insurance policies, or modified
endowment contracts, whichever is appropriate, under applicable provisions of
the Code and shall notify the Trust 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.
ARTICLE VII
Expenses
7.1. Expenses. All expenses incident to each party's performance
under this Agreement (including expenses expressly assumed by such party
pursuant to this Agreement) shall be paid by such party to the extent permitted
by law.
7.2. Trust Expenses. Expenses incident to the Trust's performance of
its duties and obligations under this Agreement include, but are not limited to,
the costs of:
(a) registration and qualification of the Trust shares under the
federal securities laws;
(b) preparation and filing with the SEC of the Trust's Prospectuses,
Trust's Statement of Additional Information, Trust's
Registration Statement, Trust proxy solicitation materials and
shareholder reports, and preparation of a camera-ready form or
form otherwise suitable for printing or duplication of the
foregoing;
12
(c) preparation of all statements and notices required by any
Federal or state securities law;
(d) all taxes on the issuance or transfer of Trust shares;
(e) payment of all applicable fees relating to the Trust, including,
without limitation, all fees due under Rule 24f-2 in connection
with sales of Trust shares to qualified retirement plans,
custodial, auditing, transfer agent and advisory fees, fees for
insurance coverage and Trustees' fees;
(f) any expenses permitted to be paid or assumed by the Trust
pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act;
and
(g) printing (or duplicating costs with respect to the statement of
additional information) and mailing costs associated with the
delivery of the Trust's Prospectuses, statement of additional
information, reports and proxy soliciting material to existing
Contract Owners. The Company will submit any bills for printing,
duplicating and/or mailing costs, relating to the Trust's
Prospectuses, statement of additional information, reports and
proxy soliciting material to the Trust for reimbursement by the
Trust, as it relates to the delivery of these materials to
existing Contract Owners. If the Trust's Prospectuses are
printed by the Company in one document with the prospectus for
the Contracts and the prospectuses for other funds, then the
expenses of such printing will be apportioned between the
Company and the Trust in proportion to the number of pages of
the Contract's prospectus, other fund prospectuses and the
Trust's Prospectuses, taking account of other relevant factors
affecting the expense of printing, such as covers, columns,
graphs and charts; the Trust to bear the cost of printing the
Trust's portion of such document (relating to the Trust's
Prospectuses) for distribution only to owners of existing
Contracts funded by the Trust and the Company to bear the
expense of printing the portion of such documents relating to
the Account; provided, however, the Company shall bear all
printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing
Variable Contracts not funded by the Trust.
7.3. Company Expenses. Expenses incident to the Company's performance
of its duties and obligations under this Agreement include, but are not limited
to, the costs of:
(a) registration and qualification of the Contracts under the
federal securities laws;
(b) preparation and filing with the SEC of the Contracts' Prospectus
and Contracts' Registration Statement;
(c) the sale, marketing and distribution of the Contracts, including
printing and dissemination of Contracts' Prospectuses and
compensation for Contract sales;
(d) administration of the Contracts;
(e) payment of all applicable fees relating to the Contracts,
including, without limitation, all fees due under Rule 24f-2;
13
(f) preparation, printing and dissemination of all statements and
notices to Contract Owners required by any Federal or state
insurance law other than those paid for by the Trust; and
(g) preparation, printing and dissemination of all marketing
materials for the Contracts and Trust except where other
arrangements are made in advance.
7.4. 12b-1 Payments. The Trust shall pay no fee or other compensation
to the Company under this Agreement, except that if the Trust or any Series or
Class adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then payments may be made to the Company in
accordance with such plan. The Trust currently does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940
Act or in contravention of such rule, although it may make payments pursuant to
Rule 12b-1 in the future. To the extent that it decides to finance distribution
expenses pursuant to Rule 12b-1 and such formulation is required by the 1940 Act
or any rules or order thereunder, 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.
ARTICLE VIII
Potential Conflicts
8.1. Exemptive Order. The parties to this Agreement acknowledge that
the Trust has received an exemptive order from the SEC (the "Exemptive Order")
granting relief from various provisions of the 1940 Act and the rules thereunder
to the extent necessary to permit Trust shares to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and other
Qualified Persons (as defined in Section 2.8 hereof). The Exemptive Order
requires the Trust and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Article VIII. The
Trust will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings on that
company as are imposed on the Company pursuant to this Article VIII.
8.2. Company Monitoring Requirements. The Company will monitor its
operations and those of the Trust for the purpose of identifying any material
irreconcilable conflicts or potential material irreconcilable conflicts between
or among the interests of Participating Plans, Product Owners of variable life
insurance policies and Product Owners of variable annuity contracts.
8.3. Company Reporting Requirements. The Company shall report any
conflicts or potential conflicts to the Trust Board and will provide the Trust
Board, at least annually, with all information reasonably necessary for the
Trust Board to consider any issues raised by such existing or potential
conflicts or by the conditions and undertakings required by the Exemptive Order.
The Company also shall assist the Trust Board in carrying out its obligations
including, but not limited to: (a) informing the Trust Board whenever it
disregards Contract Owner voting instructions with respect to variable life
insurance policies, and (b) providing such other information and reports as the
Trust Board may reasonably request. The Company will carry out these obligations
with a view only to the interests of Contract Owners.
8.4. Trust Board Monitoring and Determination. The Trust Board shall
monitor the Trust for the existence of any material irreconcilable conflicts
between or among the interests of Participating Plans, Product Owners of
variable life insurance policies and Product Owners of variable annuity
contracts and determine what action, if any, should be taken in response to
those
14
conflicts. A majority vote of Trustees who are not interested persons of
the Trust as defined in the 1940 Act (the "disinterested trustees") shall
represent a conclusive determination as to the existence of a material
irreconcilable conflict between or among the interests of Product Owners and
Participating Plans and as to whether any proposed action adequately remedies
any material irreconcilable conflict. The Trust Board shall give prompt written
notice to the Company and Participating Plan of any such determination.
8.5. Undertaking to Resolve Conflict. In the event that a material
irreconcilable conflict of interest arises between Product Owners of variable
life insurance policies or Product Owners of variable annuity contracts and
Participating Plans, the Company will, at its own expense, take whatever action
is necessary to remedy such conflict as it adversely affects Contract Owners up
to and including (1) establishing a new registered management investment
company, and (2) withdrawing assets from the Trust attributable to reserves for
the Contracts subject to the conflict and reinvesting such assets in a different
investment medium (including another Fund of the Trust) or submitting the
question of whether such withdrawal should be implemented to a vote of all
affected Contract Owners, and, as appropriate, segregating the assets supporting
the Contracts of any group of such owners that votes in favor of such
withdrawal, or offering to such owners the option of making such a change. The
Company will carry out the responsibility to take the foregoing action with a
view only to the interests of Contract Owners.
8.6. Withdrawal. If a material irreconcilable conflict arises because
of the Company's decision to disregard the voting instructions of Contract
Owners of variable life insurance policies and that decision represents a
minority position or would preclude a majority vote at any Fund shareholder
meeting, then, at the request of the Trust Board, the Company will redeem the
shares of the Trust to which the disregarded voting instructions relate. No
charge or penalty, however, will be imposed in connection with such a
redemption.
8.7. Expenses Associated with Remedial Action. In no event shall the
Trust be required to bear the expense of establishing a new funding medium for
any Contract. The Company shall not be required by this Article to establish a
new funding medium for any Contract if an offer to do so has been declined by
vote of a majority of the Contract Owners materially adversely affected by the
irreconcilable material conflict.
8.8. Successor Rules. 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 provisions of the 1940 Act or the rules promulgated thereunder with respect
to mixed and shared funding on terms and conditions materially different from
those contained in the Exemptive Order, then (i) the Trust and/or the Company,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), as amended, or Rule 6e-3, as adopted, as applicable, to the
extent such rules are applicable, and (ii) Sections 8.2 through 8.5 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Sections are contained in such Rule(s) as so
amended or adopted.
ARTICLE IX
Indemnification
9.1. Indemnification by the Company. The Company hereby agrees to,
and shall, indemnify and hold harmless the Trust, the Distributor and each
person who controls or is affiliated with the Trust or the Distributor within
the meaning of such terms under the 1933 Act or 1940 Act (but not any
Participating Insurance Companies or Qualified Persons) and any officer,
trustee, partner, director, employee or agent of the foregoing, against any and
all losses, claims, damages or liabilities, joint or several (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amounts paid in settlement of, any
15
action, suit or proceeding or any claim asserted), to which they or any of them
may become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Contracts Registration Statement,
Contracts Prospectus, sales literature or other promotional
material for the Contracts or the Contracts themselves (or any
amendment or supplement to any of the foregoing), or arise out
of or are based upon the omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made
in reliance upon and in conformity with information furnished in
writing to the Company by the Trust or the Distributor for use
in the Contracts Registration Statement, Contracts Prospectus or
in the Contracts or sales literature or promotional material for
the Contracts (or any amendment or supplement to any of the
foregoing) or otherwise for use in connection with the sale of
the Contracts or Trust shares; or
(b) arise out of any untrue statement of a material fact contained
in the Trust Registration Statement, any Prospectus for Series
or Classes or sales literature or other promotional material of
the Trust (or any amendment or supplement to any of the
foregoing), or the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
in which they were made, if such statement or omission was made
in reliance upon and in conformity with information furnished to
the Trust or Distributor in writing by or on behalf of the
Company; or
(c) arise out of or are based upon any wrongful conduct of, or
violation of federal or state law by, the Company or persons
under its control or subject to its authorization, including
without limitation, any broker-dealers or agents authorized to
sell the Contracts, with respect to the sale, marketing or
distribution of the Contracts or Trust shares, including,
without limitation, any impermissible use of broker-only
material, unsuitable or improper sales of the Contracts or
unauthorized representations about the Contracts or the Trust;
or
(d) arise as a result of any failure by the Company or persons under
its control (or subject to its authorization) to provide
services, furnish materials or make payments as required under
this Agreement; or
(e) arise out of any material breach by the Company or persons under
its control (or subject to its authorization) of this Agreement;
or
(f) arise out of any breach of any warranties contained in Article
III hereof, any failure to transmit a request for redemption or
purchase of Trust shares or payment therefor on a timely basis
in accordance with the procedures set forth in Article II, or
any unauthorized use of the names, trade names or trademark of
the Trust or the Distributor.
This indemnification is in addition to any liability that the Company may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
16
9.2. Indemnification by the Trust. The Trust hereby agrees to, and
shall, indemnify and hold harmless the Company and each person who controls or
is affiliated with the Company within the meaning of such terms under the 1933
Act or 1940 Act and any officer, director, employee or agent of the foregoing,
against any and all losses, claims, damages or liabilities, joint or several
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amounts paid in settlement of, any action, suit or
proceeding or any claim asserted), to which they or any of them may become
subject under any statute or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any
Prospectus for Series or Classes or sales literature or other
promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made
in reliance upon and in conformity with information furnished in
writing by the Company to the Trust or the Distributor for use
in the Trust Registration Statement, Trust Prospectus or sales
literature or promotional material for the Trust (or any
amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Trust
shares; or
(b) arise out of any untrue statement of a material fact contained
in the Contracts Registration Statement, Contracts Prospectus or
sales literature or other promotional material for the Contracts
(or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were
made, if such statement or omission was made in reliance upon
information furnished in writing by the Trust to the Company; or
(c) arise out of or are based upon wrongful conduct of the Trust or
its Trustees or officers with respect to the sale of Trust
shares; or
(d) arise as a result of any failure by the Trust to provide
services, furnish materials or make payments as required under
the terms of this Agreement; or
(e) arise out of any material breach by the Trust of this Agreement
(including any breach - whether or not material - of Section 6.1
of this Agreement and any warranties contained in Article III
hereof);
it being understood that in no way shall the Trust be liable to the Company with
respect to any violation of insurance law, compliance with which is a
responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Trust in accordance with Section 4.4 hereof.
This indemnification is in addition to any liability that the Trust may
otherwise have; provided, however, that no party shall be entitled to
indemnification if such loss, claim, damage or liability is caused by the
willful misfeasance, bad faith, gross negligence or reckless disregard of duty
by the party seeking indemnification.
17
9.3. Indemnification by the Distributor. The Distributor hereby
agrees to, and shall, indemnify and hold harmless the Company and each person
who controls or is affiliated with the Company within the meaning of such terms
under the 1933 Act or 1940 Act and any officer, director, employee or agent of
the foregoing, against any and all losses, claims, damages or liabilities, joint
or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amounts paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they or any of them may
become subject under any statute or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities:
(a) arise out of or are based upon any untrue statement of any
material fact contained in the Trust Registration Statement, any
Prospectus for Series or Classes or sales literature or other
promotional material of the Trust (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
in which they were made; provided that this obligation to
indemnify shall not apply if such statement or omission was made
in reliance upon and in conformity with information furnished in
writing by the Company to the Trust or Distributor for use in
the Trust Registration Statement, Trust Prospectus or sales
literature or promotional material for the Trust (or any
amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Trust
shares; or
(b) arise out of any untrue statement of a material fact contained
in the Contracts Registration Statement, Contracts Prospectus or
sales literature or other promotional material for the Contracts
(or any amendment or supplement to any of the foregoing), or the
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances in which they were
made, if such statement or omission was made in reliance upon
information furnished in writing by the Distributor to the
Company; or
(c) arise out of or are based upon wrongful conduct of the
Distributor or persons under its control with respect to the
sale of Trust shares; or
(d) arise as a result of any failure by the Distributor or persons
under its control to provide services, furnish materials or make
payments as required under the terms of this Agreement; or
(e) arise out of any material breach by the Distributor or persons
under its control of this Agreement (including any breach -
whether or not material - of Section 6.1 of this Agreement and
any warranties contained in Article III hereof);
it being understood that in no way shall the Distributor be liable to the
Company with respect to any violation of insurance law, compliance with which is
a responsibility of the Company under this Agreement or otherwise or as to which
the Company failed to inform the Distributor in accordance with Section 4.4
hereof. This indemnification is in addition to any liability that the
Distributor may otherwise have; provided, however, that no party shall be
entitled to indemnification if such loss, claim, damage or liability is caused
by the willful misfeasance, bad faith, gross negligence or reckless disregard of
duty by the party seeking indemnification.
18
9.4. Rule of Construction. It is the parties' intention that, in the
event of an occurrence for which the Trust has agreed to indemnify the Company,
the Company shall seek indemnification from the Trust only in circumstances in
which the Trust is entitled to seek indemnification from a third party with
respect to the same event or cause thereof.
9.5. Indemnification Procedures. After receipt by a party entitled to
indemnification ("indemnified party") under this Article IX of notice of the
commencement of any action, if a claim in respect thereof is to be made by the
indemnified party against any person obligated to provide indemnification under
this Article IX ("indemnifying party"), such indemnified party will notify the
indemnifying party in writing of the commencement thereof as soon as practicable
thereafter, provided that the omission to so notify the indemnifying party will
not relieve it from any liability under this Article IX, except to the extent
that the omission results in a failure of actual notice to the indemnifying
party and such indemnifying party is damaged solely as a result of the failure
to give such notice. The indemnifying party, upon the request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article IX. The
indemnification provisions contained in this Article IX shall survive any
termination of this Agreement.
ARTICLE X
Relationship of the Parties; Termination
10.1. Relationship of Parties. The Company is to be an independent
contractor vis-a-vis the Trust, the Distributor, or any of their affiliates for
all purposes hereunder and will have no authority to act for or represent any of
them (except to the limited extent the Company acts as agent of the Trust
pursuant to Section 2.3(a) of this Agreement). In addition, no officer or
employee of the Company will be deemed to be an employee or agent of the Trust,
Distributor, or any of their affiliates. The Company will not act as an
"underwriter" or "distributor" of the Trust, as those terms variously are used
in the 1940 Act, the 1933 Act, and rules and regulations promulgated thereunder.
10.2. Non-Exclusivity and Non-Interference. The parties hereto
acknowledge that the arrangement contemplated by this Agreement is not
exclusive; the Trust shares may be sold to other insurance companies and
investors (subject to Section 2.8 hereof) and the cash value of the Contracts
may be invested in other investment companies, provided, however, that until
this Agreement is terminated pursuant to this Article X:
19
(a) the Company shall not, without prior notice to the Distributor
(unless otherwise required by applicable law), take any action
to operate the Account as a management investment company under
the 1940 Act;
(b) the Company shall not, without the prior written consent of the
Distributor (unless otherwise required by applicable law),
solicit, induce or encourage Contract Owners to change or modify
the Trust to change the Trust's distributor or investment
adviser, to transfer or withdraw Contract Values allocated to a
Fund, or to exchange their Contracts for contracts not allowing
for investment in the Trust; and
(c) the Company shall not substitute another investment company for
one or more Funds without providing written notice to the
Distributor at least 30 days in advance of effecting any such
substitution.
10.3. Termination of Agreement. This Agreement shall not terminate
until (i) the Trust is dissolved, liquidated, or merged into another entity,
(ii) either party, with one hundred eighty (180) days' advance written notice to
the other parties, terminates it for any reason, or (iii) as to any Fund that
has been made available hereunder, the Account no longer invests in that Fund
and the Company has confirmed in writing to the Distributor, if so requested by
the Distributor, that it no longer intends to invest in such Fund. However,
certain obligations of, or restrictions on, the parties to this Agreement may
terminate as provided in Sections 10.4 through 10.6 and the Company may be
required to redeem Trust shares pursuant to Section 10.7 or in the circumstances
contemplated by Article VIII. Article IX and Sections 5.7, 10.8 and 10.9 shall
survive any termination of this Agreement.
10.4. Termination of Offering of Trust Shares. The obligation of the
Trust and the Distributor to make Trust shares available to the Company for
purchase pursuant to Article II of this Agreement shall terminate at the option
of the Distributor upon written notice to the Company as provided below:
(a) upon institution of formal proceedings against the Company, or
the Distributor's reasonable determination that institution of
such proceedings is being considered by the NASD, the SEC, the
insurance commission of any state or any other regulatory body
regarding the Company's duties under this Agreement or related
to the sale of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of Trust shares,
or an expected or anticipated ruling, judgment or outcome which
would, in the Distributor's reasonable judgment exercised in
good faith, materially impair the Company's or Trust's ability
to meet and perform the Company's or Trust's obligations and
duties hereunder, such termination effective upon 15 days prior
written notice;
(b) in the event any of the Contracts are not registered, issued or
sold in accordance with applicable federal and/or state law,
such termination effective immediately upon receipt of written
notice;
(c) if the Distributor shall determine, in its sole judgment
exercised in good faith, that either (1) the Company shall have
suffered a material adverse change in its business or financial
condition or (2) the Company shall have been the subject of
material adverse publicity which is likely to have a material
adverse impact upon
20
the business and operations of either the Trust or the
Distributor, such termination effective upon 30 days prior
written notice;
(d) if the Distributor suspends or terminates the offering of Trust
shares of any Series or Class to all Participating Investors or
only designated Participating Investors, if such action is
required by law or by regulatory authorities having jurisdiction
or if, in the sole discretion of the Distributor acting in good
faith, suspension or termination is necessary in the best
interests of the shareholders of any Series or Class (it being
understood that "shareholders" for this purpose shall mean
Product Owners), such notice effective immediately upon receipt
of written notice, it being understood that a lack of
Participating Investor interest in a Series or Class may be
grounds for a suspension or termination as to such Series or
Class and that a suspension or termination shall apply only to
the specified Series or Class;
(e) upon the Company's assignment of this Agreement (including,
without limitation, any transfer of the Contracts or the Account
to another insurance company pursuant to an assumption
reinsurance agreement) unless the Trust consents thereto, such
termination effective upon 30 days prior written notice;
(f) if the Company is in material breach of any provision of this
Agreement, which breach has not been cured to the satisfaction
of the Trust within 10 days after written notice of such breach
has been delivered to the Company, such termination effective
upon expiration of such 10-day period; or
(g) upon the determination of the Trusts Board to dissolve,
liquidate or merge the Trust as contemplated by Section 10.3(i),
upon termination of the Agreement pursuant to Section 10.3(ii),
or upon notice from the Company pursuant to Section 10.5 or
10.6, such termination pursuant hereto to be effective upon 15
days prior written notice.
Except in the case of an option exercised under clause (b), (d) or (g), the
obligations shall terminate only as to new Contracts and the Distributor shall
continue to make Trust shares available to the extent necessary to permit owners
of Contracts in effect on the effective date of such termination (hereinafter
referred to as "Existing Contracts") 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.
10.5. Termination of Investment in a Fund. The Company may elect to
cease investing in a Fund, promoting a Fund as an investment option under the
Contracts, or withdraw its investment or the Account's investment in a Fund,
subject to compliance with applicable law, upon written notice to the Trust
within 15 days of the occurrence of any of the following events (unless provided
otherwise below):
(a) if the Trust informs the Company pursuant to Section 4.4 that it
will not cause such Fund to comply with investment restrictions
as requested by the Company and the Trust and the Company are
unable to agree upon any reasonable alternative accommodations;
(b) if shares in such Fund are not reasonably available to meet the
requirements of the Contracts as determined by the Company
(including any non-availability as a result of notice given by
the Distributor pursuant to Section 10.4(d)), and the
21
Distributor, after receiving written notice from the Company of
such non-availability, fails to make available, within 10 days
after receipt of such notice, a sufficient number of shares in
such Fund or an alternate Fund to meet the requirements of the
Contracts;
(c) if such Fund fails to meet the diversification requirements
specified in Section 817(h) of the Code and any regulations
thereunder and the Trust, upon written request, fails to provide
reasonable assurance that it will take action to cure or correct
such failure; or
(d) if such Fund ceases to qualify as a regulated investment company
under Subchapter M of the Code, as defined therein, or any
successor or similar provision, or if the Company reasonably
believes that the Fund may fail to so qualify, and the Trust,
upon written request, fails to provide reasonable assurance that
it will take action to cure or correct such failure within 30
days; or
Such termination shall apply only as to the affected Fund and shall not apply to
any other Fund in which the Company or the Account invests.
10.6. Termination of Investment by the Company. The Company may elect
to cease investing in all Series or Classes of the Trust made available
hereunder, promoting the Trust as an investment option under the Contracts, or
withdraw its investment or the Account s investment in the Trust, subject to
compliance with applicable law, upon written notice to the Trust within 15 days
of the occurrence of any of the following events (unless provided otherwise
below):
(a) upon institution of formal proceedings against the Trust or the
Distributor (but only with regard to the Trust) by the NASD, the
SEC or any state securities or insurance commission or any other
regulatory body; or
(b) if the Trust or Distributor is in material breach of a provision
of this Agreement, which breach has not been cured to the
satisfaction of the Company within 10 days after written notice
of such breach has been delivered to the Trust or the
Distributor, as the case may be.
10.7. Company Required to Redeem. The parties understand and
acknowledge that it is essential for compliance with Section 817(h) of the Code
that the Contracts qualify as annuity contracts, life insurance policies, or
modified endowment contracts, as applicable, under the Code. Accordingly, if any
of the Contracts cease to qualify as annuity contracts, life insurance policies,
or modified endowment contracts, as applicable, under the Code, or if the Trust
reasonably believes that any such Contracts may fail to so qualify, the Trust
shall have the right to require the Company to redeem Trust shares attributable
to such Contracts upon notice to the Company and the Company shall so redeem
such Trust shares in order to ensure that the Trust complies with the provisions
of Section 817(h) of the Code applicable to ownership of Trust shares. Notice to
the Company shall specify the period of time the Company has to redeem the Trust
shares or to make other arrangements satisfactory to the Trust and its counsel,
such period of time to be determined with reference to the requirements of
Section 817(h) of the Code. In addition, the Company may be required to redeem
Trust shares pursuant to action taken or request made by the Trust Board in
accordance with the Exemptive Order described in Article VIII or any conditions
or undertakings set forth or referenced therein, or other SEC rule, regulation
or order that may be adopted after the date hereof. The Company agrees to redeem
shares in the circumstances described herein and to comply with applicable terms
and provisions.
22
Also, in the event that the Distributor suspends or terminates the offering of a
Series or Class pursuant to Section 10.4(c) of this Agreement, the Company, upon
request by the Distributor, will cooperate in taking appropriate action to
withdraw the Account's investment in the respective Fund.
10.8. Confidentiality. The Company will keep confidential any
information acquired as a result of this Agreement regarding the business and
affairs of the Trust, the Distributor, and their affiliates.
ARTICLE XI
Applicability to New Accounts and New Contracts
The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect, as appropriate, changes in or relating to the
Contracts, any Series or Class, additions of new classes of Contracts to be
issued by the Company and separate accounts therefor investing in the Trust.
Such amendments may be made effective by executing the form of amendment
included on each schedule attached hereto. The provisions of this Agreement
shall be equally applicable to each such class of Contracts, Series, Class or
separate account, as applicable, effective as of the date of amendment of such
Schedule, unless the context otherwise requires. The parties to this Agreement
may amend this Agreement from time to time by written agreement signed by all of
the parties.
ARTICLE XII
Notice, Request or Consent
Any notice, request or consent to be provided pursuant to this Agreement
is to be made in writing and shall be given:
If to the Trust:
Xxxxxxx X. Grip
President
Xxxxxxx Sachs Variable Insurance Trust
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Distributor:
Xxxxxxx X. Grip
Vice President
Xxxxxxx Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Company:
Xxxxxxx Xxxxx
AIG Life Life Insurance Company
Xxx XXXXX Xxxxx
Xxxxxxxxxx, XX 00000
or at such other address as such party may from time to time specify in writing
to the other party. Each such notice, request or consent to a party shall be
sent by registered or certified United States mail with return receipt requested
or by overnight delivery with a nationally recognized
23
courier, and shall be effective upon receipt. Notices pursuant to the provisions
of Article II may be sent by facsimile to the person designated in writing for
such notices.
ARTICLE XIII
Miscellaneous
13.1. Interpretation. This Agreement shall be construed and the
provisions hereof interpreted under and in accordance with the laws of the state
of Delaware, without giving effect to the principles of conflicts of laws,
subject to the following rules:
(a) This Agreement shall be subject to the provisions of the 1933
Act, 1940 Act and Securities Exchange Act of 1934, as amended,
and the rules, regulations and rulings thereunder, including
such exemptions from those statutes, rules, and regulations as
the SEC may grant, and the terms hereof shall be limited,
interpreted and construed in accordance therewith.
(b) 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.
(c) 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.
(d) The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
13.2. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which together shall constitute one and the
same instrument.
13.3. No Assignment. Neither this Agreement nor any of the rights and
obligations hereunder may be assigned by the Company, the Distributor or the
Trust without the prior written consent of the other parties.
13.4. Declaration of Trust. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of the State of Delaware, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as trustees, and is not binding upon any of the Trustees,
officers or shareholders of the Trust individually, but binding only upon the
assets and property of the Trust. No Series of the Trust shall be liable for the
obligations of any other Series of the Trust.
24
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and behalf by its duly authorized officer on the date
specified below.
XXXXXXX XXXXX VARIABLE INSURANCE TRUST
(Trust)
Date: By:
----------- --------------------------------------
Name:
Title:
XXXXXXX, SACHS & CO.
(Distributor)
Date: By:
----------- --------------------------------------
Name:
Title:
AMERICAN INTERNATIONAL LIFE ASSURANCE
COMPANY OF NEW YORK
(Company)
Date: By:
----------- --------------------------------------
Name:
Title:
25
Schedule 1
Accounts of the Company
Investing in the Trust
Effective as of the date the Agreement was executed, the following separate
accounts of the Company are subject to the Agreement:
Date Established by
Name of Account and Board of Directors of the SEC 1940 Act Type of Products
Subaccounts Company Registration Number Supported by Account
------------------------------------------------------------------------------------------------------------
Separate Account B June 5, 1986 333-48457 Reg. Group Variable
Universal Life Product
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
================================================================================
[Form of Amendment to Schedule 1]
Effective as of _________, the following separate accounts of the Company are
hereby added to this Schedule 1 and made subject to the Agreement:
Date Established by
Name of Account and Board of Directors of SEC 1940 Act Type of Products
Subaccounts the Company Registration Number Supported by Account
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 1 in accordance with Article XI of the Agreement.
-------------------------------- --------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust American International Life
Assurance Company of New York
--------------------------------
Xxxxxxx, Sachs & Co.
26
Schedule 2
Classes of Contracts
Supported by Separate Accounts
Listed on Schedule 1
Effective as of the date the Agreement was executed, the following classes of
Contracts are subject to the Agreement:
SEC 1933 Act
Policy Marketing Registration Contract Form Annuity or Life
Name Number Number
------------------------------------------------------------------------------------------------------------
Separate Account B 333-48457 Life
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
================================================================================
[Form of Amendment to Schedule 2]
Effective as of _______, the following classes of Contracts are hereby added to
this Schedule 2 and made subject to the Agreement:
SEC 1933 Act
Policy Marketing Registration Name of Supporting Annuity or Life
Name Number Account
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 2 in accordance with Article XI of the Agreement.
-------------------------------- --------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust American International Life
Assurance Company of New York
--------------------------------
Xxxxxxx, Sachs & Co.
27
Schedule 3
Trust Classes and Series
Available Under
Each Class of Contracts
Effective as of the date the Agreement was executed, the following Trust Classes
and Series are available under the Contracts:
Contracts Marketing Name Trust Classes and Series
--------------------------------------------------------------------------------
American International Life Assurance CORE Large Cap Growth Fund
Company of New York Separate Account B CORE Small Cap Equity Fund
CORE US Equity Fund
Global Income Fund
Growth & Income Fund
International Equity Fund
Capital Growth Fund
Mid Cap Equity Fund
--------------------------------------------------------------------------------
[Form of Amendment to Schedule 3]
Effective as of ____________, this Schedule 3 is hereby amended to reflect the
following changes in Trust Classes and Series:
Contracts Marketing Name Trust Classes and Series
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 3 in accordance with Article XI of the Agreement.
-------------------------------- --------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust American International Life
Assurance Company of New York
--------------------------------
Xxxxxxx, Sachs & Co.
28
Schedule 4
Investment Restrictions
Applicable to the Trust
Effective as of the date the Agreement was executed, the following investment
restrictions are applicable to the Trust:
================================================================================
[Form of Amendment to Schedule 4]
Effective as of ___________________, this Schedule 4 is hereby amended to
reflect the following changes:
IN WITNESS WHEREOF, the Trust, the Distributor and the Company hereby amend this
Schedule 4 in accordance with Article XI of the Agreement.
-------------------------------- --------------------------------
Xxxxxxx Xxxxx Variable Insurance Trust American International Life
Assurance Company of New York
--------------------------------
Xxxxxxx, Sachs & Co.
