LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
Explanatory Note
The purpose of this Post-Effective Amendment No. 2 to the Registration Statement on Form N-14 is to file the final agreement and plan of reorganization and tax opinion for the reorganization of each Target Fund identified below, with and into the corresponding Acquiring Fund.
Target Trust/Fund (and share classes) |
Corresponding Acquiring Trust Fund (and share classes) | |||
JPMorgan Insurance Trust | Lincoln Variable Insurance Products Trust | |||
JPMorgan Insurance Trust Core Bond Portfolio Class 1 Class 2 |
LVIP JPMorgan Core Bond Fund Standard Class Service Class | |||
JPMorgan Insurance Trust Mid Cap Value Portfolio Class 1 |
LVIP JPMorgan Mid Cap Value Fund Standard Class | |||
JPMorgan Insurance Trust Small Cap Core Portfolio Class 1 Class 2 |
LVIP JPMorgan Small Cap Core Fund Standard Class Service Class | |||
JPMorgan Insurance Trust U.S. Equity Portfolio Class 1 Class 2 |
LVIP JPMorgan U.S. Equity Fund Standard Class Service Class |
(1) |
Declaration of Trust. | |||
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By-laws. | |||
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N/A | ||
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Articles II, VII, and VIII of the Agreement and Declaration of Trust and Articles III, V and VI of the Amended Bylaws,
incorporated by reference into Exhibits (a) and (b) hereto, define the rights of holders of
shares. | ||
(6) |
Investment Advisory Contracts. | |||
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Reserved. | ||
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Sub-Advisory Contracts. | ||
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Reserved. | |
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(33) |
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Underwriting Contracts. | |||
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N/A | |||
(9) |
Custodian Agreements. | |||
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(10) |
Rule 12b-1 Plan and Rule 18f-3 Plan. | |||
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Participation Agreements | ||
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N/A | |||
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(17) |
Codes of Ethics. | |||
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(18) |
N/A |
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST |
By: /s/Benjamin A. Richer Benjamin A. Richer
Senior Vice President |
Signature |
Title | |
By: |
/s/Jayson R. Bronchetti* Jayson R. Bronchetti |
Chairman of the Board, Trustee and President (Principal Executive Officer) |
By: |
/s/William P. Flory, Jr. William P. Flory, Jr. |
Chief Accounting Officer (Principal Accounting Officer and Principal Financial Officer) |
/s/Steve A. Cobb* Steve A. Cobb |
Trustee | |
/s/Ken C. Joseph* Ken C. Joseph |
Trustee | |
/s/Barbara L. Lamb* Barbara L. Lamb |
Trustee | |
/s/Gary D. Lemon* Gary D. Lemon |
Trustee | |
/s/Thomas A. Leonard* Thomas A. Leonard |
Trustee | |
/s/Charles I. Plosser* Charles I. Plosser |
Trustee | |
/s/Pamela L. Salaway* Pamela L. Salaway |
Trustee | |
/s/Manisha A. Thakor* Manisha A. Thakor |
Trustee | |
/s/Brian W. Wixted* Brian W. Wixted |
Trustee | |
/s/Nancy B. Wolcott* Nancy B. Wolcott |
Trustee | |
By: |
/s/Benjamin A. Richer Benjamin A. Richer |
Attorney-in-Fact |
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (Agreement) is adopted as of this 28th day of April, 2023 by and among: (i) JPMorgan Insurance Trust (the Target Entity), an open-end registered investment company, separately, where applicable, on behalf of its respective series identified on Exhibit A hereto (each a Target Fund); and (ii) Lincoln Variable Insurance Products Trust, an open-end registered investment company (the Acquiring Entity), separately, where applicable, on behalf of its respective series identified on Exhibit A hereto (each an Acquiring Fund). J.P. Morgan Investment Management Inc. (JPMIM) joins this Agreement solely for purposes of Sections 1.2(f), 5.1(a), 9.2, 14, 16.3, 17.2, and 17.3. Lincoln Financial Investments Corporation (LFI, formerly Lincoln Investment Advisors Corporation) joins this agreement solely for purposes of Sections 1.2(f), 5.1(a), 9.2, 14, 16.3, 17.2, and 17.3.
WHEREAS, the parties hereto intend for each Acquiring Fund and the corresponding Target Fund (as set forth in Exhibit A hereto) to enter into a transaction pursuant to which: (i) the Acquiring Fund will acquire the Assets and Liabilities (as each such term is defined in Section 1.2) of the Target Fund in exchange for the corresponding class or classes of shares (as applicable) of the Acquiring Fund of equal value to the Net Assets (as defined in Section 1.2(c)) of the Target Fund being acquired, and (ii) the Target Fund will distribute such shares of the Acquiring Fund to shareholders of the corresponding class of the Target Fund, in connection with the liquidation of the Target Fund, all upon the terms and conditions hereinafter set forth in this Agreement (each such transaction, a Reorganization and collectively, the Reorganizations). Each Acquiring Fund is, and will be immediately prior to Closing (defined in Section 3.1), a shell series, without assets or liabilities, created solely for the purpose of acquiring the Assets and Liabilities of the Target Fund;
WHEREAS, each Target Entity and each Acquiring Entity is an open-end, registered investment company of the management type; and
WHEREAS, this Agreement is intended to be and is adopted as a plan of reorganization and liquidation with respect to each Reorganization within the meaning of Section 368(a)(1)(C) of the United States Internal Revenue Code of 1986, as amended (Code).
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows:
1. | DESCRIPTION OF THE REORGANIZATIONS |
1.1. The parties hereto intend that each Reorganization described herein shall be conducted separately of the others, and a party that is not a party to a Reorganization shall incur no obligations, duties or liabilities with respect to such Reorganization by reason of being a party to this Agreement. If any one or more Reorganizations should fail to be consummated, such failure shall not affect the other Reorganizations in any way.
1.2. Provided that all conditions precedent to a Reorganization set forth herein have been satisfied or, to the extent legally permissible, waived as of the Closing Time (defined in Section 3.1), and based on the representations and warranties each party provides to the others, the Target Entity and the Acquiring Entity agree to take the following steps with respect to their Reorganization(s), the parties to which and classes of shares to be issued in connection with which are set forth in Exhibit A:
(a) The Target Fund shall transfer all of its Assets, as defined and set forth in Section 1.2(b), to the Acquiring Fund, and the Acquiring Fund in exchange therefor shall assume the Liabilities, as defined and set forth in Section 1.2(c), and deliver to the Target Fund the number of full and fractional Acquiring Fund shares determined in the manner set forth in Section 2.
(b) The assets of the Target Fund to be transferred to the Acquiring Fund shall consist of all assets and property, including, without limitation, all rights, cash, securities, commodities and futures interests, forwards, swaps and other financial instruments, claims (whether absolute or contingent, known or unknown, accrued or unaccrued and including, without limitation, any interest in pending or future legal claims in connection with past or present portfolio holdings, whether in the form of class action claims,
opt- out or other direct litigation claims, or regulator or government-established investor recovery fund claims, and any and all resulting recoveries), receivables (including dividends, interest, principal, subscriptions and other receivables), goodwill and other intangible property, and choses in action, copies of all books and records belonging to the Target Fund (including all books and records required to be maintained under the Investment Company Act of 1940, as amended (the 1940 Act)), any deferred or prepaid expenses shown as an asset on the books of the Target Fund as of the Closing Time, and all interests, rights, privileges and powers, other than the Target Funds rights under this Agreement on the Closing Date as defined in Section 2.1(a) (collectively, Assets). The Assets of the Target Fund shall be delivered to the Acquiring Fund free and clear of all liens, encumbrances, hypothecations and claims whatsoever, and there shall be no restrictions on the full transfer thereof, except as contemplated under Section 4.1(f).
(c) The Target Fund will use its best efforts to identify and discharge all known liabilities and obligations prior to the Closing Date (as defined in Section 2.1(a)) to the extent possible and consistent with its own investment objectives and policies and normal business operations, and prior to the Closing Date will have discharged such liabilities, including without limitation (i) liabilities arising from the Target Funds allocation of Target Entity obligations, such as any undischarged obligations to board members under a deferred compensation plan; (ii) any liabilities, costs or charges relating to fee waiver and expense reimbursement arrangements between the Target Funds and JPMIM and its affiliates (including any recoupment of any fees or expenses of the Target Funds previously waived or reimbursed); and, (iii) any liabilities or penalties resulting from the termination of material contracts or other commitments of the Target Funds, including the contracts listed on schedule 4.1(h). At the Closing, the Acquiring Fund shall assume all of the liabilities of the Target Fund set forth in the statement of Assets and Liabilities as of the Closing Date delivered by the Target Fund to the Acquiring Fund pursuant to paragraph 5.1(g) (collectively, Liabilities). The Assets minus the Liabilities of a Target Fund shall be referred to herein as the Target Funds Net Assets.
(d) As soon as is reasonably practicable after the Closing, the Target Fund will distribute to its shareholders of record (Target Fund Shareholders) the shares of the Acquiring Fund of the corresponding class received by the Target Fund pursuant to Section 1.2(a), as set forth in Exhibit A, on a pro rata basis within that class, and without further notice the outstanding shares of the Target Fund will be redeemed and cancelled as permitted by its Governing Documents (as defined in Section 4.1) and applicable law, and the Target Fund will as promptly as practicable completely liquidate and dissolve as permitted by its Governing Documents and applicable law. Such distribution to the Target Fund Shareholders and liquidation of the Target Fund will be accomplished, with respect to each class of the Target Funds shares, by the transfer of the Acquiring Funds shares of the corresponding class then credited to the account of the Target Fund on the books of the Acquiring Fund to open accounts on the share records of the Acquiring Fund in the names of the Target Fund Shareholders of the class. The aggregate net asset value of the Acquiring Funds shares to be so credited to the corresponding Target Fund Shareholders shall be equal to the aggregate net asset value of the corresponding Target Funds shares owned by the Target Fund Shareholders on the Closing Date. The Acquiring Fund shall not issue certificates representing shares in connection with such exchange.
(e) Ownership of the Acquiring Funds shares will be shown on its books, as such are maintained by the Acquiring Funds transfer agent.
(f) Beginning at least forty-five (45) business days prior to the Closing Date, the Target Fund will provide LFI and the Acquiring Fund with a daily schedule of the Assets then held by the Target Fund, with current market values. At least thirty (30) business days prior to the Closing Date, and ten (10) business days prior to the Closing Date, LFI, on behalf of the Acquiring Fund, will advise JPMIM and the Target Fund of any investments of the Target Fund shown on the Target Funds schedule of Assets that the Acquiring Fund would not be permitted to hold (i) under applicable law; or (ii) because the transfer of such investments would result in material operational or administrative difficulties (including relating to valuation matters) to the Acquiring Fund in connection with facilitating the orderly transition of the Target Funds Assets to the Acquiring Fund. Under such circumstances, to the extent practicable, the Target Fund will, if requested by the Acquiring Fund and in the Target Funds discretion, to the extent permissible and consistent with its own investment objectives and policies and the fiduciary duties of the investment adviser responsible for the portfolio management of the Target Fund, make a good faith effort to liquidate
such investments prior to the Closing Date. Notwithstanding the foregoing, nothing herein will permit or require the Target Fund to liquidate any Assets, if, in the reasonable judgment of the Target Entitys board of trustees or the Target Funds investment adviser, such disposition would adversely affect the tax-free nature of the Reorganization for U.S. federal income tax purposes, or would adversely affect the Target Funds status as a regulated investment company under the Code or would otherwise not be in the best interests of the Target Fund.
(g) The Target Fund shall notify the Acquiring Fund of any portfolio security held by the Target Fund in other than book-entry form at least thirty (30) business days prior to the Closing Date.
(h) Any transfer taxes payable upon issuance of the Acquiring Funds shares in a name other than the registered holder of the Target Funds shares on the books and records of the Target Fund as of that time shall, as a condition of such issuance and transfer, be paid by the person to whom the Acquiring Funds shares are to be issued and transferred.
(i) Immediately after the Closing Time, the share transfer books relating to the Target Fund shall be closed and no transfer of shares shall thereafter be made on such books.
2. | VALUATION |
2.1. | With respect to each Reorganization: |
(a) The value of the Target Funds Assets shall be the value of such Assets computed as of immediately after the close of regular trading on the New York Stock Exchange (NYSE), which shall reflect the declaration of any dividends, on the Closing Date, using the valuation procedures set forth in the then-current prospectus for the Target Fund and the valuation procedures established by the Target Entitys board of trustees. On the Closing Date, the Target Fund shall record the value of its Net Assets, as valued pursuant to this Section 2.1(a), on a valuation report (the Valuation Report) and deliver a copy of the Valuation Report to the Acquiring Fund by 7:00 p.m. (Eastern time) on the Closing Date, or as soon as practicable thereafter.
(b) The net asset value per share of each class of the Acquiring Fund shares issued in connection with the Reorganization shall be the net asset value per share of the corresponding class of the Target Fund as of the close of business on the Closing Date.
(c) The number of shares of each class of the Acquiring Fund (including fractional shares, if any, rounded to the nearest thousandth) issued in exchange for the Target Funds Net Assets shall equal the number of shares of the corresponding class of the Target Fund outstanding as of the Closing Date. All Acquiring Fund shares delivered to a Target Fund will be delivered at net asset value without the imposition of a sales load, commission, transaction fee or other similar fee.
(d) All computations of value shall be made by the Target Fund or its designated recordkeeping agent using the valuation procedures described in this Section 2 and shall be subject to review by the Acquiring Fund and/or its recordkeeping agent, and, if requested by either the Target Entity or the Acquiring Entity, by the independent registered public accountant of the requesting party.
3. | CLOSING AND CLOSING DATE |
3.1. Each Reorganization shall close on such date as the parties may mutually agree with respect to any or all Reorganizations (the Closing Date). All acts taking place at the closing of a Reorganization (Closing) shall, subject to the satisfaction or waiver of the conditions in this Agreement, be deemed to take place simultaneously as of the later of 7:01 p.m. Eastern time or the finalization of the applicable Target Funds net asset value on the Closing Date of that Reorganization, unless otherwise agreed to by the parties (the Closing Time). The Closing of each Reorganization shall be held in person, by facsimile, email or such other communication means as the parties may reasonably agree.
3.2. | With respect to each Reorganization: |
(a) The Target Funds portfolio securities, investments or other assets that are represented by a certificate or other written instrument shall be presented, transferred and delivered by the Target Funds custodian (the Target Custodian) as of the Closing Time to the Acquiring Funds custodian for the account of the Acquiring Fund duly endorsed in proper form for transfer and in such condition as to constitute good delivery thereof. The Target Fund shall direct the Target Custodian to deliver to the Acquiring Funds custodian as of the Closing Date by book entry, in accordance with the customary practices of Target Custodian and any securities depository (as defined in Rule 17f-4 under the 1940 Act), in which the Assets are deposited, the Target Funds portfolio securities and instruments so held. The Target Funds portfolio securities represented by a certificate or other written instrument shall be presented by the Target Custodian to the Acquiring Funds custodian. A draft of such presentation shall be made for examination no later than five (5) business days preceding the Closing Date, and such final certificates and other written instruments shall be transferred and delivered by the Target Custodian as of the Closing Time for the account of the Acquiring Fund duly endorsed in proper form for transfer in such condition as specified by the Acquiring Funds custodian so as to constitute good delivery thereof. The cash to be transferred by the Target Fund shall be delivered to the Acquiring Funds custodian by wire transfer of federal funds or other appropriate means on the Closing Date. If the Target Fund is unable to make such delivery on the Closing Date in the manner contemplated by this Section for the reason that any of such securities or other investments purchased prior to the Closing Date have not yet been delivered to the Target Fund or its broker, then the Acquiring Fund may, in its sole discretion, waive the delivery requirements of this Section with respect to the undelivered securities or other investments if the Target Fund has, by or on the Closing Date, delivered to the Acquiring Fund or its custodian executed copies of an agreement of assignment and escrow and due bills executed on behalf of said broker or brokers, together with such other documents as may be required by the Acquiring Fund or its custodian, such as brokers confirmation slips.
(b) The Target Entity shall direct the Target Custodian for the Target Fund to deliver, at the Closing or as soon as practicable thereafter, a certificate of an authorized officer stating that (i) except as permitted by Section 3.2(a), the Assets have been delivered in proper form to the Acquiring Fund no later than the Closing Time on the Closing Date, and (ii) all necessary Taxes (as defined below) in connection with the delivery of the Assets, including all applicable federal, state and foreign stock transfer stamps, if any, have been paid or provision for payment has been made. At the Closing, or as soon as practicable thereafter, the Acquiring Entity will cause the custodian for the Acquiring Fund to deliver a certificate of an authorized officer acknowledging that the Acquiring Fund has received the Target Fund portfolio securities, cash and any other Assets as of the final settlement date for such transfers.
(c) At such time prior to the Closing Date as the parties mutually agree, the Target Fund shall provide instructions and related information to the Acquiring Fund or its transfer agent with respect to the Target Fund Shareholders, including names, addresses, dividend reinvestment elections, if any, and tax withholding status of the Target Fund Shareholders as of the date agreed upon (such information to be updated as of the Closing Date, as necessary). The Acquiring Fund and its transfer agent shall have no obligation to inquire as to the validity, propriety or correctness of any such instruction, information or documentation, but shall, in each case, assume that such instruction, information or documentation is valid, proper, correct and complete.
(d) The Target Entity shall direct the transfer agent for a Target Fund (the Target Transfer Agent) to deliver to the Acquiring Fund at the Closing a certificate of an authorized officer stating that its records, as provided to the Acquiring Fund, contain the names and addresses of the Target Fund Shareholders and the number of outstanding shares of each class owned by each such shareholder immediately prior to the Closing. At the Closing, each party shall deliver to the other such bills of sale, checks, assignments, certificates, if any, receipts or other documents as such other party or its counsel may reasonably request.
(e) In the event that on the Closing Date (i) the NYSE or another primary trading market for portfolio securities of the Target Fund (each, an Exchange) shall be closed to trading or trading thereupon shall be restricted, or (ii) trading or the reporting of trading on such Exchange or elsewhere shall be disrupted so that, in the judgment of the board of trustees of the Acquiring Entity or the Target Entity, or the authorized officers of such entities, accurate appraisal of the value of the net assets of the Acquiring
Fund or the Target Fund, respectively, is impossible or impracticable, the Closing Date shall be postponed until the first business day after the day when trading shall have been fully resumed and reporting shall have been restored or such later dates as may be mutually agreed in writing by an authorized officer of each party.
4. | REPRESENTATIONS AND WARRANTIES |
4.1. The Target Entity, on behalf of itself or, where applicable a Target Fund, represents and warrants to the Acquiring Entity and Acquiring Fund as follows:
(a) The Target Entity is a voluntary association with transferable shares, of the type commonly referred to as a Massachusetts business trust, and is validly existing under the laws of the Commonwealth of Massachusetts with power under the Target Entitys governing documents (including bylaws), as applicable (Governing Documents) and Massachusetts law, to own all of its Assets, to carry on its business as it is now being conducted and to enter into this Agreement and perform its obligations hereunder. The Target Fund is a duly established and designated separate series of the Target Entity;
(b) The Target Entity is a registered investment company classified as a management company of the open-end type, and its registration with the U.S. Securities and Exchange Commission (the Commission) as an investment company under the 1940 Act, and the registration of the shares of the Target Fund under the Securities Act of 1933, as amended (1933 Act), are in full force and effect, and will be in full force and effect on the Closing Date, and, to the knowledge of the Target Fund, no action or proceeding to revoke or suspend such registrations is pending, or threatened. All issued and outstanding shares of the Target Fund have been offered for sale in conformity in all material respects with applicable federal and state securities laws;
(c) No consent, approval, authorization, or order of any court or governmental authority or the Financial Industry Regulatory Authority (FINRA) is required for the consummation by the Target Fund and the Target Entity of the transactions contemplated herein, except such as have been obtained or will be obtained prior to the Closing Date under the 1933 Act, the Securities Exchange Act of 1934, as amended (1934 Act), the 1940 Act, and state securities or blue sky laws (which term as used herein shall include the laws of the District of Columbia and of Puerto Rico), each of which, as required, shall have been obtained on or prior to the Closing Date. No consent of or notice to any other third party or entity is required for the consummation by the Target Fund of the transactions contemplated by this Agreement;
(d) To the knowledge of the Target Fund, the current prospectus and statement of additional information and current shareholder reports of the Target Fund, and each prospectus and statement of additional information and shareholder reports of the Target Fund used at all times during the three (3) years prior to the date of this Agreement, conform or conformed at the time of its use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and does not or did not at the time of its use include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not materially misleading;
(e) To the knowledge of the Target Fund, the Target Fund is in compliance in all material respects with, and during the three (3) years prior to the date of this Agreement was in compliance in all material respects with, the requirements of, and the rules and regulations under, the 1933 Act, the 1934 Act and the 1940 Act, state securities laws and all other applicable federal and state laws or regulations. To the knowledge of the Target Fund, (i) the Target Fund is in compliance in all material respects with, and during the three (3) years prior to the date of this Agreement was in compliance in all material respects with, its investment objectives, policies, guidelines and restrictions and compliance procedures, and (ii) the value of the Net Assets of the Target Fund is, and during such period was, determined using portfolio valuation methods that, in the reasonable judgment of the Target Fund, comply in all material respects with the requirements of the 1940 Act and the rules and regulations of the Commission thereunder and the pricing and valuation policies of the Target Fund, and (iii) there have been no material miscalculations of the net asset value of the Target Fund or the net asset value per share of the Target Fund (or any class thereof) during the twelve (12) month period preceding the date hereof that, individually or in the aggregate, would have a material adverse effect on the Target Fund or its Assets and that have not been remedied or will not
be remedied prior to the Closing Date in accordance with industry practice, and all such calculations have been made in accordance with the applicable provisions of the 1940 Act. To the knowledge of the Target Fund, all advertising and sales material used by the Target Fund during the twelve (12) months prior to the date of this Agreement complied in all material respects, at the time such material was used, with applicable law and the rules and regulations of FINRA;
(f) Except as otherwise disclosed to and accepted, in writing, by or on behalf of the Acquiring Fund, the Target Fund will as of the Closing Time have good and marketable title to the Assets and full right, power, and authority to sell, assign, transfer and deliver such Assets free of adverse claims, including any liens or other encumbrances, and upon delivery and payment for such Assets, the Acquiring Fund will acquire good and marketable title thereto, free of adverse claims and subject to only those restrictions on the full transfer thereof as when they were held by the Target Fund, including, without limitation, such restrictions as might arise under the 1933 Act, provided that the Acquiring Fund will, as applicable, acquire assets that are segregated as collateral for the Target Funds derivative positions, including without limitation as collateral for swap positions and as margin for futures and options positions, subject to such segregation and liens that apply to such Assets;
(g) Except as otherwise disclosed to and accepted, in writing, by or on behalf of the Acquiring Fund, the Target Fund is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Target Entitys Governing Documents or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Target Fund or the Target Entity is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any lien, encumbrance, penalty or additional fee under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Target Fund or Target Entity is a party or by which it is bound;
(h) To the knowledge of the Target Fund, except as otherwise disclosed to and accepted, in writing, by or on behalf of the Acquiring Fund, all material contracts or other commitments of the Target Fund (other than this Agreement and certain investment contracts, including swap agreements, options, futures and forward contracts) will terminate or be terminated with respect to the Target Fund without liability to the Target Fund or may otherwise be assigned to the Acquiring Fund without the payment of any fee (penalty or otherwise) or acceleration of any obligations of the Target Fund on or prior to the Closing Date, provided that such assigned contracts are identified on Schedule 4.1(h);
(i) To the knowledge of the Target Fund, except as set forth on Schedule 4.1(i), no litigation or administrative proceeding or investigation of or before any court, tribunal, arbitrator, governmental body, regulatory agency or FINRA is presently pending or threatened against the Target Fund or Target Entity, and no such litigation, proceeding or investigation, if adversely determined, would materially and adversely affect the Target Funds financial condition or the conduct of its business or the Target Funds ability to consummate the transactions contemplated by this Agreement. The Target Fund and the Target Entity, without any special investigation or inquiry, know of no facts that might form the basis for the institution of such proceedings and neither the Target Entity nor the Target Fund is a party to or subject to the provisions of any order, decree or judgment of any court, governmental body, regulatory agency or FINRA that materially and adversely affects its business or its ability to consummate the transactions herein contemplated. The Target Fund (i) has not entered into any contract or agreement or amendment of any contract or agreement or terminated any contract or agreement, in each case material to the operation of the Target Fund, except as otherwise contemplated by this Agreement or as disclosed to the Acquiring Fund; (ii) has not incurred any indebtedness, other than in the ordinary course of business consistent with the investment objective and policies of the Target Fund; (iii) has not entered into any amendment of its Governing Documents that has not been disclosed to the Acquiring Fund; (iv) does not have outstanding any grant or imposition of any lien, claim, charge or encumbrance (other than encumbrances arising in the ordinary course of business) upon any asset of the Target Fund other than a lien for Taxes (as defined below) not yet due and payable or as contemplated by Section 4.1(f); and (v) has not entered into any agreement or made any commitment to do any of the foregoing except as disclosed to the Acquiring Fund;
(j) The financial statements of the Target Fund for the most recently completed fiscal year have been, or will be, audited by the independent registered public accounting firm identified in the Target Funds
prospectus or statement of additional information included in the Target Funds registration statement on Form N-1A. To the knowledge of the Target Fund, such statements, as well as the unaudited, semi-annual financial statements for the semi-annual period next succeeding the Target Funds most recently completed fiscal year, if any, are or will be, as applicable, prepared in accordance with GAAP consistently applied, and such statements (copies of which, if available, have been furnished or made available to the Acquiring Fund) present fairly, or will present fairly, in all material respects, the financial condition of the Target Fund as of such date in accordance with GAAP, and there are no known contingent liabilities of the Target Fund required to be reflected on a balance sheet (including the notes thereto) in accordance with GAAP as of such date not disclosed therein. No significant deficiency, material weakness, fraud, significant change or other factor that could significantly affect the internal controls of the Target Fund has been disclosed or, to the knowledge of the Target Fund, is required to be disclosed in the Target Funds reports on Form N-CSR and, to the knowledge of the Target Fund, no such disclosure will be required as of the Closing Date;
(k) Since the last day of the Target Funds most recently completed fiscal year, there has not been any material adverse change in the Target Funds financial condition, assets, liabilities or business, other than changes occurring in the ordinary course of business, except as otherwise disclosed to and accepted by the Acquiring Fund in writing. For the purposes of this subparagraph, a decline in net asset value due to declines in market values of securities held by the Target Fund, the redemption of the Target Funds shares by shareholders of the Target Fund or the discharge of the Target Funds ordinary course liabilities shall not constitute a material adverse change;
(l) To the knowledge of the Target Fund, on the Closing Date, all Tax Returns (as defined below) of the Target Fund required by law to have been filed by such date (including any extensions) for the prior three (3) taxable years for which Tax Returns have been due shall have been filed and are or will be true, correct and complete in all material respects, and all Taxes (as defined below) shown as due or claimed to be due by any government entity shall have been paid or provision has been made for the payment thereof. To the Target Funds knowledge, no such Tax Return is currently under audit by any federal, state, local or foreign Tax authority; no assessment has been asserted with respect to such Tax Returns; there are no levies, liens or other encumbrances on the Target Fund or its assets resulting from the non-payment of any Taxes; no waivers of the time to assess any such Taxes are outstanding nor are any written requests for such waivers pending; and adequate provision has been made in the Target Fund financial statements for all Taxes in respect of all periods ended on or before the date of such financial statements. To the Target Funds knowledge, no claim has ever been made by a taxing authority in a jurisdiction where the Target Fund does not file a Tax Return that the Target Fund is or may be subject to taxation in that jurisdiction. To the knowledge of the Target Fund, the Target Fund is in compliance in all material respects with applicable regulations of the Internal Revenue Service (the Service) pertaining to the reporting of distributions on and redemptions of its shares of beneficial interest and to withholding in respect of distributions to shareholders, and is not liable for any material penalties that could be imposed thereunder. As used in this Agreement, Tax or Taxes means any tax, governmental fee or other like assessment or charge of any kind whatsoever (including, but not limited to, excise tax and withholding on amounts paid to or by any person), together with any interest, penalty, addition to tax or additional amount imposed by any governmental authority (whether domestic, foreign, federal, state or local) responsible for the imposition of any such tax. Tax Return means reports, returns, information returns, dividend reporting forms, elections, agreements, declarations, or other documents or reports of any nature or kind (including any attached schedules, supplements and additional or supporting material) filed or required to be filed or furnished or required to be furnished with respect to Taxes, including any claim for refund, amended return or declaration of estimated Taxes (and including any amendments with respect thereto);
(m) The Target Fund: (i) is not (and will not be as of the Closing Date) classified as a partnership, and instead is (and will be as of the Closing Date) classified as an association that is subject to Tax as a corporation for federal Tax purposes, (ii) has elected to be a regulated investment company under Subchapter M of the Code, and (iii) is a fund, as defined in Section 851(g)(2) of the Code, that is treated as a separate corporation under Section 851(g)(1) of the Code. The Target Fund has qualified for treatment as a regulated investment company for each taxable year since inception that has ended prior to the Closing Date and will have satisfied the requirements of Part I of Subchapter M of the Code to maintain such qualification for the period beginning on the first day of its current taxable year and ending on the Closing Date, and for each such taxable year (or portion thereof), the Target Fund has been eligible to compute its
federal income tax under Section 852 of the Code. The Target Fund will satisfy the diversification requirements of Section 851(b)(3) of the Code without regard to the last sentence of Section 851(d)(1) of the Code as of the last taxable year quarter end of the Target Fund closing on or before the Closing Date. The Target Fund will not have as of the Closing Date any material tax liability under Sections 852 or 4982 of the Code for any period ended on or before the Closing Date. The Target Fund has no earnings or profits accumulated with respect to any taxable year in which the provisions of Subchapter M of the Code did not apply to the Target Fund. If a Target Fund serves as a funding vehicle for variable contracts (life insurance or annuity), the Target Fund, with respect to each of its taxable years that has ended prior to the Closing Date during which it has served as such a funding vehicle, has satisfied the diversification requirements of Section 817(h) of the Code and will continue to satisfy the requirements of Section 817(h) of the Code for the period beginning on the first day of its current taxable year and ending on the Closing Date. Each Target Fund that serves as a funding vehicle for variable contracts (life insurance or annuity) has been managed and its business has been conducted so that no variable contract holder is or will be taxable on such Target Funds income and gains as a result of the investor control doctrine. The Target Fund will not be subject to corporate-level taxation on the sale of any assets currently held by it as a result of the application of Section 337(d) of the Code and the Treasury Regulations promulgated thereunder;
(n) The Target Fund has not changed its taxable year end within the most recent 60-month period ending on the last day of the month immediately preceding the Closing Date of a Reorganization, and it does not intend to change its taxable year end prior to the Closing Date;
(o) The Target Fund has not undergone, has not agreed to undergo, nor, to its knowledge, is required to undergo (nor will it be required as a result of the transactions contemplated in this Agreement to undergo) a change in its method of accounting resulting in an adjustment to its taxable income pursuant to Section 481 of the Code. The Target Fund (including the Acquiring Fund as its successor) will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; or (iv) prepaid amount received on or prior to the Closing Date;
(p) The Target Fund has not been notified in writing that any examinations of the Tax Returns of the Target Fund are currently in progress or threatened, and, to the knowledge of the Target Fund, no such examinations are currently in progress or threatened, and no deficiencies have been asserted or assessed against the Target Fund as a result of any audit by the Service or any state, local or foreign taxing authority, and, to the knowledge of the Target Fund, no such deficiency has been proposed or threatened, and there are no levies, liens or other encumbrances related to Taxes existing or known to the Target Fund to be threatened or pending with respect to the Assets of the Target Fund;
(q) The Target Fund has no actual or potential liability for any Tax obligation of any taxpayer other than itself. The Target Fund is not currently and has never been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns. The Target Fund is not a party to any Tax allocation, sharing, or indemnification agreement;
(r) All issued and outstanding shares of the Target Fund are, and on the Closing Date will be, duly and validly issued and outstanding, fully paid and non-assessable by the Target Entity, and are not, and on the Closing Date will not be, subject to preemptive or objecting shareholder rights. In every state where offered or sold, such offers and sales have been in compliance in all material respects with applicable registration and/or notice requirements of the 1933 Act and state and District of Columbia securities laws. All of the issued and outstanding shares of the Target Fund will, at the time of Closing, be held by the persons and in the amounts set forth in the records of the Target Transfer Agent, on behalf of the Target Fund;
(s) The Target Entity, on behalf of the Target Fund, has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement has been duly authorized by all necessary action, if any, on the part of the board of trustees of the Target Entity and, subject to the approval of the shareholders of the Target Fund
(only with respect to those obligations under this Agreement that are contingent on such shareholder approval) and the due authorization, execution and delivery of this Agreement by the other parties hereto, this Agreement will constitute a valid and binding obligation of the Target Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights and to general equity principles;
(t) The information relating to the Target Fund furnished by the Target Fund for use in no-action letters, applications for orders, registration statements, proxy materials and other documents filed or to be filed with any federal, state or local regulatory or self-regulatory authority that are necessary in connection with the transactions contemplated hereby is and will be accurate and complete in all material respects and will comply in all material respects with federal securities laws and regulations thereunder and other applicable laws and regulations applicable thereto;
(u) As of the date of this Agreement or within a certain time thereafter as mutually agreed by the parties, the Target Fund has provided the Acquiring Fund with all information requested by the Acquiring Fund reasonably necessary for the preparation of the N-14 Registration Statement (as defined in Section 5.1(b) hereof), in compliance with the 1933 Act, the 1934 Act and the 1940 Act in connection with the meeting of shareholders of the Target Fund to approve this Agreement and the transactions contemplated hereby. As of the effective date of the N-14 Registration Statement, the date of the meeting of shareholders of the Target Fund and the Closing Date, such information provided by any Target Fund will not, to its knowledge, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading; provided, however, that the representations and warranties in this subparagraph shall not apply to statements in or omissions from the N-14 Registration Statement made in reliance upon and in conformity with information that was furnished by the Acquiring Fund for use therein;
(v) To the knowledge of the Target Fund, the books and records of the Target Fund are true and correct in all material respects and contain no material omissions with respect to information required to be maintained under the laws, rules and regulations applicable to the Target Fund;
(w) The Target Entity and the Target Fund have maintained any material license, permit, franchise, authorization, certification and approval required by any governmental entity in the conduct of its business (the Licenses and Permits). Each License and Permit has been duly obtained, is valid and in full force and effect, and is not subject to any pending or, to the knowledge of the Target Entity, threatened administrative or judicial proceeding to revoke, cancel, suspend or declare such License and Permit invalid;
(x) The Target Entity is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code; and
(y) The Target Fund has no unamortized or unpaid organizational fees or expenses.
4.2. The Acquiring Entity, on behalf of each Acquiring Fund, represents and warrants to the Target Entity and corresponding Target Fund as follows:
(a) The Acquiring Fund is duly organized as a series of the Acquiring Entity, which is a statutory trust duly formed, validly existing, and in good standing under the laws of the State of Delaware, each with power under its Governing Documents to own all of its properties and assets and to carry on its business as it is now being, and as it is contemplated to be, conducted and to enter into this Agreement and perform its obligations hereunder;
(b) The Acquiring Entity is a registered investment company classified as a management company of the open-end type, and its registration with the Commission as an investment company under the 1940 Act and the registration of shares of the Acquiring Fund under the 1933 Act are in full force and effect, and will be in full force and effect on the Closing Date, and no action or proceeding to revoke or suspend such registrations is pending, or to the knowledge of the Acquiring Fund, threatened;
(c) No consent, approval, authorization, or order of any court, governmental authority or FINRA is required for the consummation by the Acquiring Fund of the transactions contemplated herein, except such
as have been or will be (at or prior to the Closing Date) obtained under the 1933 Act, the 1934 Act, the 1940 Act and state securities or blue sky laws (which term as used herein shall include the laws of the District of Columbia and of Puerto Rico), each of which, as required, shall have been obtained on or prior to the Closing Date. No consent of or notice to any other third party or entity is required for the consummation by the Acquiring Fund of the transactions contemplated by this Agreement;
(d) The prospectus and statement of additional information of the Acquiring Fund to be used in connection with the Reorganization will conform at the time of their use in all material respects to the applicable requirements of the 1933 Act and the 1940 Act and the rules and regulations of the Commission thereunder and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(e) The Acquiring Fund is not engaged currently, and the execution, delivery and performance of this Agreement will not result, in (i) a material violation of the Acquiring Entitys Governing Documents or of any agreement, indenture, instrument, contract, lease or other undertaking to which the Acquiring Fund or the Acquiring Entity is a party or by which it is bound, or (ii) the acceleration of any obligation, or the imposition of any lien, encumbrance, penalty, or additional fee under any agreement, indenture, instrument, contract, lease, judgment or decree to which the Acquiring Fund or the Acquiring Entity is a party or by which it is bound;
(f) Except as set forth on Schedule 4.2(f), no litigation or administrative proceeding or investigation of or before any court, tribunal, arbitrator, governmental body, regulatory agency or FINRA is presently pending or, to the Acquiring Funds knowledge, threatened against the Acquiring Fund, and no such litigation, proceeding or investigation, if adversely determined, would materially and adversely affect the Acquiring Funds financial condition or the conduct of its business or the Acquiring Funds ability to consummate the transactions contemplated by this Agreement. The Acquiring Fund and the Acquiring Entity, without any special investigation or inquiry, know of no facts that might form the basis for the institution of such proceedings and neither the Acquiring Entity nor the Acquiring Fund is a party to or subject to the provisions of any order, decree or judgment of any court, governmental body, regulatory agency or FINRA that materially and adversely affects its business or its ability to consummate the transactions herein contemplated;
(g) The Acquiring Fund has not yet commenced operations. The Reorganization will be structured as a shell reorganization subject to U.S. federal income tax treatment under Section 368(a)(1) of the Code. The Acquiring Fund is, and will be at the time of Closing, a new series portfolio of the Acquiring Entity created within the last twelve (12) months, without assets or liabilities, formed for the purpose of receiving the Assets and assuming the Liabilities of the Target Fund in connection with the Reorganization and, accordingly, the Acquiring Fund has not prepared books of account and related records or financial statements or issued any shares except those issued in a private placement to LFI or its affiliate to secure any required initial shareholder approvals;
(h) On the Closing Date, all material Tax Returns of the Acquiring Fund required by law to have been filed by such date (including any extensions) shall have been filed and are or will be true, correct and complete in all material respects, and all Taxes shown as due or claimed to be due by any government entity shall have been paid or provision has been made for the payment thereof. To the Acquiring Funds knowledge, no such Tax Return is currently under audit by any federal, state, local or foreign Tax authority; no assessment has been asserted with respect to such Tax Returns; there are no levies, liens or other encumbrances on the Acquiring Fund or its assets resulting from the non-payment of any Taxes; and no waivers of the time to assess any such Taxes are outstanding nor are any written requests for such waivers pending;
(i) The Acquiring Fund: (i) was formed for the purpose of the respective Reorganization, (ii) is not (and will not be as of the Closing Date) classified as a partnership, and instead is (and will be as of the Closing Date) classified as an association that is subject to Tax as a corporation for federal Tax purposes and has elected (or will timely elect) the latter classification by filing Form 8832 with the Service, (iii) has not filed any income tax return, and intends to qualify to be a regulated investment company under Subchapter M of the Code for its taxable year which includes the Closing Date, (iv) holds and has held no
property and has and has had no Tax attributes, and (v) is a fund, as defined in Section 851(g)(2) of the Code, that is treated as a separate corporation under Section 851(g)(1) of the Code. The Acquiring Fund has no earnings or profits accumulated in any taxable year in which the provisions of Subchapter M of the Code did not apply to it;
(j) The Acquiring Entity, on behalf of the Acquiring Fund, has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated herein. The execution, delivery and performance of this Agreement will have been duly authorized prior to the Closing Date by all necessary action, if any, on the part of the board of trustees of the Acquiring Entity, on behalf of the Acquiring Fund, and subject to the approval of shareholders of the Target Fund and the due authorization, execution and delivery of the Agreement by the other parties thereto, this Agreement will constitute a valid and binding obligation of the Acquiring Fund, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights and to general equity principles;
(k) The shares of the Acquiring Fund to be issued and delivered to the Target Fund, for the account of the Target Fund Shareholders, pursuant to the terms of this Agreement, have been duly authorized and, when so issued and delivered, will be duly and validly issued Acquiring Fund shares, and, upon receipt of the Target Funds Assets in accordance with the terms of this Agreement, will be fully paid and non-assessable by the Acquiring Entity;
(l) The Acquiring Entity is not under the jurisdiction of a court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code;
(m) The Acquiring Fund has no unamortized or unpaid organizational fees or expenses for which it does not expect to be reimbursed by LFI or its affiliates;
(n) As of the effective date of the N-14 Registration Statement, the date of the meeting of shareholders of the Target Fund and the Closing Date, the information provided by any Acquiring Fund for use in the N-14 Registration Statement, including the documents contained or incorporated therein by reference will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading; provided, however, that the representations and warranties in this subparagraph shall not apply to statements in or omissions from the N-14 Registration Statement made in reasonable reliance upon and in conformity with information that was furnished by the Target Fund for use therein; and
4.3. With respect to each Reorganization, the Target Entity, on behalf of the Target Fund, and the Acquiring Entity, on behalf of the Acquiring Fund, represents and warrants as follows:
(a) The net asset value of the Acquiring Funds shares that each Target Fund shareholder receives will be equal to the net asset value of the Target Fund shares it actually or constructively surrenders in exchange therefor;
(b) The fair market value of the Assets will equal or exceed the Liabilities to be assumed by the Acquiring Fund and those to which the Assets are subject;
(c) No expenses incurred by the Target Fund or on its behalf in connection with the Reorganization will be paid or assumed by the Acquiring Fund or any other third party unless those expenses are solely and directly related to the Reorganization (determined in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B. 187) (Reorganization Expenses), and no cash or property other than Acquiring Fund shares will be transferred to the Target Fund or any of its shareholders with the intention that it be used to pay any expenses (even Reorganization Expenses) thereof; and
(d) Immediately following consummation of the Reorganization: (1) the shareholders of the Acquiring Fund will own all the Acquiring Fund shares and will own those shares solely by reason of their ownership of the Target Fund shares immediately before the Reorganization; (2) the Acquiring Fund will hold the same Assets and will be subject to the Liabilities that the Target Fund held or was subject to immediately before the Reorganization; and (3) the amount of all distributions (other than dividends and
redemption payments) Target Fund will make immediately preceding the Reorganization, will, in the aggregate, constitute less than 1% of its net assets.
5. | COVENANTS OF THE ACQUIRING ENTITY AND THE TARGET ENTITY |
5.1. | With respect to each Reorganization: |
(a) The Target Fund will (i) operate its business in the ordinary course and substantially in accordance with past practice between the date hereof and the Closing Date, it being understood that, with respect to the Target Fund, such ordinary course of business may include purchases and sales of portfolio securities and other instruments, sales and redemptions of the Target Funds shares, and the declaration and payment of customary dividends and distributions, and any other distribution that may be advisable, and (ii) use its reasonable best efforts to preserve intact its business organization and material assets and maintain the rights, franchises and business and customer relations necessary to conduct the business operations of the Target Fund in the ordinary course in all material respects. The Acquiring Fund shall take such actions as are customary to the organization of a new series prior to its commencement of operations. In order to facilitate the transfer of Assets at the Closing Date, LFI may request in writing that JPMIM use commercially reasonable efforts, subject to JPMIMs fiduciary duty, as applicable, to limit or cease portfolio trading on behalf of the Target Fund for a period of up to three (3) days prior to the Closing Date. JPMIM agrees that it will accommodate such requests if in JPMIMs discretion such trading restrictions may practicably be implemented and are consistent with the investment objectives, policies and strategies of the Target Fund and consistent with fulfilling its fiduciary obligations as an investment adviser. No party shall take any action that would, or would reasonably be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect.
(b) The parties hereto shall cooperate in preparing, and the Acquiring Entity shall file with the Commission, a registration statement on Form N-14 under the 1933 Act, which shall properly register the Acquiring Fund shares to be issued in connection with the Reorganization and include a proxy statement with respect to the votes of the shareholders of the Target Fund to approve the Reorganization (the N-14 Registration Statement). If at any time prior to the Closing Date a party becomes aware of any untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements made not misleading in light of the circumstances under which they were made in respect of the N-14 Registration Statement, such party shall notify each other party, and the parties shall cooperate in promptly preparing and filing with the Commission and, if appropriate, distributing to shareholders appropriate disclosure with respect to the item. The Target Fund agrees to mail or otherwise deliver (e.g., by electronic means consistent with applicable regulations governing their use) to its respective shareholders of record entitled to vote at the special meeting of shareholders at which action is to be considered regarding this Agreement, in sufficient time to comply with requirements as to notice thereof, the prospectus/proxy statement contained in the N-14 Registration Statement and other documents as are necessary, which each comply in all material respects with the applicable provisions of Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act, and the rules and regulations, respectively, thereunder.
(c) The Target Entity will call a meeting of the shareholders of the Target Fund to be held prior to the Closing Date to consider and act upon this Agreement and to take all other action necessary to seek to obtain the required shareholder approval of the transactions contemplated herein. In the event that the Target Fund does not achieve a quorum or receives insufficient votes from shareholders to approve the proposal, the meeting may be postponed or adjourned as permitted under the Target Entitys Governing Documents, applicable law and the N-14 Registration Statement in order to permit further solicitation of proxies, for a period of up to 120 days or such longer period as is mutually agreed upon by the parties.
(d) The Target Fund covenants that the Acquiring Funds shares to be issued pursuant to this Agreement are not being acquired for the purpose of making any distribution thereof, other than in accordance with the terms of this Agreement.
(e) The Target Entity will assist the Acquiring Fund in obtaining such information as the Acquiring Fund reasonably requests concerning the beneficial ownership of the Target Funds shares, and will assist the Acquiring Fund and LFI in obtaining copies of any books and records of the Target Fund from its service providers reasonably requested by the Acquiring Entity or LFI.
(f) The Target Entity will provide the Acquiring Fund with: (i) a schedule, as set forth in this Schedule 5.1(f), certified by the Treasurer of the Target Entity, stating that the various statements, books and records set forth in Schedule 5.1(f) exist and specifying the location of such statements, books and records and the means by which the Acquiring Entity can access them (the Schedule of Statements, Books and Records); and (ii) FASB ASC 740-10 (formerly FIN 48) work papers and supporting statements pertaining to the Target Fund relating to any taxable years of the Target Fund not closed by the applicable Tax statute of limitations (the ASC 740-10 Workpapers). The Schedule of Statements, Books and Records shall be provided at the Closing. The ASC 740-10 Workpapers shall be provided at least sixty (60) days prior to the Closing Date.
(g) The Target Fund will prepare and deliver to the Acquiring Fund at least five (5) business days prior to the Closing Date a statement of the Assets and the Liabilities of the Target Fund as of such date for review and agreement by the parties to determine that the Assets and the Liabilities of the Target Fund are being correctly determined in accordance with the terms of this Agreement. The Target Fund will deliver at the Closing a statement of Assets and Liabilities of the Target Fund as of the Closing Date, certified by the Treasurer of the Target Entity.
(h) Subject to the provisions of this Agreement, the Acquiring Fund and the Target Fund will each take, or cause to be taken, all action, and do or cause to be done all things, reasonably necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement.
(i) As soon as is reasonably practicable after the Closing, the Target Fund will make one or more distributions to its shareholders consisting of all shares of the applicable class of the Acquiring Fund received at the Closing, as set forth in Section 1.2(d) hereof. (j) The Acquiring Fund and the Target Fund shall each use their reasonable best efforts prior to Closing to fulfill or obtain the fulfillment of the conditions precedent to effect the transactions contemplated by this Agreement.
(k) The Target Fund shall, from time to time, as and when reasonably requested by the Acquiring Fund, execute and deliver or cause to be executed and delivered all such assignments and other instruments, and will take or cause to be taken such further action, as the Acquiring Fund may reasonably deem necessary or desirable in order to vest in and confirm the Acquiring Funds title to and possession of all the Assets and otherwise to carry out the intent and purpose of this Agreement.
(l) The Acquiring Fund shall, from time to time, as and when reasonably requested by the Target Fund, execute and deliver or cause to be executed and delivered all such assumption agreements and other instruments, and will take or cause to be taken such further action, as the Target Fund may reasonably deem necessary or desirable in order for the Acquiring Fund to assume the Target Funds Liabilities and otherwise to carry out the intent and purpose of this Agreement.
(m) The Acquiring Fund will use all reasonable efforts to obtain the approvals and authorizations required by the 1933 Act, the 1940 Act and such of the state blue sky or securities laws as may be necessary in order to continue its operations after the Closing Date.
(n) The parties intend that each Reorganization will qualify as a reorganization with the meaning of Section 368(a) of the Code. None of the parties to this Agreement shall take any action or cause any action to be taken (including, without limitation the filing of any Tax Return) that is inconsistent with such treatment or results in the failure of a Reorganization to qualify as a reorganization with the meaning of Section 368(a) of the Code.
(o) At or prior to the Closing, the Target Fund shall have delivered to the Acquiring Fund copies of: (i) any legal opinions that have been issued to or for the benefit of the Target Fund and which have continuing relevance and (ii) with respect to any wholly owned subsidiaries of the Target Fund (if any), any organizational documents, including without limitation, the declarations of trust, articles of incorporation and bylaws, together with the board meeting minutes and consent of directors or trustees and shareholders.
6. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE TARGET ENTITY |
6.1. With respect to each Reorganization, the obligations of the Target Entity, on behalf of the Target Fund, to consummate the transactions provided for herein shall be subject to the performance, or to the extent legally permissible, the Target Entitys waiver, of the obligations to be performed by the Acquiring Fund hereunder on or before the Closing Date and, in addition thereto, the following conditions:
(a) All representations and warranties of the Acquiring Fund and the Acquiring Entity contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Time, with the same force and effect as if made on and as of the Closing Time;
(b) The Acquiring Entity shall have delivered to the Target Entity as of the Closing Time a certificate executed in its name by its President or Vice President and Treasurer, in form and substance reasonably satisfactory to Target Entity and dated as of the Closing Date, to the effect that the representations and warranties of or with respect to the Acquiring Entity and Acquiring Fund made in this Agreement are true and correct at and as of the Closing Time, except as they may be affected by the transactions contemplated by this Agreement;
(c) The Acquiring Entity and the Acquiring Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Acquiring Entity and the Acquiring Fund, on or before the Closing Time;
(d) The Target Fund and the Acquiring Fund shall have agreed on the number of full and fractional shares of each class of the Acquiring Fund to be issued in connection with the Reorganization after such number has been calculated in accordance with Section 1.2 hereto;
(e) As of the Closing Date, there shall have been no material change in the investment objectives, policies and restrictions or any increase in the investment management fee rate or other fee rates that the Acquiring Fund is contractually obligated to pay for services provided to the Acquiring Fund from those described in the N-14 Registration Statement;
(f) The Target Entity shall have received from the Target Transfer Agent a certificate stating that it has received from the Acquiring Entity the number of shares of the Acquiring Fund equal in value to the value of the shares of the Target Fund as of the time and date set forth in Section 3; and
(g) The Target Entity shall have received on the Closing Date the opinion of Dechert LLP (Dechert), counsel to the Target Entity (which may rely on certificates of officers or trustees of the Acquiring Entity), dated as of the Closing Date, covering the following points:
(i) The Acquiring Entity is a statutory trust duly formed, validly existing and in good standing under the laws of the State of Delaware, and has the trust power to own all of the Acquiring Funds properties and assets and to carry on its business, including that of the Acquiring Fund, as a registered investment company;
(ii) The Acquiring Entity is a registered investment company classified as a management company of the open-end type with respect to each series of shares it offers, including the Acquiring Fund, under the 1940 Act, and its registration with the Commission as an investment company under the 1940 Act is in full force and effect;
(iii) The Agreement has been duly authorized by the Acquiring Entity on behalf of the Acquiring Fund and, assuming due authorization, execution and delivery of the Agreement by the Target Entity, the Target Fund and JPMIM, it is a valid and binding obligation of the Acquiring Entity, on behalf of the Acquiring Fund, enforceable against it in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent conveyance, reorganization, receivership, moratorium and other similar laws relating to or affecting creditors rights generally, general equity principles (whether considered in a proceeding in equity or at law) and to an implied covenant of good faith and fair dealing;
(iv) The Acquiring Fund shares to be issued to the Target Fund as provided by this Agreement are duly authorized, upon such delivery will be validly issued and upon receipt of the Target Funds Assets will be fully paid and non-assessable by the Acquiring Entity, and no shareholder of an Acquiring Fund has any preemptive rights to subscription or purchase in respect thereof; and
(v) The execution and delivery of the Agreement did not, and the consummation of the transactions contemplated hereby will not, result in a violation of the Acquiring Entitys Governing Documents or a breach or default under any material contract, agreement, instrument or other document pertaining to, or material to the business or financial condition of, the Acquiring Fund, or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any such agreement.
7. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING ENTITY |
7.1. With respect to each Reorganization, the obligations of the Acquiring Entity, on behalf of the Acquiring Fund, to consummate the transactions provided for herein shall be subject to the performance, or to the extent legally permissible, the Acquiring Funds waiver, of the obligations to be performed by the Target Fund hereunder on or before the Closing Date and, in addition thereto, the following conditions:
(a) All representations and warranties of the Target Entity and the Target Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and, except as they may be affected by the transactions contemplated by this Agreement, as of the Closing Time, with the same force and effect as if made on and as of the Closing Time;
(b) The Target Entity, on behalf of the Target Fund, shall have delivered to the Acquiring Entity (i) a statement of the Target Funds Assets and Liabilities, as of the Closing Date, certified by the Treasurer of the Target Entity, (ii) the Schedule of Statements, Books and Records, (iii) in electronic form, to the extent permitted by applicable law, all information pertaining to, or necessary or useful in the calculation or demonstration of, the investment performance of the Target Fund, and (iv) the ASC 740-10 Workpapers. The information to be provided under (ii) and (iv) of this subsection shall be provided in accordance with the timing set forth in Section 5.1(f) hereof;
(c) The Target Entity shall have delivered to the Acquiring Entity as of the Closing Time a certificate executed in its name by its President or Vice President and Treasurer, in form and substance satisfactory to the Acquiring Entity and dated as of the Closing Date, to the effect that the representations and warranties of or with respect to the Target Entity and Target Fund made in this Agreement are true and correct at and as of the Closing Time;
(d) The Target Custodian and the Target Transfer Agent shall have delivered the certificates contemplated by Sections 3.2(b) and 3.2(d) of this Agreement, respectively, and the Target Transfer Agent or the Target Entitys President or Vice President shall have delivered the certificate contemplated by Section 5.1(f) of this Agreement, each duly executed by an authorized officer of the Target Custodian, the Target Transfer Agent, the Target Entitys President or the Target Entitys Vice President, as applicable;
(e) The Target Entity and the Target Fund shall have performed all of the covenants and complied with all of the provisions required by this Agreement to be performed or complied with by the Target Entity and the Target Fund, on or before the Closing Time;
(f) The Target Fund and the Acquiring Fund shall have agreed on the number of full and fractional shares of each class of the Acquiring Fund set forth on Exhibit A hereto to be issued in connection with the Reorganization after such number has been calculated in accordance with Section 1.2 hereto;
(g) The Target Entity shall have duly executed and delivered to the Acquiring Entity, on behalf of the Target Fund, such bills of sale, assignments, certificates and other instruments of transfer, including transfer instructions to the Target Custodian and instructions to the Acquiring Funds transfer agent as the Acquiring Entity may reasonably deem necessary or desirable to evidence the transfer to the Acquiring Fund by the Target Fund all of the right, title and interest of the Target Fund in and to the respective Assets of the Target Fund. In each case, the Assets of the Target Fund shall be accompanied by all necessary state stock transfer stamps or cash for the appropriate purchase price therefor;
(h) The Acquiring Entity shall have received at the Closing: (i) a certificate of an authorized signatory of the Target Custodian stating that the Assets of the Target Fund have been delivered to the Acquiring Fund; (ii) a certificate of an authorized signatory from the custodian for the Acquiring Fund stating that the Assets of the Target Fund have been received; (iii) a certificate of an authorized officer of the Target Transfer Agent confirming that the transfer agent has delivered its records containing the names and addresses of the record holders of the Target Funds shares and the number and percentage (to four
decimal places) of ownership of the Target Fund owned by each such holder as of the Closing Date; and (iv) the Tax books and records of the Target Fund, including but not limited to, for purposes of preparing any Tax Returns required by law to be filed after the Closing Date;
(i) As of the Closing Date, there shall have been no material change in the investment objectives, policies and restrictions or any increase in the investment management fee rate or other fee rates that the Target Fund is contractually obligated to pay for services provided to the Target Fund from those described in the N-14 Registration Statement; and
(j) The Acquiring Entity shall have received on the Closing Date an opinion of Dechert, counsel to the Target Entity (which may rely on certificates of officers or trustees of the Target Entity), covering the following points:
(i) The Target Entity is a voluntary association with transferable shares, of the type commonly referred to as a Massachusetts business trust, and is validly existing under the laws of the Commonwealth of Massachusetts with power under the Target Entitys Governing Documents and Massachusetts law to own all of its Assets, and to conduct its business, including that of the Target Fund, as described in its organizational documents or in the most recently filed registration statement of the Target Fund;
(ii) The Target Entity is a registered investment company classified as a management company of the open-end type with respect to itself and, if applicable, each series of shares it offers, including the Target Fund, under the 1940 Act, and its registration with the Commission as an investment company under the 1940 Act is in full force and effect;
(iii) The Agreement has been duly authorized by the Target Entity on behalf of Target Fund and, assuming due authorization, execution and delivery of the Agreement by the Acquiring Entity, the Acquiring Fund and LFI, is a valid and binding obligation of the Target Entity, on behalf of the Target Fund, enforceable against the Target Entity in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent conveyance, reorganization, receivership, moratorium and other similar laws relating to or affecting creditors rights generally, general equity principles (whether considered in a proceeding in equity or at law) and to an implied covenant of good faith and fair dealing; and
(iv) The execution and delivery of the Agreement did not, and the consummation of the transactions contemplated hereby will not, result in a violation of, as appropriate, the Target Entitys Governing Documents or a breach or default under any material contract, agreement, instrument or other document pertaining to, or material to the business or financial condition of, the Target Fund, or, to the knowledge of such counsel, result in the acceleration of any obligation or the imposition of any penalty under any such agreement.
8. | FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING ENTITY AND THE TARGET ENTITY |
With respect to each Reorganization, if any of the conditions set forth below have not been satisfied on or before the Closing Date with respect to the Target Fund or the Acquiring Fund, the Acquiring Entity or Target Entity, respectively, shall, at its option, not be required to consummate the transactions contemplated by this Agreement:
8.1. The Agreement shall have been approved by the requisite vote of the holders of the outstanding shares of the Target Fund in accordance with the provisions of the Target Entitys Governing Documents, applicable law of the Commonwealth of Massachusetts, and the 1940 Act, and certified copies of the voting record from the proxy solicitor evidencing such approval shall have been delivered to the Acquiring Fund. Notwithstanding anything herein to the contrary, neither the Target Fund nor the Acquiring Fund may waive the conditions set forth in this Section 8.1;
8.2. The Agreement and transactions contemplated herein shall have been approved by the board of trustees of the Target Entity and the board of trustees of the Acquiring Entity and each party shall have delivered to the other party a copy of the resolutions approving this Agreement and the transactions contemplated in connection herewith
adopted by such partys board of trustees, certified by the secretary or equivalent officer. Notwithstanding anything herein to the contrary, neither the Target Fund nor the Acquiring Fund may waive the conditions set forth in this Section 8.2;
8.3. On the Closing Date, no action, suit or other proceeding shall be pending or, to the Target Entitys or the Acquiring Entitys knowledge, threatened before any court or governmental agency in which it is sought to restrain or prohibit, or obtain damages or other relief in connection with, this Agreement or the transactions contemplated herein;
8.4. All consents of other parties and all other consents, orders and permits of federal, state and local regulatory authorities deemed necessary by the Acquiring Fund or Target Fund to permit consummation, in all material respects, of the transactions contemplated hereby shall have been obtained, except where failure to obtain any such consent, order or permit would not result in a material adverse effect on the Acquiring Fund or the Target Fund, provided that either party hereto may for itself waive any of such conditions;
8.5. The N-14 Registration Statement shall have become effective under the 1933 Act and no stop orders suspending the effectiveness thereof shall have been issued and, to the best knowledge of the parties hereto, no investigation or proceeding for that purpose shall have been instituted or be pending, threatened or contemplated under the 1933 Act;
8.6. The Target Entity and the Acquiring Entity shall have received on or before the Closing Date an opinion of Dechert in form and substance reasonably acceptable to the Target Entity and the Acquiring Entity, as to the matters set forth on Schedule 8.6. In rendering such opinion, Dechert may request and rely upon representations contained in certificates of officers of the Target Entity, the Acquiring Entity and others, and the officers of the Target Entity and the Acquiring Entity shall use their best efforts to make available such truthful certificates. Such opinion shall contain such limitations as shall be in the opinion of Dechert appropriate to render the opinions expressed therein. Subject to receipt of the certificates referenced in this Section 8.6 and absent a change of law or change of fact between the date of this Agreement and the Closing, the Acquiring Fund agrees that such opinion shall state that the Reorganization will qualify as a reorganization under Section 368(a)(1) of the Code. Notwithstanding anything herein to the contrary, neither the Acquiring Entity nor the Target Entity may waive the conditions set forth in this paragraph 8.6;
9. | FEES AND EXPENSES |
9.1. The parties hereto represent and warrant to each other that there are no brokers or finders entitled to receive any payments in connection with the transactions provided for herein.
9.2. Except as otherwise stated herein, LFI and JPMIM will bear the expenses of the Target Entity and Acquiring Entity relating to the Reorganizations, whether or not the Reorganizations are consummated. The expenses of the Reorganizations shall include costs associated with obtaining board approvals, any necessary order of exemption from the 1940 Act, organizing each Acquiring Fund, preparation, printing and distribution of the N-14 Registration Statement for each Reorganization (including the prospectus/proxy statement contained therein), preparation and filing other necessary reorganization documents with the SEC to effect the Reorganization, legal fees, accounting fees, audit fees, proxy solicitation fees, taxes and stamps, expenses of holding shareholders meetings, and other related administrative or operational costs (including, for example, brokerage commissions, transfer fees, exchange fees, and securities registration fees). LFI and JPMIM will not bear any costs relating to the Reorganizations other than as described in this Agreement.
10. | COOPERATION AND EXCHANGE OF INFORMATION |
With respect to each Reorganization, prior to the Closing and for a reasonable time thereafter, the Target Entity and the corresponding Acquiring Entity will provide each other and their respective representatives with such cooperation, assistance and information as is reasonably necessary (i) for the filing of any Tax Return, for the preparation for any audit, and for the prosecution or defense of any claim, suit or proceeding relating to any proposed adjustment, or (ii) for any financial accounting purpose. Each such party or their respective agents will retain until the applicable period for assessment under applicable law (giving effect to any and all extensions or
waivers) has expired all returns, schedules and work papers and all material records or other documents relating to Tax matters and financial reporting of Tax positions of the Target Fund and the Acquiring Fund for its taxable period first ending after the Closing of the applicable Reorganization and for all prior taxable periods for which the statute of limitation had not run at the time of the Closing, provided that a Target Entity shall not be required to maintain any such documents that it has delivered to the Acquiring Fund.
11. | INDEMNIFICATION |
11.1. With respect to each Reorganization, the Acquiring Entity, out of the assets of the applicable Acquiring Fund, agrees to indemnify and hold harmless the Target Entity and each of the Target Entitys officers and trustees from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which, jointly and severally, the Target Entity or any of its trustees or officers may become subject, insofar as such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Acquiring Entity, on behalf of the applicable Acquiring Fund, of any of its representations, warranties, covenants or agreements set forth in this Agreement. This indemnification obligation shall survive the termination of this Agreement and the Closing of the Reorganization.
11.2. With respect to each Reorganization, the Target Entity, out of the assets of the applicable Target Fund, agrees to indemnify and hold harmless the Acquiring Entity and each of the Acquiring Entitys officers and trustees from and against any and all losses, claims, damages, liabilities or expenses (including, without limitation, the payment of reasonable legal fees and reasonable costs of investigation) to which, jointly and severally, the Acquiring Entity or any of its trustees or officers may become subject, insofar as such loss, claim, damage, liability or expense (or actions with respect thereto) arises out of or is based on any breach by the Target Entity, on behalf of the applicable Target Fund, of any of its representations, warranties, covenants or agreements set forth in this Agreement. This indemnification obligation shall survive the termination of this Agreement and the Closing of the Reorganization.
12. | ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES AND COVENANTS |
12.1. Except as described in Section 9.2, each party agrees that no party has made any representation, warranty or covenant not set forth herein and that this Agreement constitutes the entire agreement between the parties.
12.2. The representations, warranties and covenants contained in this Agreement or in any document delivered pursuant hereto or in connection herewith shall survive the consummation of the transactions contemplated hereunder. The covenants to be performed after the Closing shall survive the Closing.
13. | TERMINATION |
This Agreement may be terminated and the transactions contemplated hereby may be abandoned with respect to one or more (or all) Reorganizations at any time prior to the Closing Date by: (i) mutual agreement of the parties; (ii) either the Acquiring Entity or the Target Entity if the Closing shall not have occurred on or before November 1, 2023; unless such date is extended by mutual agreement of the Acquiring Entity and the Target Entity; (iii) any party if one or more other parties shall have materially breached its obligations under this Agreement or made a material misrepresentation herein or in connection herewith which would render a condition set forth in this Agreement unable to be satisfied; or (iv) by the board of trustees of either the Target Entity or Acquiring Entity. In the event of any such termination, this Agreement shall become void and there shall be no liability hereunder on the part of any party or their respective directors/trustees or officers, except for (a) any such material breach or intentional misrepresentation or (b) the parties respective obligations under Sections 9.2 and 11, as to each of which all remedies at law or in equity of the party adversely affected shall survive.
14. | AMENDMENTS |
This Agreement may be amended, modified or supplemented in a writing signed by the parties hereto to be bound by such Amendment; provided, however, that following the meeting of the shareholders of the Target Fund called pursuant to Section 5.1(c) of this Agreement, no such amendment may have the effect of changing the provisions for determining the number of shares of the Acquiring Fund to be issued to the shareholders of the Target Fund under this Agreement to the detriment of such shareholders without their further approval.
15. | NOTICES |
Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by facsimile, electronic delivery, personal service or prepaid or certified mail addressed to:
For the Acquiring Entity and LFI:
c/o Lincoln Financial Investments Corporation
150 N. Radnor Chester Road
Radnor, PA 19087
Fax:
Attn: Benjamin A. Richer, Senior Vice President
With a copy to:
Dechert LLP
650 Town Center Drive
Suite 700
Costa Mesa, CA 92626-7122
Attn: Robert A. Robertson
For the Target Entity and JPMIM:
277 Park Avenue
New York, NY 10172
Fax: (212) 648-1948
Attn: Gregory S. Samuels, Secretary
with a copy to:
Dechert LLP
Three Bryant Park
1095 Avenue of the Americas
New York, NY 10036-6797
Fax: (860) 394-4206
Attn: Anthony H. Zacharski
16. | HEADINGS; GOVERNING LAW; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY |
16.1. The Article and Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
16.2. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware and applicable federal law, without regard to its principles of conflicts of laws.
16.3. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other parties. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement.
16.4. This Agreement may be executed in any number of counterparts, each of which shall be considered an original.
16.5. The Target Entity is a Massachusetts business trust. With respect to the Reorganization of each Target Fund, the Target Entity is executing this Agreement on behalf of the Target Fund only. Pursuant to the Trust Instrument of the Target Entity and Massachusetts law, there is a limitation on liability of each series such that (a) the debts, liabilities, obligations and expenses incurred, contracted or otherwise existing with respect to the Target Fund are enforceable against the assets of that Target Fund only, and not against its shareholders, Trustees, the assets of the Target Entity generally or the assets of any other series thereof, and (b) none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Target Entity generally or with respect to any other series thereof are enforceable against the assets of such Target Fund or its shareholders or Trustees.
16.6. The Acquiring Entity is a Delaware statutory trust. With respect to the Reorganization with each Acquiring Fund, the Acquiring Entity is executing this Agreement on behalf of the Acquiring Fund only. Pursuant to the Trust Instrument of the Acquiring Entity and Section 3804(a) of the Delaware Statutory Trust Act, there is a limitation on liability of each series such that (a) the debts, liabilities, obligations and expenses incurred, contracted or otherwise existing with respect to the Acquiring Fund are enforceable against the assets of that Acquiring Fund only, and not against the assets of the Acquiring Entity generally or the assets of any other series thereof, and (b) none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Acquiring Entity generally or with respect to any other series thereof are enforceable against the assets of such Acquiring Fund.
16.7. The parties expressly agree that their obligations hereunder shall not be binding upon any of their respective board members, shareholders, nominees, officers, agents, or employees personally, but, except as provided in Section 9.2 hereof, shall bind only the property of the applicable Target Fund or the applicable Acquiring Fund as provided in the Governing Documents of the applicable Target Entity or the applicable Acquiring Entity, respectively. The execution and delivery by such officers shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the property of such party.
17. | PUBLICITY/CONFIDENTIALITY |
17.1. The parties shall cooperate on determining the manner in which any public announcements or similar publicity with respect to this Agreement or the transactions contemplated herein are made, provided that nothing herein shall prevent either party from making such public announcements as may be required by law, in which case the party issuing such statement or communication shall use all reasonable commercial efforts to advise the other party prior to such issuance.
17.2. The Target Entity, the Acquiring Entity, JPMIM and LFI (for purposes of this Section 17, the Protected Persons) will hold, and will cause their board members, officers, employees, representatives, agents and affiliates to hold, in confidence, and not disclose to any other person, and not use in any way except in connection with the transactions herein contemplated, without the prior written consent of the other Protected Persons, any non-public information obtained from the other Protected Persons in connection with the transactions contemplated by this Agreement, except such information may be disclosed: (i) to governmental or regulatory bodies, and, where necessary, to any other person in connection with the obtaining of consents or waivers as contemplated by this Agreement; (ii) if required by court order or decree or applicable law; (iii) if it becomes publicly available through no act or failure to act of such party; (iv) if it was already known to such party on a non-confidential basis on the date of receipt; (v) during the course of or in connection with any litigation, government investigation, arbitration, or other proceedings based upon or in connection with the subject matter of this Agreement, including, without limitation, the failure of the transactions contemplated hereby to be consummated; or (vi) if it is otherwise expressly provided for herein.
17.3. In the event of a termination of this Agreement, the Protected Persons agree that they along with their employees, representative agents and affiliates shall, and shall cause their affiliates to, except with the prior written consent of the other Protected Persons, keep secret and retain in confidence, and not use for the benefit of itself or
themselves, nor disclose to any other persons, any and all confidential or proprietary information relating to the other Protected Persons and their related parties and affiliates, whether obtained through their due diligence investigation, this Agreement or otherwise, except such information may be disclosed: (i) if required by court order or decree or applicable law; (ii) if it is publicly available through no act or failure to act of such party; (iii) if it was already known to such party on a non-confidential basis on the date of receipt; (iv) during the course of or in connection with any litigation, government investigation, arbitration, or other proceedings based upon or in connection with the subject matter of this Agreement, including, without limitation, the failure of the transactions contemplated hereby to be consummated; or (v) if it is otherwise expressly provided for herein.
[Signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be approved on behalf of the Acquiring Fund and Target Fund.
Lincoln Variable Insurance Products Trust, on behalf of its series identified on Exhibit A hereto | JPMorgan Insurance Trust, on behalf of its series identified on Exhibit A hereto | |||||||
By: | /s/ Benjamin A. Richer |
By: | /s/ Timothy J. Clemens | |||||
Name: Benjamin A. Richer | Name: Timothy J. Clemens | |||||||
Title: Senior Vice President | Title: Treasurer and Principal Financial Officer | |||||||
Lincoln Financial Investments Corporation, solely with respect to Sections 1.2(f), 5.1(a), 9.2, 14, 16.3, 17.2, and 17.3 | J.P. Morgan Investment Management Inc., solely with respect to 1.2(f), 5.1(a), 9.2, 14, 16.3, 17.2, and 17.3 | |||||||
By: | /s/ Benjamin A. Richer |
By: | /s/ Brian S. Shlissel | |||||
Name: Benjamin A. Richer | Name: Brian S. Shlissel | |||||||
Title: Senior Vice President | Title: Managing Director |
EXHIBIT A
CHART OF REORGANIZATIONS
Target Trust/Fund (and share classes) |
Corresponding Acquiring Trust/Fund (and share classes) | |||
JPMorgan Insurance Trust | Lincoln Variable Insurance Products Trust | |||
JPMorgan Insurance Trust Core Bond Portfolio Class 1 Class 2 |
|
LVIP JPMorgan Core Bond Fund Standard Class Service Class | ||
JPMorgan Insurance Trust Mid Cap Value Portfolio Class 1 |
LVIP JPMorgan Mid Cap Value Fund Standard Class | |||
JPMorgan Insurance Trust Small Cap Core Portfolio Class 1 Class 2 |
LVIP JPMorgan Small Cap Core Fund Standard Class Service Class | |||
JPMorgan Insurance Trust U.S. Equity Portfolio Class 1 Class 2 |
LVIP JPMorgan U.S. Equity Fund Standard Class Service Class |
Schedule 4.1(h)
Assigned Contracts
[None]
Schedule 4.1(i)
Target Fund/Target Entity Litigation, Administrative Proceedings and Investigations
[None]
Schedule 4.2(f)
Acquiring Fund Litigation, Administrative Proceedings and Investigations
[None]
Schedule 5.1(f)
Target Fund Statements, Books and Records
Type of Statements, Books or Records | Location | Method of Access | ||||||
Shareholder ledger accounts including, without limitation:
the name, address and taxpayer identification number of each shareholder of record,
the number of shares of beneficial interest held by each shareholder,
the dividend reinvestment elections applicable to each shareholder, and
the backup withholding and nonresident alien withholding certifications |
J.P. Morgan Investment Management Inc. 383 Madison Avenue New York, New York 10179 |
Electronic | ||||||
Information in connection with the Target Funds cost basis reporting and related obligations under Sections 1012, 6045, 6045A, and 6045B of the Code and related regulations issued by the United States Treasury (Income Tax Regulations) | ||||||||
Notices or records on file with the Target Fund with respect to each shareholder, for all of the shareholders of record of the Target Fund as of the close of business on the Closing Date, who are to become holders of the Acquiring Fund as a result of the transfer of Assets | ||||||||
Year-end shareholder tax reporting information including ICI broker files, Tax insert letters, and supporting calculations for the Target Fund | ||||||||
All IRS Forms 8937 (Report of Organizational Actions
Affecting Basis of Securities) filed or posted by the Target Fund |
Type of Statements, Books or Records | Location | Method of Access | ||||||
Statement of the respective Tax1 basis (by lot) and holding period as of the most recent Tax year end of the Target Fund of all portfolio securities to be transferred by the Target Fund to the Acquiring Fund | ||||||||
Tax books and records of the Target Fund for purposes of preparing any Tax returns required by law to be filed for Tax periods ending after the Closing Date2 | ||||||||
A statement of any capital loss carryovers, for U.S. federal income tax purposes, of the Target Fund, as of the most recent Tax year end of the Target Fund, along with supporting workpapers providing information regarding any limitations on the use of such capital loss carryovers including information on any built-in gains and built-in losses of the Target Fund for purposes of applying applicable limitations on the use of such items under the Code | ||||||||
All Tax Returns filed by or on behalf of the Target Fund (including extensions) | ||||||||
Any of the following that have been issued to or for the benefit of the Target Fund: (a) rulings, determinations, holdings or opinions issued by any Tax authority and (b) Tax opinions |
1 | The terms Tax or Taxes and Tax Return as used in this Schedule 5.1(f) shall be as set forth in Section 4.1(l) of this Agreement. |
2 | Such Tax books and records shall include, but not be limited to, a statement of the current earnings and profits of the Target Fund for U.S. federal income tax purposes, a statement of the items that the Acquiring Fund will succeed to and take into account as a result of Section 381 of the Code and the current and historical books and records of the Target Fund to comply with regulatory requirements imposed under the Code and the Income Tax Regulations for all periods including, but not limited to, up to and including the Closing Date. |
Type of Statements, Books or Records | Location | Method of Access | ||||||
All books and records related to testing the qualification of the Target Fund, excluding the C Corporation Target Fund, as a regulated investment company for Tax purposes (e.g., distribution requirement, qualifying income requirement, quarterly asset diversification requirement) | ||||||||
All books and records relating to the filing of FBARs (FinCEN Form 114, Report of Foreign Bank and Financial Accounts) by the Target Fund | ||||||||
Current and historical books and records of the Target Fund to comply with regulatory requirements imposed under the 1940 Act, including, without limitation, Section 31(a) of the 1940 Act and the rules thereunder, for all periods including, but not limited to, up to and including the Closing Date |
Schedule 8.6
Tax Opinions
With respect to each Reorganization:
(i) The acquisition by the Acquiring Fund of all of the Assets of the Target Fund, as provided for in the Agreement, in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund, followed by the distribution by the Target Fund to its shareholders of the Acquiring Fund shares in complete liquidation of the Target Fund, will qualify as a reorganization within the meaning of Section 368(a)(1) of the Code, and the Target Fund and the Acquiring Fund each will be a party to the reorganization within the meaning of Section 368(b) of the Code.
(ii) No gain or loss will be recognized by the Target Fund upon (i) the transfer of all of its Assets to, and assumption of its Liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund shares pursuant to Section 361(a) and Section 357(a) of the Code and (ii) the distribution of the Acquiring Fund shares by the Target Fund to its shareholders in complete liquidation (in pursuance of the Agreement) pursuant to Section 361(c)(1) of the Code, except that the Target Fund may be required to recognize gain or loss with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, or (C) any other gain or loss required to be recognized upon the termination of a position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code.
(iii) No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the Assets of the Target Fund in exchange solely for the assumption of the Liabilities of the Target Fund and issuance of the Acquiring Fund shares pursuant to Section 1032(a) of the Code.
(v) The tax basis of the Assets of the Target Fund received by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Target Fund immediately prior to the transfer pursuant to Section 362(b) of the Code, except with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, and (C) any other Asset on which gain was recognized by the Target Fund upon the termination of a position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code.
(vi) The holding periods of the Assets of the Target Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Target Fund pursuant to Section 1223(2) of the Code.
(vii) No gain or loss will be recognized by the shareholders of the Target Fund upon the exchange of all of their Target Fund shares for the Acquiring Fund shares pursuant to Section 354(a) of the Code.
(viii) The aggregate tax basis of the Acquiring Fund shares to be received by each shareholder of the Target Fund will be the same as the aggregate tax basis of Target Fund shares exchanged therefor pursuant to Section 358(a)(1) of the Code.
(ix) The holding period of Acquiring Fund shares received by a shareholder of the Target Fund will include the holding period of the Target Fund shares exchanged therefor, provided that the shareholder held Target Fund shares as a capital asset on the date of the exchange pursuant to Section 1223(1) of the Code.
(x) For purposes of Section 381 of the Code, the Acquiring Fund will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the Income Tax Regulations, the items of Target Fund described in Section 381(c) of the Code as if there had been no Reorganization, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and, if applicable, the Income Tax Regulations promulgated thereunder.
This opinion does not address the tax consequences of the Reorganization to contracts or securities on which gain or loss is recognized upon the transfer of an asset regardless of whether such transfer would otherwise be a nonrecognition transaction under the Code.
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Three Bryant Park 1095 Avenue of the Americas New York, NY 10036-6797 +1 212 698 3500 Main +1 212 698 3599 Fax www.dechert.com
|
April 28, 2023
Board of Trustees
JPMorgan Insurance Trust Core Bond Portfolio
JPMorgan Insurance Trust
277 Park Avenue
New York, NY 10172
Board of Trustees
LVIP JPMorgan Core Bond Fund
Lincoln Variable Insurance Products Trust
1301 South Harrison Street
Fort Wayne, IN 46802
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax consequences to JPMorgan Insurance Trust Core Bond Portfolio (the Target Fund), a separate series of JPMorgan Insurance Trust, a Massachusetts business trust (the Target Entity), to the record holders of Target Fund shares (the Target Fund Shareholders), and to LVIP JPMorgan Core Bond Fund (the Acquiring Fund), a separate series of Lincoln Variable Insurance Products Trust, a Delaware statutory trust (the Acquiring Entity), in connection with the proposed transfer of all of the assets, as defined in the Agreement and Plan of Reorganization (the Plan) dated as of April 28, 2023, executed by the Target Entity on behalf of the Target Fund and by the Acquiring Entity on behalf of the Acquiring Fund, of the Target Fund (the Assets) to the Acquiring Fund in exchange solely for Acquiring Fund shares and the assumption of the liabilities, as defined in the Plan, of the Target Fund (the Liabilities) by the Acquiring Fund, followed by the distribution of such Acquiring Fund shares received by the Target Fund in complete liquidation and termination of the Target Fund (the Reorganization), all pursuant to the Plan.
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For purposes of this opinion, we have examined and relied upon (1) the Plan, (2) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Target Entity on behalf of the Target Fund, (3) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Acquiring Entity on behalf of the Acquiring Fund, and (4) such other documents and instruments as we have deemed necessary or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended (the Code), United States Treasury regulations, judicial decisions, and administrative rulings and pronouncements of the Internal Revenue Service, all as in effect on the date hereof. This opinion is conditioned upon the Reorganization taking place in the manner described in the Plan.
Based upon the foregoing, it is our opinion that for federal income tax purposes:
1. | The acquisition by the Acquiring Fund of all of the Assets of the Target Fund, as provided for in the Agreement, in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund, followed by the distribution by the Target Fund to its shareholders of the Acquiring Fund shares in complete liquidation of the Target Fund, will qualify as a reorganization within the meaning of Section 368(a)(l) of the Code, and the Target Fund and the Acquiring Fund each will be a party to the reorganization within the meaning of Section 368(b) of the Code. |
2. | No gain or loss will be recognized by the Target Fund upon (i) the transfer of all of its Assets to, and assumption of its Liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund shares pursuant to Section 361(a) and Section 357(a) of the Code and (ii) the distribution of the Acquiring Fund shares by the Target Fund to its shareholders in complete liquidation (in pursuance of the Agreement) pursuant to Section 361(c)(1) of the Code, except that the Target Fund may be required to recognize gain or loss with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, or (C) any other gain or loss required to be recognized upon the termination of a |
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position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
3. | No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the Assets of the Target Fund in exchange solely for the assumption of the Liabilities of the Target Fund and issuance of the Acquiring Fund shares pursuant to Section 1032(a) of the Code. |
4. | The tax basis of the Assets of the Target Fund received by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Target Fund immediately prior to the transfer pursuant to Section 362(b) of the Code, except with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, and (C) any other Asset on which gain was recognized by the Target Fund upon the termination of a position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
5. | The holding periods of the Assets of the Target Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Target Fund pursuant to Section 1223(2) of the Code. |
6. | No gain or loss will be recognized by the Target Fund Shareholders upon the exchange of all of their Target Fund shares for the Acquiring Fund shares pursuant to Section 354(a) of the Code. |
7. | The aggregate tax basis of the Acquiring Fund shares to be received by each Target Fund Shareholder will be the same as the aggregate tax basis of Target Fund shares exchanged therefor pursuant to Section 358(a)(l) of the Code. |
8. | The holding period of Acquiring Fund shares received by a Target Fund Shareholder will include the holding period of the Target Fund shares exchanged therefor, provided that the Target Fund Shareholder held Target Fund shares as a capital asset on the date of the exchange pursuant to Section 1223(1) of the Code. |
(continued)
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9. | For purposes of Section 381 of the Code, the Acquiring Fund will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the Treasury regulations, the items of Target Fund described in Section 381(c) of the Code as if there had been no Reorganization, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and, if applicable, the Treasury regulations promulgated thereunder. |
We express no opinion as to the federal income tax consequences of the Reorganization except as expressly set forth above, or as to any transaction except those consummated in accordance with the Plan. Without limiting the foregoing, this opinion does not address the tax consequences of the Reorganization to contracts or securities on which gain or loss is recognized upon the transfer of an asset regardless of whether such transfer would otherwise be a nonrecognition transaction under the Code.
Very truly yours, |
/s/ Dechert LLP |
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Three Bryant Park 1095 Avenue of the Americas New York, NY 10036-6797 +1 212 698 3500 Main +1 212 698 3599 Fax www.dechert.com
|
April 28, 2023
Board of Trustees
JPMorgan Insurance Trust Mid Cap Value Portfolio
JPMorgan Insurance Trust
277 Park Avenue
New York, NY 10172
Board of Trustees
LVIP JPMorgan Mid Cap Value Fund
Lincoln Variable Insurance Products Trust
1301 South Harrison Street
Fort Wayne, IN 46802
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax consequences to JPMorgan Insurance Trust Mid Cap Value Portfolio (the Target Fund), a separate series of JPMorgan Insurance Trust, a Massachusetts business trust (the Target Entity), to the record holders of Target Fund shares (the Target Fund Shareholders), and to LVIP JPMorgan Mid Cap Value Fund (the Acquiring Fund), a separate series of Lincoln Variable Insurance Products Trust, a Delaware statutory trust (the Acquiring Entity), in connection with the proposed transfer of all of the assets, as defined in the Agreement and Plan of Reorganization (the Plan) dated as of April 28, 2023, executed by the Target Entity on behalf of the Target Fund and by the Acquiring Entity on behalf of the Acquiring Fund, of the Target Fund (the Assets) to the Acquiring Fund in exchange solely for Acquiring Fund shares and the assumption of the liabilities, as defined in the Plan, of the Target Fund (the Liabilities) by the Acquiring Fund, followed by the distribution of such Acquiring Fund shares received by the Target Fund in complete liquidation and termination of the Target Fund (the Reorganization), all pursuant to the Plan.
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For purposes of this opinion, we have examined and relied upon (1) the Plan, (2) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Target Entity on behalf of the Target Fund, (3) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Acquiring Entity on behalf of the Acquiring Fund, and (4) such other documents and instruments as we have deemed necessary or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended (the Code), United States Treasury regulations, judicial decisions, and administrative rulings and pronouncements of the Internal Revenue Service, all as in effect on the date hereof. This opinion is conditioned upon the Reorganization taking place in the manner described in the Plan.
Based upon the foregoing, it is our opinion that for federal income tax purposes:
1. | The acquisition by the Acquiring Fund of all of the Assets of the Target Fund, as provided for in the Agreement, in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund, followed by the distribution by the Target Fund to its shareholders of the Acquiring Fund shares in complete liquidation of the Target Fund, will qualify as a reorganization within the meaning of Section 368(a)(1) of the Code, and the Target Fund and the Acquiring Fund each will be a party to the reorganization within the meaning of Section 368(b) of the Code. |
2. | No gain or loss will be recognized by the Target Fund upon (i) the transfer of all of its Assets to, and assumption of its Liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund shares pursuant to Section 361(a) and Section 357(a) of the Code and (ii) the distribution of the Acquiring Fund shares by the Target Fund to its shareholders in complete liquidation (in pursuance of the Agreement) pursuant to Section 361(c)(l) of the Code, except that the Target Fund may be required to recognize gain or loss with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, or (C) any other gain or loss required to be recognized upon the termination of a |
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position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
3. | No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the Assets of the Target Fund in exchange solely for the assumption of the Liabilities of the Target Fund and issuance of the Acquiring Fund shares pursuant to Section 1032(a) of the Code. |
4. | The tax basis of the Assets of the Target Fund received by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Target Fund immediately prior to the transfer pursuant to Section 362(b) of the Code, except with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, and (C) any other Asset on which gain was recognized by the Target Fund upon the termination of a position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
5. | The holding periods of the Assets of the Target Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Target Fund pursuant to Section 1223(2) of the Code. |
6. | No gain or loss will be recognized by the Target Fund Shareholders upon the exchange of all of their Target Fund shares for the Acquiring Fund shares pursuant to Section 354(a) of the Code. |
7. | The aggregate tax basis of the Acquiring Fund shares to be received by each Target Fund Shareholder will be the same as the aggregate tax basis of Target Fund shares exchanged therefor pursuant to Section 358(a)(1) of the Code. |
8. | The holding period of Acquiring Fund shares received by a Target Fund Shareholder will include the holding period of the Target Fund shares exchanged therefor, provided that the Target Fund Shareholder held Target Fund shares as a capital asset on the date of the exchange pursuant to Section 1223(1) of the Code. |
(continued)
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9. | For purposes of Section 381 of the Code, the Acquiring Fund will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the Treasury regulations, the items of Target Fund described in Section 381(c) of the Code as if there had been no Reorganization, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and, if applicable, the Treasury regulations promulgated thereunder. |
We express no opinion as to the federal income tax consequences of the Reorganization except as expressly set forth above, or as to any transaction except those consummated in accordance with the Plan. Without limiting the foregoing, this opinion does not address the tax consequences of the Reorganization to contracts or securities on which gain or loss is recognized upon the transfer of an asset regardless of whether such transfer would otherwise be a nonrecognition transaction under the Code.
Very truly yours, |
/s/ Dechert LLP |
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Three Bryant Park 1095 Avenue of the Americas New York, NY 10036-6797 +1 212 698 3500 Main +1 212 698 3599 Fax www. dechert.com
|
April 28, 2023
Board of Trustees
JPMorgan Insurance Trust Small Cap Core Portfolio
JPMorgan Insurance Trust
277 Park Avenue
New York, NY 10172
Board of Trustees
LVIP JPMorgan Small Cap Core Fund
Lincoln Variable Insurance Products Trust
1301 South Harrison Street
Fort Wayne, IN 46802
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax consequences to JPMorgan Insurance Trust Small Cap Core Portfolio (the Target Fund), a separate series of JPMorgan Insurance Trust, a Massachusetts business trust (the Target Entity), to the record holders of Target Fund shares (the Target Fund Shareholders), and to LVIP JPMorgan Small Cap Core Fund (the Acquiring Fund), a separate series of Lincoln Variable Insurance Products Trust, a Delaware statutory trust (the Acquiring Entity), in connection with the proposed transfer of all of the assets, as defined in the Agreement and Plan of Reorganization (the Plan) dated as of April 28, 2023, executed by the Target Entity on behalf of the Target Fund and by the Acquiring Entity on behalf of the Acquiring Fund, of the Target Fund (the Assets) to the Acquiring Fund in exchange solely for Acquiring Fund shares and the assumption of the liabilities, as defined in the Plan, of the Target Fund (the Liabilities) by the Acquiring Fund, followed by the distribution of such Acquiring Fund shares received by the Target Fund in complete liquidation and termination of the Target Fund (the Reorganization), all pursuant to the Plan.
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For purposes of this opinion, we have examined and relied upon (1) the Plan, (2) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Target Entity on behalf of the Target Fund, (3) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Acquiring Entity on behalf of the Acquiring Fund, and (4) such other documents and instruments as we have deemed necessary or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended (the Code), United States Treasury regulations, judicial decisions, and administrative rulings and pronouncements of the Internal Revenue Service, all as in effect on the date hereof. This opinion is conditioned upon the Reorganization taking place in the manner described in the Plan.
Based upon the foregoing, it is our opinion that for federal income tax purposes:
1. | The acquisition by the Acquiring Fund of all of the Assets of the Target Fund, as provided for in the Agreement, in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund, followed by the distribution by the Target Fund to its shareholders of the Acquiring Fund shares in complete liquidation of the Target Fund, will qualify as a reorganization within the meaning of Section 368(a)(1) of the Code, and the Target Fund and the Acquiring Fund each will be a party to the reorganization within the meaning of Section 368(b) of the Code. |
2. | No gain or loss will be recognized by the Target Fund upon (i) the transfer of all of its Assets to, and assumption of its Liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund shares pursuant to Section 361(a) and Section 357(a) of the Code and (ii) the distribution of the Acquiring Fund shares by the Target Fund to its shareholders in complete liquidation (in pursuance of the Agreement) pursuant to Section 361(c)(l) of the Code, except that the Target Fund may be required to recognize gain or loss with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, or (C) any other gain or loss required to be recognized upon the termination of a |
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position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code.
3. | No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the Assets of the Target Fund in exchange solely for the assumption of the Liabilities of the Target Fund and issuance of the Acquiring Fund shares pursuant to Section 1032(a) of the Code. |
4. | The tax basis of the Assets of the Target Fund received by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Target Fund immediately prior to the transfer pursuant to Section 362(b) of the Code, except with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, and (C) any other Asset on which gain was recognized by the Target Fund upon the termination of a position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
5. | The holding periods of the Assets of the Target Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Target Fund pursuant to Section 1223(2) of the Code. |
6. | No gain or loss will be recognized by the Target Fund Shareholders upon the exchange of all of their Target Fund shares for the Acquiring Fund shares pursuant to Section 354(a) of the Code. |
7. | The aggregate tax basis of the Acquiring Fund shares to be received by each Target Fund Shareholder will be the same as the aggregate tax basis of Target Fund shares exchanged therefor pursuant to Section 358(a)(1) of the Code. |
8. | The holding period of Acquiring Fund shares received by a Target Fund Shareholder will include the holding period of the Target Fund shares exchanged therefor, provided that the Target Fund Shareholder held Target Fund shares as a capital asset on the date of the exchange pursuant to Section 1223(1) of the Code. |
(continued)
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9. | For purposes of Section 381 of the Code, the Acquiring Fund will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the Treasury regulations, the items of Target Fund described in Section 381(c) of the Code as if there had been no Reorganization, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and, if applicable, the Treasury regulations promulgated thereunder. |
We express no opinion as to the federal income tax consequences of the Reorganization except as expressly set forth above, or as to any transaction except those consummated in accordance with the Plan. Without limiting the foregoing, this opinion does not address the tax consequences of the Reorganization to contracts or securities on which gain or loss is recognized upon the transfer of an asset regardless of whether such transfer would otherwise be a nonrecognition transaction under the Code.
Very truly yours, |
/s/ Dechert LLP |
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Three Bryant Park 1095 Avenue of the Americas
New York, NY 10036-6797
+1 212 698 3500 Main
+1 212 698 3599 Fax
www.dechert.com
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April 28, 2023
Board of Trustees
JPMorgan Insurance Trust U.S. Equity Portfolio
JPMorgan Insurance Trust
277 Park Avenue
New York, NY 10172
Board of Trustees
LVIP JPMorgan U.S. Equity Fund
Lincoln Variable Insurance Products Trust
1301 South Harrison Street
Fort Wayne, IN 46802
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax consequences to JPMorgan Insurance Trust U.S. Equity Portfolio (the Target Fund), a separate series of JPMorgan Insurance Trust, a Massachusetts business trust (the Target Entity), to the record holders of Target Fund shares (the Target Fund Shareholders), and to LVIP JPMorgan U.S. Equity Fund (the Acquiring Fund), a separate series of Lincoln Variable Insurance Products Trust, a Delaware statutory trust (the Acquiring Entity), in connection with the proposed transfer of all of the assets, as defined in the Agreement and Plan of Reorganization (the Plan) dated as of April 28, 2023, executed by the Target Entity on behalf of the Target Fund and by the Acquiring Entity on behalf of the Acquiring Fund, of the Target Fund (the Assets) to the Acquiring Fund in exchange solely for Acquiring Fund shares and the assumption of the liabilities, as defined in the Plan, of the Target Fund (the Liabilities) by the Acquiring Fund, followed by the distribution of such Acquiring Fund shares received by the Target Fund in complete liquidation and termination of the Target Fund (the Reorganization), all pursuant to the Plan.
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Page 2 JPMorgan Insurance Trust U.S. Equity Portfolio LVIP JPMorgan U.S. Equity Fund April 28, 2023 |
For purposes of this opinion, we have examined and relied upon (1) the Plan, (2) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Target Entity on behalf of the Target Fund, (3) the facts and representations contained in the letter dated on or about the date hereof addressed to us from the Acquiring Entity on behalf of the Acquiring Fund, and (4) such other documents and instruments as we have deemed necessary or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended (the Code), United States Treasury regulations, judicial decisions, and administrative rulings and pronouncements of the Internal Revenue Service, all as in effect on the date hereof. This opinion is conditioned upon the Reorganization taking place in the manner described in the Plan.
Based upon the foregoing, it is our opinion that for federal income tax purposes:
1. | The acquisition by the Acquiring Fund of all of the Assets of the Target Fund, as provided for in the Agreement, in exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of the Liabilities of the Target Fund, followed by the distribution by the Target Fund to its shareholders of the Acquiring Fund shares in complete liquidation of the Target Fund, will qualify as a reorganization within the meaning of Section 368(a)(l) of the Code, and the Target Fund and the Acquiring Fund each will be a party to the reorganization within the meaning of Section 368(b) of the Code. |
2. | No gain or loss will be recognized by the Target Fund upon (i) the transfer of all of its Assets to, and assumption of its Liabilities by, the Acquiring Fund in exchange solely for Acquiring Fund shares pursuant to Section 361(a) and Section 357(a) of the Code and (ii) the distribution of the Acquiring Fund shares by the Target Fund to its shareholders in complete liquidation (in pursuance of the Agreement) pursuant to Section 361(c)(l) of the Code, except that the Target Fund may be required to recognize gain or loss with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, or (C) any other gain or loss required to be recognized upon the termination of a |
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Page 3 JPMorgan Insurance Trust U.S. Equity Portfolio LVIP JPMorgan U.S. Equity Fund April 28, 2023 |
position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
3. | No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the Assets of the Target Fund in exchange solely for the assumption of the Liabilities of the Target Fund and issuance of the Acquiring Fund shares pursuant to Section 1032(a) of the Code. |
4. | The tax basis of the Assets of the Target Fund received by the Acquiring Fund will be the same as the tax basis of such Assets in the hands of the Target Fund immediately prior to the transfer pursuant to Section 362(b) of the Code, except with respect to (A) contracts described in Section 1256(b) of the Code, (B) stock in a passive foreign investment company, as defined in Section 1297(a) of the Code, and (C) any other Asset on which gain was recognized by the Target Fund upon the termination of a position, or upon the transfer of such asset regardless of whether such a transfer would otherwise be a nontaxable transaction under the Code. |
5. | The holding periods of the Assets of the Target Fund in the hands of the Acquiring Fund will include the periods during which such Assets were held by the Target Fund pursuant to Section 1223(2) of the Code. |
6. | No gain or loss will be recognized by the Target Fund Shareholders upon the exchange of all of their Target Fund shares for the Acquiring Fund shares pursuant to Section 354(a) of the Code. |
7. | The aggregate tax basis of the Acquiring Fund shares to be received by each Target Fund Shareholder will be the same as the aggregate tax basis of Target Fund shares exchanged therefor pursuant to Section 358(a)(l) of the Code. |
8. | The holding period of Acquiring Fund shares received by a Target Fund Shareholder will include the holding period of the Target Fund shares exchanged therefor, provided that the Target Fund Shareholder held Target Fund shares as a capital asset on the date of the exchange pursuant to Section 1223(1) of the Code. |
(continued)
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Page 4 JPMorgan Insurance Trust U.S. Equity Portfolio LVIP JPMorgan U.S. Equity Fund April 28, 2023 |
9. | For purposes of Section 381 of the Code, the Acquiring Fund will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the Treasury regulations, the items of Target Fund described in Section 381(c) of the Code as if there had been no Reorganization, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and, if applicable, the Treasury regulations promulgated thereunder. |
We express no opinion as to the federal income tax consequences of the Reorganization except as expressly set forth above, or as to any transaction except those consummated in accordance with the Plan. Without limiting the foregoing, this opinion does not address the tax consequences of the Reorganization to contracts or securities on which gain or loss is recognized upon the transfer of an asset regardless of whether such transfer would otherwise be a nonrecognition transaction under the Code.
Very truly yours,
/s/ Dechert LLP
April 18, 2023
J.P. Morgan Investment Management Inc.
277 Park Avenue, Floor 8
New York, N.Y. 10172
Attention: Jessica Badillo
Dear Mrs. Badillo:
The undersigned, Lincoln Financial Investments Corporation (the Adviser), is investment adviser to the series of the trust listed on Exhibit A (Trust). The Adviser and J.P. Morgan Investment Management Inc. (the Sub-Adviser) are parties to a Sub-Advisory Agreement dated September 21, 2012, as amended from time to time (the Agreement) pursuant to which the Sub-Adviser provides investment advisory services to the series of the Trust listed on Exhibit A hereto (each a Fund and together, the Funds).
This letter supplements the Agreement and the Funds current prospectus and statement of additional information (collectively, the Prospectus) with the representations, warranties and covenants by the Adviser set forth below that the Sub-Adviser will rely upon when entering into Derivatives Transactions (as defined below) and agreements relating to such transactions and other agreements on behalf of the Fund. The Adviser hereby authorizes Sub-Adviser to conclusively rely upon such representations, warranties and covenants as being true, correct and complete on and as of the date hereof and for so long as the Agreement is outstanding or until written notice to the contrary is provided to the Sub-Adviser with respect to any such representation, warranty, or covenant. The Adviser shall provide the Sub-Adviser as soon as practicable with written notice if any of the representations, warranties and covenants set forth in this letter ceases to be true, correct or complete.
For purposes of this letter agreement (the Letter Agreement) Derivatives Transaction shall mean any contract, transaction or arrangement (whether cleared or uncleared and whether or not exchange traded) as specified in 1.a. -1.d. of Section A below which is authorized for investment by the Prospectus and the Agreement and all necessary or appropriate documentation relating thereto.
A. | Futures, Options, Short Sales and Derivatives Authorization |
1. | Subject to this Agreement and the Prospectus (and for the absence of doubt the provisions of this Letter Agreement shall not be deemed to grant the Sub-Adviser authority to make any investment not permitted by the Agreement or the Prospectus), in investing and reinvesting the assets of the Fund, the Sub-Adviser is authorized and empowered as follows: |
a. | to purchase, sell, hold, make payments and transfers with respect to, and generally deal in any manner with and in, all futures contracts (and any options on such contracts) and to enter into all documents and agreements relating thereto, including, without limitation, futures contracts with a futures commission merchant or swap dealer with respect to financial instruments and any group or index of securities or commodities (or any interest therein based upon the value thereof), futures account agreements, cleared derivatives transactions addenda, cleared derivatives execution agreements, give-up agreements and |
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related documentation, in each case on such terms and conditions as the Sub-Adviser shall determine; |
b. | to engage in short sales and to execute or cause to be executed and to enter into any and all documents and agreements related thereto, in each case on such terms and conditions as the Sub-Adviser shall determine; |
c. | to enter into, purchase, sell, hold, make payments and transfers with respect to and generally deal in any manner with and in any derivative transactions (whether cleared or uncleared and whether or not exchange traded) and to execute, cause to be executed and enter into all documents and agreements relating thereto (including, without limitation, any master agreements, futures and options agreements, cleared derivatives transactions addenda, cleared derivatives execution agreements and account agreements, give-up agreements, International Swaps and Derivatives Association (ISDA) protocols and related documentation), in each case with futures commission merchants, swap dealers, security-based swap dealers or other market participants on such terms and conditions as the Sub-Adviser shall determine, including, without limitation, (i) any transaction that is a rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, contract for differences, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate swap transaction, currency option, credit protection transaction, credit swap, credit default swap, credit default option, total return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell-back transaction, securities lending transaction, security-based swap transaction, weather index transaction or forward purchase or sale of a security, commodity or other financial instrument or interest (including any option with respect to any of these transactions) or (ii) which is a type of transaction that is similar to any transaction referred to in clause (i) above that is currently, or in the future becomes, recurrently entered into in the financial markets and which is a forward, swap, future, option or other derivative on one or more rates, currencies, commodities, equity securities or other equity instruments, debt securities or other debt instruments, economic indices or measures of economic risk or value, or other benchmarks against which payments or deliveries are to be made, and (iii) any combination of these transactions; and |
d. | in connection with any transaction or agreement specified in clauses (a) (c) above, to deposit or transfer any property as collateral with any agent or counterparty, to grant security interests in such collateral and to execute or cause to be executed any and all required or appropriate documentation with respect to such collateral and to make any and all margin payments, all on such terms and conditions as the Sub-Adviser shall determine. |
B. Adviser Representations, Warranties and Covenants
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1) | The Adviser acknowledges and agrees that, in connection with the Sub-Advisers performance of its services under the Agreement (including, without limitation, the execution, delivery and performance of any Derivatives Transactions), the Sub-Adviser will rely on the representations, warranties and covenants of the Adviser and the Fund, on behalf of the Fund, that will be a party to such Derivatives Transactions set forth below. The Adviser hereby authorizes the Sub-Adviser to conclusively rely upon such representations, warranties and covenants as being true, correct and complete on and as of the date hereof and for so long as the Agreement is outstanding or until written notice to the contrary is provided to the Sub-Adviser with respect to any such representation, warranty, or covenant. The Adviser shall provide the Sub-Adviser, as soon as practicable, with written notice if any of the representations, warranties and covenants set forth on this Exhibit A ceases to be true, correct or complete. |
2) | The Adviser represents, warrants and covenants as follows: |
a. | Each Fund is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing, and pursuant to the Funds governing documents and the laws, rules and regulations applicable to each Fund, such Fund is duly authorized and empowered to permit the Sub-Adviser to undertake all of the actions contemplated hereby (including without limitation, delivering collateral on behalf of each Fund to counterparties). |
b. | The Adviser has the power to authorize the Sub-Adviser to execute Derivatives Transactions on the Funds behalf, to perform its obligations under any such Derivatives Transactions and has taken, or will take prior to the execution of any such Derivatives Transaction, all necessary action(s) to authorize the execution, delivery and performance of any such Derivatives Transactions. |
c. | The Sub-Adviser may enter into the various types of transactions contemplated hereunder on behalf of the Funds under documentation negotiated by the Sub-Adviser for such purpose and neither the Funds, nor any law, rule or regulation applicable with respect to the Funds, requires the Sub-Adviser to include (or not include) any terms, information, conditions, representations or other contractual provisions (other than those that have been attached hereto by the Adviser, if any) in such documentation, such as, without limitation, provisions related to jurisdiction, tax or sovereign immunity. |
d. | The Adviser hereby acknowledges that the Sub-Adviser is relying on the Adviser to advise the Sub-Adviser of any terms, information, conditions, representations or other contractual provisions that the Sub-Adviser is required to include (or not include) in such documentation. |
e. | Assuming compliance by the Sub-Adviser with the relevant provisions of the Investment Guidelines and the Agreement, the execution, delivery and performance of any Derivatives Transaction will not violate or conflict with any law applicable to the Funds, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of the assets or any contractual restriction binding on or affecting it or any of its assets. |
f. | All governmental and other consents that are required to have been obtained by the Funds with respect to the execution and performance of Derivatives Transactions have been obtained and at the time of execution of any such Derivatives Transaction will be in full force and effect and all conditions of any such consents will have been complied with. |
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g. | Assuming any applicable Derivatives Transaction that is entered into by the Sub-Adviser on behalf of each Fund is a legal, valid and binding obligation of, and enforceable in accordance with its terms against, each of the other parties thereto, each Funds obligations under any such Derivatives Transaction constitute or will constitute its legal, valid and binding obligations, enforceable in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)). |
h. | There is not pending or, to the Advisers knowledge, threatened against the Funds or any of the Trusts or the Funds affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of any Derivatives Transaction to which it is (or may in the future become) a party or its ability to perform its obligations under any such Derivatives Transaction. |
i. | The Adviser, on behalf of each Fund, is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice) the terms and conditions of entering into Derivatives Transactions, and understands and accepts, the risks of entering into Derivatives Transactions. Each Fund assumes the financial and other risks of any Derivatives Transactions to which it is, or in the future may become, a party. The Adviser, on behalf of the Funds, understands that the counterparties to any Derivatives Transactions are not, and will not be, acting as a fiduciary for or an adviser to each Fund in respect of such Derivatives Transactions. |
j. | The Adviser, on behalf of each Fund, understands that the counterparties to Derivatives Transactions generally will be entitled to request or receive certain certificates, opinions, financial statements, documents (including without limitation, copies of this Agreement and the Investment Guidelines) or information in accordance with the terms of such Derivatives Transactions (collectively, Information) from the Funds and the Trustss custodian, and will be entitled to rely conclusively upon any Information furnished to the counterparty. The Adviser, on behalf of the Funds, covenants that it shall provide, or cause to be provided, to the Sub-Adviser such Information as may be required of such persons under any Derivative Transactions, or as the Sub-Adviser may reasonably request from time to time to satisfy its obligations under any Derivative Transactions and that such Information will, as of the date of such Information, be true, accurate and complete in all material respects and the Sub-Adviser may provide such Information to such counterparties. The Adviser, on behalf of each Fund, understands that any failure to provide Information in connection with Derivatives Transactions in a timely fashion may result in counterparties termination of certain Derivative Transactions. |
k. | With respect to any Derivatives Transaction executed on behalf of each Fund on or under the rules of any swaps execution facility or any security-based swaps execution facility (each such swaps execution facility and such security-based swaps execution facility being a SEF), to the extent required by such SEF under its rulebook or otherwise, the Adviser, on behalf of each Fund: (a) consents to the jurisdiction of such SEF in connection with and with respect to any such Derivatives Transaction; (b) agrees that every such Derivatives Transaction shall import all the terms of the rules of such SEF insofar as they are applicable to such Derivatives Transaction; (c) agrees that the Sub-Adviser shall be permitted to comply with all requirements of such SEFs rulebook and any other arrangements, |
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provisions and directions given by such SEF; (d) agrees that it (the Adviser) shall provide to such SEF and its agents, including its regulatory service provider, access to all books and records, staff and other information necessary for monitoring and enforcement of such SEFs rulebook; (e) agrees to comply with all disclosure requirements set forth in applicable CFTC rules and regulations, National Futures Association rules and regulations, U.S. Securities and Exchange Commission (SEC) rules and regulations and any additional disclosure or other requirements imposed by a SEFs rulebook; and (f) agrees that all disputes or claims arising out of any Derivatives Transaction executed on or under the rules of a SEF will be resolved by submission to arbitration pursuant to the rulebook of such SEF. |
l. | The Adviser acknowledges and agrees that the Sub-Adviser and its affiliates may aggregate transactions in swaps (as defined under the Commodity Exchange Act, as amended (CEA) and by rules and regulations of the CFTC) on behalf of the Funds together with transactions in swaps on behalf of other clients of the Sub-Adviser or its affiliates and may effect such transactions as block trades (as defined under the CEA). |
m. | Each Fund has reviewed the registration requirements of the CEA and the National Futures Association pertinent to commodity pool operators and has determined that it is in compliance with such requirements to the extent applicable. |
n. | In the event the Sub-Adviser is terminated as investment sub-adviser to the Funds, by the Adviser or the Board of the Trust, a successor investment sub-adviser shall have the power and authority to assume any outstanding transaction under the Agreement entered into by the terminated investment sub-adviser. |
o. | The Adviser has taken all steps to, and directed the Custodian to, follow all of the Sub-Advisers investment related direction with respect to the assets subject to this Agreement, including, without limitation, the posting of any margin, collateral or other assets that may be required under such agreements or arrangements entered into by the Sub-Adviser with respect to the assets of the Funds hereunder. The Adviser represents and warrants that with respect to each Fund, in connection with the Sub-Advisers activities described in the Agreement with respect to the Funds, including without limitation, this Exhibit A, such actions are and shall be authorized and permitted under all applicable governing documents of the Trust and will not violate or conflict with any law applicable to the Funds, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting its assets. The Sub-Adviser is not responsible for the custody of the Funds assets. |
p. | Each Fund is the sole owner of or otherwise has the right to transfer, or pledge, the assets to be used as collateral in connection with the Derivatives Transactions. |
q. | The Adviser, on behalf of each Fund, has not granted any lien or security interest in such Fund assets ; |
r. | The Adviser, on behalf of each Fund, will take and/or permit the Sub-Adviser, on the Funds behalf, to take any and all necessary actions in order to transfer title to, or grant a valid, perfected security interest in (as may be applicable), such assets to a counterparty under the applicable Credit Support Annex or other counterparty documents. |
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s. | Each Fund is a Financial Entity1 as defined under Section 2(h)(7)(C)(i) of the CEA, without regard to an exemption or exclusion provided in Section 2(h)(7)(C)(ii) of the CEA and CFTC regulations thereunder or in Section 2(h)(7)(C)(iii) of the CEA; |
t. | Each Fund is not a Financial Company as defined under Section 201(a)(11) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 12 U.S.C. §5381(a)(11). |
u. | Each Fund is not an Insured Depository Institution as defined under 12 U.S.C. §1813. |
v. | Each Fund is not Commodity Pool as defined under Section 1(a)(10) of the CEA2 and applicable regulations thereunder. |
w. | The Adviser, on behalf of each Fund, hereby represents that the Funds reasonably believes that it does fall within one or more of the U.S. Person Categories (as defined in Appendix 1) or would otherwise be deemed to be a U.S. person under CFTC Rules. |
x. | The Adviser, on behalf of each Fund, is capable of assessing the merits of and understanding (on the Funds behalf or through independent professional advice), the terms and conditions of and understands and accepts the risks of entering into and submitting the cleared Derivatives Transactions for clearing and settlement in accordance with this Agreement, including, but not limited to, the risk that: (1) the regulations applicable to cleared Derivatives Transactions, including the rules, regulations and procedures of the applicable clearing organization and each SEF or designated contract market, if any, that the Funds uses in connection with cleared Derivatives Transactions, may differ from the regulations applicable to the execution and clearing of futures contracts; and (2) such cleared Derivatives Transactions may not be afforded the same legal and regulatory treatment as may be afforded the execution and clearing of futures contracts. No clearing member will be acting as a fiduciary for or an adviser to the Funds in respect of the cleared Derivatives Transactions. |
y. | The Adviser hereby agrees to provide by prompt written notice to the Sub-Adviser any additional representations, warranties and covenants requested by the Sub-Adviser to the extent such representations, warranties or covenants are requested by counterparties or required by applicable law. |
3) | The Adviser (i) asserts that all the representations, warranties or information in or provided in connection with this Exhibit A is true, accurate and complete in all material respects and (ii) agrees to promptly notify the Sub-Adviser in writing of any change to such representations, warranties or information if any of such representations, warranties or information become incorrect or misleading in any respect. |
1 Definition available at: http://www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2013-17958a.pdf
2 CEA means the United States Commodity Exchange Act.
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Protocol(s) Information and Representations:
I. | The full legal name of the Funds that will be party to any Swaps3 are: |
Lincoln Variable Insurance Products Trust - LVIP JPMorgan Core Bond Fund
Lincoln Variable Insurance Products Trust - LVIP JPMorgan Mid Cap Value Fund
Lincoln Variable Insurance Products Trust - LVIP JPMorgan Small Cap Core Fund
Lincoln Variable Insurance Products Trust - LVIP JPMorgan U.S. Equity Fund
____________________________________________________________________________________________
II. | The address of the Funds is: |
1301 South Harrison Street
Fort Wayne, Indiana 46802___________________________________________________________________________
III. | The Funds U.S. Tax ID numbers (if applicable) are : |
LVIP JPMorgan Core Bond Fund 38-3347500
LVIP JPMorgan Mid Cap Value Fund 38-3347502
LVIP JPMorgan Small Cap Core Fund 20-5044196
LVIP JPMorgan U.S. Equity Fund 38-3231232
____________________________________________________________________________________________ |
IV. | The main business line of the Funds are: mutual funds_________________________________________________ |
(e.g., Pension Plans for____ ) | ||
(e.g., Endowment for , or City of ____ ) |
V. | CFTC Interim Compliant Identifier/Legal Entity Identifier/ Global Market Entity Identifier (CICI/LEI/GMEI): |
The Funds CICI/LEI/GMEI is:
3 Swap means a swap as defined in the Section 1a(47) of the CEA and CFTC Regulation 1.3(xxx). The term Swap also includes any foreign exchange swaps and foreign exchange forwards that may be exempted from regulation as swaps by the Secretary of the Treasury pursuant to authority granted by Section 1a(47)(E) of the Commodity Exchange Act.
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LVIP JPMorgan Core Bond Fund
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549300G0KAUIXSZUYB35
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LVIP JPMorgan Mid Cap Value Fund
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549300BN8E26I3SIGW49
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LVIP JPMorgan Small Cap Core Fund
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54930093DX7S6Y3HEW08
| |
LVIP JPMorgan U.S. Equity Fund
|
549300F8CJLQF0QIZ965
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☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐ ☐
VI. | Eligible Contract Participant: The Fund is an Eligible Contract Participant because: (please mark the below, as applicable) |
(Note: please contact your Client Account Manager if you are unable to mark any of the below boxes in this Section IV)
☐ Financial Institution: The Fund is a financial institution as defined in Section 1a(21) of the CEA (a Financial Institution).4
☐ Eligible Insurance Company: The Fund is an insurance company that is regulated by a State of the United States, including a regulated subsidiary or affiliate of such insurance company (an Eligible Insurance Company).5
☒ Eligible Investment Company: The Fund is an investment company subject to regulation under the Investment Company Act of 1940, as amended (regardless of whether each investor in the investment company is itself an Eligible Contract Participant).6
☐ Eligible Commodity Pool: The Fund is a Commodity Pool that (1) has total assets exceeding $5,000,000 and (2) was formed and is operated by a person subject to regulation under the CEA.7
☐ Large Entity: The Fund is a corporation, partnership, proprietorship, organization, trust, or other entity that has total assets exceeding $10,000,000.8
☐ Hedging entity ECP: The Fund is a corporation, partnership, proprietorship, organization, trust, or other entity that has a net worth exceeding $1,000,000 and enters into Swaps in connection with the conduct of the entitys business or to manage the risk associated with an
4 | CEA § 1a(18)(A)(i). |
5 | CEA § 1a(18)(A)(ii). |
6 | CEA § 1a(18)(A)(iii). |
7 | CEA § 1a(18)(A)(iv). The CFTC has interpreted the language subject to regulation under the Commodity Exchange Act, for purposes of CFTC Regulation 1.3(m)(6) (effective Dec. 31, 2012) and CEA § 1a(18)(A)(iv) as requiring lawful operation of the Commodity Pool by a person excluded from the definition of commodity pool operator, a registered commodity pool operator or a person properly exempt from registration as a commodity pool operator. See 77 Fed. Reg. 30596, 30654-55 (May 23, 2012). |
8 | CEA § 1a(18)(A)(v)(I)-(II). |
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asset or liability owned or incurred or reasonably likely to be owned or incurred by the entity in the conduct of the entitys business.9
☐ Employee Benefits Plan: The Fund is an employee benefit plan subject to ERISA10 or a governmental employee benefit plan (1) that has total assets exceeding $5,000,000; or (2) the investment decisions of which are made by (A) an investment adviser or commodity trading advisor subject to regulation under the Sub-Advisers Act of 1940, as amended, or the CEA; (B) a Financial Institution; or (C) an Eligible Insurance Company, or a regulated subsidiary or affiliate of such Eligible Insurance Company.11
☐ Eligible Government Entity: The Fund is (1) a governmental entity (including the United States or a State), or political subdivision of a governmental entity, (2) a multinational or supranational government entity, or (3) an instrumentality, agency, or department of an entity described in clause (1) or (2), and if the Fund is an entity described in clause (1) or (3), the Fund owns and invests on a discretionary basis $50,000,000 or more in investments, or otherwise satisfies the requirements of Section 1a(18)(A)(vii)(III)(aa) or (cc) of the CEA.12
Commodity Pools: Mark the applicable box(es):
a. | ☒ The Fund has total assets exceeding $5,000,000 and is operated by (and, if the Fund was formed on or after December 31, 2012, is formed by) (1) a person registered as a Commodity Pool Operator (CPO) with the CFTC, (2) a person excluded from the CPO definition under CFTC Regulation 4.5 or otherwise, or (3) a person properly exempt from registration as a CPO under CFTC Regulation 4.13(a)(3) or otherwise. |
b. | ☐ With respect to Specified FX Transactions13 that (1) the Fund has total assets exceeding $10,000,000, (2) the Fund was either (i) formed on or before December 31, 2012 or (ii) not formed for the purpose of evading regulation under Section 2(c)(2)(B) or 2(c)(2)(C) of the CEA or related CFTC rules, regulations or orders and (3) is operated by (A) a person registered as a CPO with the CFTC or (B) a person properly exempt from registration as a CPO under CFTC Regulation 4.13(a)(3) or any other regulation specified in CFTC Regulation 1.3(m)(8) or any successor regulation. |
c. | ☐ With respect to Specified FX Transactions that (1) the Fund has total assets exceeding $5,000,000, (2) the Fund is operated by (and, if the Fund was formed on or after December 31, 2012, is formed by) (A) a person registered as a CPO with the CFTC, (B) a person excluded from the CPO definition under CFTC Regulation 4.5 or otherwise, or (C) a person properly exempt from registration as a CPO under CFTC Regulation 4.13(a)(3) or otherwise, (3) all direct participants in the Fund are Eligible Contract Participants, except as specifically permitted by applicable CFTC interpretative guidance with respect to Section 1(a)(18)(A)(iv) of the CEA and CFTC Regulation 1.3(m)(5), and (4) the Fund otherwise satisfies the requirements of Section 1a(18)(A)(iv) of the CEA, CFTC Regulation 1.3(m)(5) and related CFTC interpretations as such requirements, rules and interpretations relate to Specified FX Transactions. |
9 | CEA § 1a(18)(A)(v)(III). |
10 | ERISA means the Employee Retirement Income Security Act of 1974, as amended. |
11 | CEA § 1a(18)(A)(vi). |
12 | CEA § 1a(18)(A)(vii). |
13 | Specified FX Transactions means transactions described in Section 2(c)(2)(B)(vi) or 2(c)(2)(C)(vii) of the CEA. |
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☐ Broker or Dealer Non natural person: the Fund is a broker or dealer (other than a natural person or proprietorship) subject to regulation under the Securities Exchange Act14,15.
☐ Investment Bank Holding Company: the Fund is an investment bank holding company (as defined in Section 17(i) of the Securities Exchange Act).16
☐ Futures Commission Merchant (FCM) Non Natural Person: the Fund is a futures commission merchant subject to regulation under the CEA (other than a natural person or proprietorship).17
VII. | Special Entity status: |
(i) Non-Special Entity: The Adviser represents that the Fund is not a federal agency or state government body or political subdivision of a state, employee benefit plan subject to Title I of ERISA, governmental plan as defined in Section 3 of ERISA, endowment or any employee benefit plan as defined in Section 3 of ERISA (other than a plan subject to Title I of ERISA or a governmental plan) that has elected to be a Special Entity, and is therefore not a Special Entity as defined in CFTC and SEC rules governing swap transactions.
(ii) ERISA Special Entity: The Adviser represents that the Fund is an employee benefit plan subject to Title I of ERISA.
(iii) Non-ERISA Special Entity: The Adviser represents that the Fund is [a federal agency]; or [a state government body]; or [a political subdivision of a state]; or [a governmental plan as defined in Section 3 of ERISA]; or [an endowment]; or [any employee benefit plan defined in Section 3 of ERISA (other than a plan subject to Title I of ERISA or a governmental plan as defined in Section 3 of ERISA) that hereby elects to be a Special Entity].
VIII. | Safe Harbor: (i) Non-Special Entity Safe Harbor: The Adviser represents that the Fund has complied in good faith with written policies and procedures that are reasonably designed to ensure that the Sub-Adviser, as a person to whom it has granted swap and security-based swap trading authority, is capable of (i) evaluating swap and security-based swap recommendations made by swap dealers and security-based swap dealers and (ii) making swap and security-based swap trading decisions on its behalf. |
(ii) ERISA Special Entity Safe Harbor: With respect to any swap or security-based swap executed by the Sub-Adviser on the Funds behalf, Adviser represents that the Fund will rely on
14 | Securities Exchange Act means the Securities Exchange Act of 1934, as amended. |
15 | CEA § 1a(18)(A)(viii)(I). |
16 | CEA § 1a(18)(A)(viii)(III). |
17 | CEA § 1a(18)(A)(ix). |
10
the advice of the Sub-Adviser as its fiduciary (as such term is defined in Section 3 of ERISA) and not on the recommendations (if any) of a swap dealer or security-based swap dealer.
(iii) Non-ERISA Special Entity Safe Harbor: The Adviser represents that the Fund has written policies and procedures that it believes in good faith it has complied with that are reasonably designed to ensure that Sub-Adviser as a qualified independent representative (within the meaning of Rule 23.450 of the CFTC external business conduct rules governing swap transactions) for its swap transactions, and as a qualified independent representative (within the meaning of SEC Rule 15Fh-5) for its security-based swap transactions, meets the requirements to be a qualified independent representative and that such policies and procedures provide for the ongoing monitoring of the performance of the Sub-Adviser as a qualified independent representative.
IX. | CFTC Swap Entity status: The Adviser represents that the Fund is not: (i) a Major Swap Participant or a Major Security-Based Swap Participant as defined in CFTC and SEC rules governing entity definitions or (ii) registered as a swap dealer with the CFTC or registered as a security-based swap dealer with the SEC. |
X. | Trading Authority: The Adviser acknowledges and agrees that subject to applicable investment guidelines, the Sub-Adviser has been given full discretion over the trading of swap and security-based swap transactions for the Fund. Such discretion includes, among other things, the authority to open trading accounts with swap dealers and security-based swap dealers and provide directly or through service providers relevant know your customer and any other information to such swap dealer or security-based swap dealer, and to receive on the Funds behalf the disclosures and other information a swap dealer or security-based swap dealer is required to provide to its counterparties under CFTC, SEC or other rules governing swap or security-based swap transactions, including the form and method of delivery of such disclosures and information. |
XI. | Consent to Disclosure: Notwithstanding anything to the contrary in any non-disclosure, confidentiality or other agreement between the Adviser or the Fund and any other party, the Adviser confirms that the Adviser, on behalf of the Fund, hereby consents to and agrees that the Sub-Adviser is authorized to use and disclose information (and to permit counterparties to disclose information) concerning the Fund and the Fund: (a) to the extent permitted by applicable law, rules, regulations, instruments, orders or directives that mandate reporting and/or retention of transaction and similar information issued by any regulatory authority, body or agency with jurisdiction to regulate trade reporting with respect to derivatives activities or to regulate persons with respect to trade reporting |
11
in connection with their derivatives activities (the Reporting Requirements) or (b) to and between the other partys head office, branches or affiliates, or any persons or entities who provide services to such other party or its head office, branches or affiliates, in each case, in connection with such Reporting Requirements. |
XII. | For the avoidance of doubt, (i) to the extent that applicable non-disclosure, confidentiality, bank secrecy or other law imposes nondisclosure requirements on transaction and similar information otherwise required to be disclosed but permits the Fund to waive such non-disclosure requirements by consent, the Adviser on behalf of the Fund consents to waive such non-disclosure requirements to the extent permitted by such applicable laws and (ii) any agreement between the Adviser or the Fund and any other party to maintain confidentiality of information contained in any non-disclosure, confidentiality or other agreement shall continue to apply to the extent that such agreement is not inconsistent with the disclosure of information in connection with the Reporting Requirements as set out herein. The Adviser represents and warrants that any third party to whom the Fund may owe a duty of confidentiality in respect of the information disclosed has consented to the disclosure of that information. Notwithstanding anything to the contrary in any non-disclosure, confidentiality or other agreement between the Adviser and the Sub-Adviser, in connection with the provision of certain services related to derivatives to the Fund by an affiliate of the Sub-Adviser, the Adviser hereby consents to, and authorizes, the Sub-Adviser to transfer and disclose information concerning the Fund and the Funds account to such affiliate for the performance of the services. |
XIII. | European Market Infrastructure Regulations (EMIR) and Counterparty Categorization: Market counterparties subject to EMIR need to know to which category their trading counterparts belong in order to assess which EMIR requirements apply to their derivative contracts with such counterparties. Under EMIR, all counterparties to swap transactions must be categorized as a Financial Counterparty (FC)18, Non Financial Counterparty Minus (NFC-)19, Non Financial |
18 | Financial Counterparty (FC) means an investment firm authorised in accordance with Directive 2004/39/EC, a credit institution authorised in accordance with Directive 2006/48/EC, an insurance undertaking authorised in accordance with Directive 73/239/EEC, an assurance undertaking authorised in accordance with Directive 2002/83/EC, a reinsurance undertaking authorised in accordance with Directive 2005/68/EC, a UCITS and, where relevant, its management company, authorised in accordance with Directive 2009/65/EC, an institution for occupational retirement provision within the meaning of Article 6(a) of Directive 2003/41/EC and an alternative investment fund managed by AIFMs authorised or registered in accordance with Directive 2011/61/EU. |
19 | Non-financial Counterparty (NFC-) means a counterparty below the clearing threshold, as referred to in Article 10 of EMIR. |
12
Counterparty Plus (NFC+)20 or a Third Country Entity (TCE).21 The distinction between these types of counterparties is important as it affects the nature of the obligations that EMIR applies or will apply to you. Please confirm the classification that applies to you. You must provide the correct categorization so that market counterparties may report trade information to the relevant regulatory bodies. You should also note that if you deem that you are an NFC+ and reside within the EEA, 22 you are required to notify the European Securities and Markets Authority (ESMA) and your local competent authority of this status.
a. | Please select the appropriate category below that is applicable to you under the EMIR regulation: |
☒ | TCE and a Hypothetical FC |
☐ | TCE and a Hypothetical NFC- |
☐ | TCE and a Hypothetical NFC+ |
European counterparties subject to EMIR regulations require all entities they face to provide an EMIR categorization. If a client is a TCE, our European derivatives counterparties will require a hypothetical EMIR categorization to satisfy their regulatory requirements. |
b. | Delegated Reporting: The Adviser represents that the Fund is not domiciled within the EEA and therefore the Fund does not delegate any reporting requirements to the Sub-Adviser under EMIR regulations. |
20 | Non-financial Counterparty (NFC+) means a counterparty above the clearing threshold, as referred to in Article 10 of EMIR. |
21 | Third Country Entity (TCE) means any entity or undertaking that is established outside of the EEA. If a TCE enters into derivative transactions with a FC, NFC+ or a NFC-, that TCE may be required by its FC, NFC+ or NFC- counterparty to perform certain obligations in order to assist that counterparty to comply with its own obligations under EMIR. Accordingly, all TCEs that enter into derivative transactions with a FC, NFC+ or NFC- need to be classified based on the classification it would have if it were established in the EU (i.e. as a Hypothetical FC, Hypothetical NFC+ or a Hypothetical NFC-). |
22 | EEA is the European Union plus Iceland, Liechtenstein and Norway. |
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XIV. | Canadian Representations: |
The undersigned hereby represents that each of the following statements is true:
(i) The Fund is not a Canadian Person23; and
(ii) The Fund is not registered as a Dealer24, or registered in an alternative category25 as a consequence of trading in Derivatives26 in any jurisdiction in Canada.
XV. | National Futures Association (NFA) BYLAW 1101: |
J.P. Morgan Investment Management Inc. (JPMIM) is a registered Commodity Pool Operator (CPO) and Commodity Trading Advisor (CTA) with the NFA. As such, JPMIM must comply with NFA Bylaw 1101, which prohibits NFA members from doing business with most non-members that are required to be registered with the CFTC.
Please complete both sections (1) and (2) below as appropriate.
(1) | NFA Registration Status: Please indicate if you are an NFA member: |
☐ Currently registered with the NFA.
☐ Not required to be a member of NFA or to be registered.
(2) | Commodity Pool Operator (CPO) Status: Please check all boxes that apply: |
☐ The Fund is operated by a person that is a registered CPO with respect to the Fund. If this box is checked, please respond to the following two items:
☐ The NFA ID Number of the CPO is_________________________________.
☐ The CPO is an approved Swap Firm.
☒ The Fund is operated by a person that is not registered as a CPO with respect to the Fund because (check all that apply):
☒ It is excluded from the definition of a CPO under CFTC Rule 4.5.
23 | Canadian Person means a person or company, that is not an individual, that is organized under the laws of, has its head office in, or has its principal place of business in a province or territory of Canada or, with respect to jurisdiction of organization only, the federal jurisdiction of Canada. For this purpose, person includes unincorporated organizations such as partnerships, associations, syndicates and trusts and company includes any incorporated entity. |
24 | Dealer means a dealer as defined under the Derivatives Act (Québec) or a derivatives dealer as defined under Rule 91-507 and equivalent rules, regulations, instruments, directives or orders when finalized by any Canadian provincial, territorial, federal or national regulatory authority, body or agency with jurisdiction to regulate derivatives activities or to regulate persons with respect to their derivatives activities, including the Office of the Superintendent of Financial Institutions with respect to the activities of federally regulated financial institutions (Canadian Regulator). |
25 | The reference to registration in an alternate category includes reference to registration as a large derivative participant. This regime is not yet in place in any jurisdiction. |
26 | Derivative means a derivative as defined in the securities or derivatives legislation, rules or regulations of a relevant Canadian jurisdiction, that is not excluded from the definition by reason of any rule or order of the relevant Canadian Regulator |
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☐ | it is exempt from registration as a CPO under CFTC Rule 4.13(a)(3). |
☐ | it relies on CFTC No-Action Letter 12-38 (for certain Funds of Funds). |
☐ | it is exempt from registration as a CPO under CFTC Rule 3.10(c). |
☐ | it relies on another CFTC No-Action Letter (please specify)______________________________. |
☐ | it is otherwise exempt or excluded from CPO registration (please specify basis) ___________________. |
☐ | The Fund is exempt from the definition of commodity pool under CFTC Rule 4.5(a). |
☐ | A claim of exemption exclusion, or reliance on a CFTC No-Action Letter has been filed with the NFA. |
☐ | The NFA ID number associated with the claim is__________________________________. |
Funds to which this section applies:
This Letter Agreement shall automatically terminate upon termination of the Agreement.
15
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT DOCUMENT.
Very truly yours, | ||||
LINCOLN FINANCIAL INVESTMENTS CORPORATION | ||||
By: |
/s/ Benjamin Richer |
|||
Name: |
Benjamin A. Richer |
|||
Title: |
Senior Vice President |
16
Appendix 1: Definitions
U.S. Person Categories means the enumerated categories of U.S. persons that are provided pursuant to CFTC Rule 23.23 (17 C.F.R. 23.23(a)23). For informational purposes only, the text of the categories is reproduced below:
(i) | A natural person resident in the United States; |
(ii) | A partnership, corporation, trust, investment vehicle, or other legal person organized, incorporated, or established under the laws of the United States or having its principal place of business in the United States;27 |
(iii) | An account (whether discretionary or non-discretionary) of a U.S. Person; or |
(iv) | An estate of a decedent who was a resident of the United States at the time of death. |
27 | The CFTC stated in the Cross-Border Rule that, in its view, the language herein would include pension plans for the employees, officers, or principals of a legal entity described in this paragraph. The language in this paragraph also subsumes the trust prong of the US Person definition in the Cross-Border Margin Rule. |
17
EXHIBIT A
TRUSTS AND FUNDS
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST (the Trust)
LVIP JPMORGAN SELECT MID CAP VALUE MANAGED VOLATILITY FUND
LVIP JPMORGAN RETIREMENT INCOME FUND
LVIP JPMORGAN CORE BOND FUND
LVIP JPMORGAN SMALL CAP CORE FUND
LVIP JPMORGAN U.S. EQUITY FUND
18
Amendment to Fund Participation Agreement
This Amendment (the Amendment), by and among Lincoln Variable Insurance Products Trust, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), Lincoln Investment Advisors Corporation, a Tennessee corporation (Adviser), Lincoln Financial Distributors, Inc., a Connecticut corporation (Distributor), and Riversource Life Insurance Company (Company), is effective as of May 1, 2023 (the Effective Date).
WHEREAS, the parties hereto entered into the Fund Participation Agreement (FPA), executed and effective as of June 5, 2007, as amended;
WHEREAS, the parties desire to amend the Agreement to permit the separate accounts to invest in additional funds; and
WHEREAS, effective March 13, 2023 Lincoln Investment Advisors Corporation changed its name to Lincoln Financial Investments Corporation.
NOW, THEREFORE, in consideration of the promises and mutual covenants hereinafter contained, the parties, intending to be legally bound, agree as follows:
1. | Schedule A shall be deleted in their entirety and replaced with Schedule A attached hereto. |
2. | All references in the Agreement to Lincoln Investment Advisors Corporation are hereby changed to Lincoln Financial Investments Corporation. |
3. | Unless otherwise defined in this Amendment, all terms used herein shall have the meanings they were ascribed in the Agreement. |
4. | All other terms and conditions of the Agreement remain in effect and are hereby incorporated herein by reference. |
5. | This Amendment may be executed in counterparts, each of which shall be deemed to be an original. |
IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment to be executed by its duly authorized representative as of the Effective Date.
Lincoln Variable Insurance |
|
Lincoln Financial Investments | ||||||
Products Trust |
Corporation | |||||||
By: |
/s/ William P. Flory Jr. |
By: |
/s/ Benjamin Richer | |||||
Name: |
William P. Flory Jr. |
Name: |
Benjamin Richer | |||||
Title: |
VP, Treasurer and CAO |
Title: |
SVP, Head of Funds Management | |||||
Date: |
4/24/2023 |
Date: |
4/24/2023 | |||||
Lincoln Financial Distributors, Inc. |
Riversource Life Insurance Company | |||||||
By: |
/s/ Thomas ONeill |
By: |
/s/ Kevin St. John | |||||
Name: |
Thomas ONeill |
Name: |
Kevin St. John | |||||
Title: Date: |
SVP 4/24/2023 |
Title: |
Vice President - Fund Selection & Management | |||||
Date: |
4/20/23 |
SCHEDULE A
Lincoln Variable Insurance Products Trusts
LVIP Baron Growth Opportunities Fund
LVIP JPMorgan U.S. Equity Fund
LVIP JP Morgan Small Cap Core Fund
LVIP JPMorgan Mid Cap Value Fund
LVIP JPMorgan Core Bond Fund
RiverSource Life Insurance Company Separate Accounts
RiverSource Variable Account 10 (previously IDS Life Variable Account 10)
RiverSource Variable Annuity Account
RiverSource of New York Variable Annuity Account
RiverSource Variable Life Account
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and RIVERSOURCE LIFE INSURANCE CO. OF NEW YORK (Company), a life insurance company organized under the laws of the State of New York.
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable annuity contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV).
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC.
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of such Variable Contract owners will be adjusted and the amount of
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any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The Company will communicate the net share purchase or redemption orders of units of Funds to the Trust by 8:30 AM, Eastern Time, on Day 2, in a mutually agreed upon format.
1.7. If the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. If the Companys order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge.
1.8. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.9. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion.
1.10. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements
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of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.11. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker-dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
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2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify.
2.8. The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust Company hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust Company hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust Company is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it
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shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents, as specified in paragraph (b)(1) of Rule 30e-3 and paragraph (j)(1)(iii) of Rule 498A:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
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(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports that are referred to in Rule 30e-3 as the Current and Prior Report to Shareholders). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); and |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings). |
3.3. The Trust shall provide the Summary Prospectus and Statutory Prospectus for the Funds to the Company (or its designee) on a timely basis (to facilitate the required website posting) and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis (to facilitate the required website posting) but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted by Rule 30e-3.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (b)(3) of Rule 30e-3 and paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. The Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.7. The Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
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3.8. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.9. | The Trust shall: |
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Contract owners (in order to comply with the requirements of paragraphs (e) and (f) of Rule 30e-3 and paragraphs (i)(1) and (j)(3) of Rule 498A). Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its desig- nee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.10 | Lincoln Variable Insurance Products Trust shall provide such data regarding each Portfolios expense ratios and investment performance as the Company shall reasonably request, to facilitate the registration and sale of the Variable Contracts. Without limiting the generality of the forgoing, the Lincoln Variable Insurance Products Trust shall provide the following Portfolio expense and performance data on a timely basis to facilitate the Companys preparation of its annually updated registration statement for the Variable Contracts (and as otherwise reasonably requested by the Company), but in no event later than 75 calendar days after the close of each Portfolios fiscal year: |
(a). the gross Annual Portfolio Company Expenses for each Portfolio calculated in accordance with Item 3 of Form N-1A, before any expense reimbursements or fee
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waiver arrangements (and in accordance with (i) Instruction 16 to Item 4 of Form N-4, and (ii) Instruction 4(a) to Item 4 of Form N-6); and
(b). the net Annual Portfolio Company Expenses (aka Total Annual Fund Operating Expenses) for each Portfolio calculated in accordance with Item 3 of Form N-1A, that include any expense reimbursements or fee waiver arrangements (and in accordance with (i) Instruction 17 to Item 4 of Form N-4, and (ii) Instruction 4 to Item 17 of Form N-4, and (iii) Instruction 4(b) to Item 4 of Form N-6, and (iv) Instruction 4 to Item 18 of Form N-6), and the period for which the expense reimbursements or fee waiver arrangement is expected to continue and whether it can be terminated by the Portfolio (or Fund); and
(c). the Average Annual Total Returns for each Portfolio (before taxes) as calculated pursuant to Item 4(b)(2)(iii) of Form N-1A (for the 1, 5, and 10 year periods, and in accordance with (i) Instruction 7 to Item 17 of Form N-4, and (ii) Instruction 7 to Item 18 of Form N-6).
3.11 The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.12 The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.13 The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
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3.14 Except with respect to information regarding the Company provided in writing by that party, the Company shall not be responsible for the content of the prospectus or statement of additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy- related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this Section shall survive the termination of this Agreement.
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4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These
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responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
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(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. CLIENT AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
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(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. Distributor agrees, on behalf of itself and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent. |
7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates. |
(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
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Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | as part of processing an application for a Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Contract; |
(b) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Contract Owners, including the identity of principal and beneficial owners of Contracts held by non-natural persons; |
(c) | as part of processing an application for a Contract, it will verify that no applicant, including prospective principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
(d) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Contract Owner, including a principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
(g) | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors,
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officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 8.1 to 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
(d) | Arise as a result of any failure by the Company to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | 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. |
9.2. 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
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Indemnified Party as such may arise from such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser. The Adviser agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 8.4 to 8.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | 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 Variable Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
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(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.6. The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Adviser shall be entitled to participate at its own expense in the defense thereof.
9.7. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. This Agreement shall terminate in accordance with the following provisions:
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
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(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
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(i) | At the option of the Trust, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
10.4. Except as necessary to implement Variable Contract owner initiated transactions, or as required by state insurance laws or regulations, the Company shall not redeem the shares attributable to the Variable Contracts (as opposed to the shares attributable to the Companys assets held in the Separate Accounts or invested directly), and the Company shall not prevent Variable Contract owners from allocating payments to a Fund that was otherwise available under the Variable Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address
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below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Legal Department | ||
If to the Adviser: | Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Company: | RiverSource Life Insurance Co. of New York | |
9500 Ameriprise Financial Center | ||
Minneapolis, MN 55474 | ||
Attn: Kevin St. John, Vice President |
Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
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12.5. Each party 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.
12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE | LINCOLN FINANCIAL INVESTMENTS | |||||
PRODUCTS TRUST | CORPORATION | |||||
4/26/2023 | 4/26/2023 | |||||
By: /s/ William P. Flory Jr. | By: /s/ Benjamin Richer | |||||
Name: William P. Flory Jr. | Name: Benjamin Richer | |||||
Title: VP, Treasurer and CAO | Title: SVP, Head of Funds Management | |||||
LINCOLN FINANCIAL DISTRIBUTORS, INC. | RIVERSOURCE LIFE INSURANCE CO. | |||||
4/27/2023 | OF NEW YORK | |||||
By: /s/ Thomas ONeill | ||||||
Name: Thomas ONeill | By: /s/ Kevin St. John | 4/26/23 | ||||
Title: SVP | Name: Kevin St. John | |||||
Title: Vice President - Fund Selection and Management |
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Exhibit A
The currently available Funds of the Trust are:
1. LVIP JPMorgan U.S. Equity Fund
2. LVIP JP Morgan Small Cap Core Fund
3. LVIP JPMorgan Mid Cap Value Fund
4. LVIP JPMorgan Core Bond Fund
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Exhibit B
Separate Accounts of the Company Registered Under the 1940 Act as Unit Investment Trusts
The following separate accounts are subject to this Agreement:
RiverSource of New York Variable Annuity Account
Variable Annuity Contracts and Variable Life Insurance Contracts Registered Under the Securities Act of 1933
The following contracts are subject to this Agreement:
RiverSource RAVA Apex NY Variable Annuity
RiverSource RAVA Vista NY Variable Annuity
RiverSource RAVA 5 Access Variable Annuity New York
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and ALLIANZ LIFE INSURANCE COMPANY OF NEW YORK (Company), a life insurance company organized under the laws of the state of New York.
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable annuity contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
WHEREAS, the Parties anticipate being able to use the services of the National Securities Clearing Corporation (NSCC) for trades in the LVIP Funds.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of
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such Variable Contract owners will be adjusted and the amount of any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. Submission of LVIP Fund Trades
(a) | NSCC Trades. Company will communicate to the Trust purchases and redemptions of units of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.7(c). |
(b) | To the extent that trades are submitted by NSCC, the Rules & Procedures Manual of the NSCC, as amended from time to time, are hereby made a part of this Agreement as it fully set forth herein and shall be a part of each trade cleared. The Parties represent that they, an affiliate and/or agent are, or with respect to the Funds are in the process of applying to be, members of the NSCC. |
(c) | Manual Trades. In the event that the NSCC should become unavailable for any reason for submission of Fund trades, the Parties agree to that Company will communicate the purchases and redemptions of units of Funds through a trade file in a mutually agreed upon format, submitted via SFTP or email by 7:30 AM, Eastern Time, on Day 2. |
1.8. For manual and direct-feed trades, if the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. For manual and direct-feed trades, if the Companys
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order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. Payment for trades through the NSCC will be settled through the NSCC. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.10. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion.
1.11. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.12. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker-dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
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2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply and will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify.
2.8. The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust Company hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust Company hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust Company is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
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2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
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Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents, as specified in paragraph (b)(1) of Rule 30e-3 and paragraph (j)(1)(iii) of Rule 498A:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports that are referred to in Rule 30e-3 as the Current and Prior Report to Shareholders). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); and |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings). |
3.3. The Trust shall provide the Summary Prospectus and Statutory Prospectus for the Funds to the Company (or its designee) no later than 5 business days prior to May 1 of each year (to facilitate any required website posting) and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis (to facilitate the required website posting) but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted by Rule 30e-3.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (b)(3) of Rule 30e-3 and paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
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(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. In the event that the Company elects to rely on Rule 498A to distribute Initial Summary Prospectuses or Updating Summary Prospectuses, then, as and to the extent required, the Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.7. In the event that the Company elects to rely on Rule 498A to distribute Initial Summary Prospectuses or Updating Summary Prospectuses, then, as and to the extent required, the Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.8. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.9. The Trust shall:
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Contract owners (for example, in order to comply with the requirements of paragraphs (e) and (f) of Rule 30e-3 and, if applicable, paragraphs (i)(1) and (j)(3) of Rule 498A). Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its desig- nee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of |
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the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.10. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.11. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.12. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.13. Except with respect to information regarding the Company provided in writing by that party, the Company shall not be responsible for the content of the prospectus or statement of additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
3.14. The Trust or its affiliate maintains a public website where current copies of the Trust Documents are maintained on a continuous basis, and the Trust shall comply with all applicable requirements of Rule 498.
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Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non- affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this Section shall survive the termination of this Agreement.
4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of
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performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in
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a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
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Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. CLIENT AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. Distributor agrees, on behalf of itself and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent. |
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7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates. |
(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
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(a) | as part of processing an application for a Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Contract; |
(b) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Contract Owners, including the identity of principal and beneficial owners of Contracts held by non-natural persons; |
(c) | as part of processing an application for a Contract, it will verify that no applicant, including prospective principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
(d) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Contract Owner, including a principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
(g) | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 8.1 to 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
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(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
(d) | Arise as a result of any failure by the Company to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | 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. |
9.2. 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process
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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 an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser. The Adviser agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 8.4 to 8.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | 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 Variable Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
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(d) | Arise as a result of a failure by the Trust to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.6. The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Adviser shall be entitled to participate at its own expense in the defense thereof.
9.7. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. This Agreement shall terminate in accordance with the following provisions:
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the |
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Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
(i) | At the option of the Trust, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification |
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requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
10.4. Except as necessary to implement Variable Contract owner initiated transactions, or as required by state insurance laws or regulations, the Company shall not redeem the shares attributable to the Variable Contracts (as opposed to the shares attributable to the Companys assets held in the Separate Accounts or invested directly), and the Company shall not prevent Variable Contract owners from allocating payments to a Fund that was otherwise available under the Variable Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Legal Department |
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If to the Adviser: |
Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Company: |
Allianz Life Insurance Company of New York | |
5701 Golden Hills Drive | ||
Minneapolis, MN 55416 | ||
Attn: Legal Department |
Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
12.5. Each party 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.
12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the
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agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST |
LINCOLN FINANCIAL INVESTMENTS CORPORATION | |
By: /s/ William P. Flory Jr. | By: /s/ Benjamin Richer | |
Name: William P. Flory Jr. | Name: Benjamin Richer | |
Title: VP, Accounting Mgt | Title: SVP, Head of Funds Management | |
LINCOLN FINANCIAL DISTRIBUTORS, INC. | ALLIANZ LIFE INSURANCE COMPANY | |
OF NEW YORK | ||
By: /s/ Thomas ONeill | By: /s/ Brian Muench | |
Name: Thomas ONeill | Name: Brian Muench | |
Title: SVP | Title: Vice President, Advisory Solutions | |
By: /s/ Jean Roch Sibille | ||
Name: Jean Roch Sibille | ||
Title: Chief Investment Officer |
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Exhibit A
The currently available Funds of the Trust are:
1. LVIP JPMorgan U.S. Equity Fund
2. LVIP JP Morgan Small Cap Core Fund
3. LVIP JPMorgan Mid Cap Value Fund
4. LVIP JPMorgan Core Bond Fund
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Exhibit B
Separate Accounts of the Company Registered Under the 1940 Act as Unit Investment Trusts
The following separate accounts are subject to this Agreement:
Allianz Life of NY Variable Account C
Variable Annuity Contracts and Variable Life Insurance Contracts Registered Under the Securities Act of 1933
The following contracts are subject to this Agreement:
Any contract issued by Allianz Life of NY Variable Account C
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and [METROPOLITAN TOWER LIFE INSURANCE COMPANY NAME] (Company), a life insurance company organized under the laws of the [State of Nebraska
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable annuity contracts and variable life insurance (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of such Variable Contract owners will be adjusted and the amount of any underpayments shall be
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credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. Submission of LVIP Fund Trades
(a) | Manual Trades., The Parties agree to that Company will communicate the purchases and redemptions of units of Funds through a trade file in a mutually agreed upon format, submitted via SFTP by 7:30 AM, Eastern Time, on Day 2. |
1.8. If the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. If the Companys order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. The Company shall notify the Distributor at least three day in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
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1.10. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.11. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker- dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts, provided that the Trust fulfills its obligations under Article III below.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust
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shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify.
2.8. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
2.9. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.10. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.11. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.12. 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.
2.13. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting
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initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.14. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents as specified in Rule 30 eparagraph (j)(1)(iii) of Rule 498A:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); and |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings). |
3.3. The Trust shall provide the Summary Prospectus and Statutory Prospectus for the Funds to the Company (or its designee) no later than 7 business days prior to May 1 of each year and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
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3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis but no later than 5business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted on a website by Rule 30e-1.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with Rule 30e paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. Website Hosting and Notice Fee.
(a) | The Trust and/or Distributor shall bear their proportional costs of managing, formatting, hosting and maintaining Trust Required Materials on the website hosted by the Company. The Trust and/or Distributor shall also bear the cost of managing, formatting, hosting and distributing the Required Materials for electronic delivery. Such costs borne by the Trust and/or Distributor under this subsection (a) shall not exceed $10,000 per year. |
(b) | The Trust and/or Distributor shall bear their proportional costs of preparing and mailing the Notices of the availability of the Trusts Reports to Contract Owners (the Notices required by paragraph (c) of Rule 30e-3). |
(c) | The Company shall make reasonable efforts to comply with the safe harbor provisions, terms and conditions of paragraph (b)(5) of Rule 30e-3, which shall constitute compliance with subsections (a) through (c) of Section 1 of this Amendment (for the avoidance of doubt, for this purpose, the Company referred to in said paragraph (b)(5) of Rule 30e-3 means the Company on behalf of the Accounts). |
3.7. | Provision of Required Materials for Paper Delivery. |
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The Trust and/or Distributor shall reimburse the Company for the costs of mailing the Trusts Required Materials to Contract Owners. This reimbursement is in addition to, and not part of or in lieu of, the Website Hosting and Notice Fee specified above.
3.8. Paper Notice to Contract Owners. To the extent applicable, the Company shall be responsible for providing the paper Notice to its Contract Owners in accordance with paragraphs (c) and (d) of Rule 30e-3.
3.9. Delivery of Paper Copy Upon Ad Hoc Request. To the extent applicable the Company shall be responsible for fulfilling ad hoc requests from Contract Owners for a paper copy of any of the Required Materials, in accordance with paragraph (e) of Rule 30e-3.
3.10. Investor Elections to Receive Future Trust Reports in Paper. To the extent applicable, the Company shall be responsible for fulfilling Contract Owner elections to receive future Trust shareholder reports in paper, in accordance with paragraph (f) of Rule 30e-3.
3.11. If required by the Securities Act of 1933 and the 1940 Act, the Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.12. If required by the Securities Act of 1933 and the 1940 Act, the Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.13. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.14. | The Trust shall: |
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a |
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supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Contract owners (in order to comply with the requirements of paragraphs (e) and (f) of Rule 30e-3, or 30b-2 (as applicable) and paragraphs (i)(1) and (j)(3) of Rule 498A). Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its designee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.15. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.16. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.17. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.18. Except with respect to information regarding the Company provided in writing by that party, the Company shall not be responsible for the content of the prospectus or statement of
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additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this Section shall survive the termination of this Agreement.
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4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
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5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
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(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. CLIENT AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
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(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. Distributor agrees, on behalf of itself and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent. |
7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates. |
(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
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Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | as part of processing an application for a Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Contract; |
(b) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Contract Owners, including the identity of principal and beneficial owners of Contracts held by non-natural persons; |
(c) | as part of processing an application for a Contract, it will verify that no applicant, including prospective principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
(d) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Contract Owner, including a principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
(g) | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser
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within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 8.1 to 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust, the Distributor or the Advisor for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
(d) | Arise as a result of any failure by the Company to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | 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. |
9.2. 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 Partys willful misfeasance, bad
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faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser. The Adviser agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 8.4 to 8.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | 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 Variable Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable Contracts, or any amendment thereof or supplement thereto, or the |
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omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.6. The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Adviser shall be entitled to participate at its own expense in the defense thereof.
9.7. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. | This Agreement shall terminate in accordance with the following provisions: |
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a |
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sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
(i) | At the option of the Trust, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any Fund |
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may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
10.4. Except as necessary to implement Variable Contract owner initiated transactions, or as required by state insurance laws or regulations, or judicial or other legal precedent of general application or as permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act the Company shall not redeem the shares attributable to the Variable Contracts (as opposed to the shares attributable to the Companys assets held in the Separate Accounts or invested directly), and the Company shall not prevent Variable Contract owners from allocating payments to a Fund that was otherwise available under the Variable Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road Radnor, PA 19087 |
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Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | ||
The If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Legal Department | ||
If to the Adviser: | Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | ||
If to the Company: | Metropolitan Tower Life Insurance Company 200 Park Avenue | |
New York, NY 10017 Attn: Legal Department | ||
Email: Brian P. Kane bpkane@metlife.com |
Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
12.5. Each party 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.
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12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST | LINCOLN FINANCIAL INVESTMENTS CORPORATION | |||||||
By: | /s/ William P. Flory Jr. |
By: | /s/ Benjamin Richer | |||||
Name: | William P. Flory Jr. | Name: | Benjamin Richer | |||||
Title: | VP, Treasurer and CAO | Title: | SVP, Head of Funds Management | |||||
LINCOLN FINANCIAL DISTRIBUTORS, INC. | METROPOLITAN TOWER LIFE INSURANCE COMPANY | |||||||
By: | /s/ Thomas ONeill |
By: | /s/ Sabrina K. Model | |||||
Name: | Thomas ONeill | Name: | Sabrina K. Model | |||||
Title: | SVP | Title: | Vice President |
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Exhibit A
The currently available Funds of the Trust are:
1. | LVIP JPMorgan U.S. Equity Fund |
2. | LVIP JP Morgan Small Cap Core Fund |
3. | LVIP JPMorgan Mid Cap Value Fund |
4. | LVIP JPMorgan Core Bond Fund |
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Exhibit B
Separate Accounts of the Company Registered Under the 1940 Act as Unit Investment Trusts
The following separate accounts are subject to this Agreement:
General American Separate Account Seven
General American Separate Account Eleven
Variable Annuity Contracts and Variable Life Insurance Contracts Registered Under the Securities Act of 1933
The following contracts are subject to this Agreement:
VUL (00,01,98)
JSVUL (00,98)
VUL 100
Russell VUL
VGSP
Destiny
Variable Life Contracts that are not registered under the 1940 Act or under the Securities Act of 1933
Partnership LifeNB PPVUL
PPVL/IPPVL
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and INTEGRITY LIFE INSURANCE COMPANY (Company), a life insurance company organized under the laws of the State of Ohio.
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable annuity contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
WHEREAS, the Parties anticipate being able to use the services of the National Securities Clearing Corporation (NSCC) for trades in the Lincoln Variable Insurance Product Trust Funds (LVIP Funds).
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less
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than the amount to which they are entitled, the number of shares of the applicable sub-account of such Variable Contract owners will be adjusted and the amount of any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. Submission of LVIP Fund Trades
(a) | NSCC Trades. Company will communicate to the Trust purchases and redemptions of units of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.7(c). |
(b) | To the extent that trades are submitted by NSCC, the Rules & Procedures Manual of the NSCC, as amended from time to time, are hereby made a part of this Agreement as it fully set forth herein and shall be a part of each trade cleared. The Parties represent that they, an affiliate and/or agent are, or with respect to the Funds are in the process of applying to be, members of the NSCC. |
(c) | Manual Trades. In the event that the NSCC should become unavailable for any reason for submission of Fund trades, the Parties agree to that Company will communicate the purchases and redemptions of units of Funds through a trade file in a mutually agreed upon format, submitted via email by 7:30 AM, Eastern Time, on Day 2. |
1.8. For manual and direct-feed trades, if the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. For manual and direct-feed trades, if
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the Companys order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. Payment for trades through the NSCC will be settled through the NSCC. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.10. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion.
1.11. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.12. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker-dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state
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laws and further that the sale of the Variable Contracts shall comply in all material respects with applicable state and federal insurance law suitability requirements.
2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify.
2.8. The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site, at the time when the Company establishes a site, from the same place that the Company is listed on the Trusts site. The Trust hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust Company is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
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2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
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Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents, as specified in paragraph (b)(1) of Rule 30e-3 and paragraph (j)(1)(iii) of Rule 498A:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports that are referred to in Rule 30e-3 as the Current and Prior Report to Shareholders). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); and |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings). |
3.3. The Trust shall provide the Summary Prospectus and Statutory Prospectus for the Funds to the Company (or its designee) no later than 5 business days prior to May 1 of each year (to facilitate the required website posting) and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis (to facilitate the required website posting) but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted by Rule 30e-3.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (b)(3) of Rule 30e-3 and paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that |
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is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. The Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.7. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.8. The Trust shall:
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Contract owners (in order to comply with the requirements of paragraphs (e) and (f) of Rule 30e-3 and paragraphs (i)(1) and (j)(3) of Rule 498A). Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its designee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.9. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as
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well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents, with respect to prospective Variable Contract owners of the Company.
3.10. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.11. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.12. Except with respect to information regarding the Company provided in writing by that party, the Company shall not be responsible for the content of the prospectus or statement of additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No
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such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this Section shall survive the termination of this Agreement.
4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
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4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result
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of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
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6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. CLIENT AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. Distributor and Adviser agree, on behalf of themselves and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent. |
7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates. |
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(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other reasonable format acceptable to the Fund and Company.
Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | as part of processing an application for a Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Contract; |
(b) | as part of its compliance with the USA Patriot Act, it will verify the identity of Contract Owners, including the identity of principal and beneficial owners of Contracts held by non-natural persons; |
(c) | as part of processing an application for a Contract, it will verify that no applicant, including prospective principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
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(d) | as part of its compliance with the USA Patriot Act, it will verify that no Contract Owner, including a principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
(g) | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 8.1 to 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including reasonable legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
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(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
(d) | Arise as a result of any failure by the Company to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | 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. |
9.2. 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser. The Adviser agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 8.4 to 8.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser which consent shall not be unreasonably withheld) or litigation (including
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reasonable legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | 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 Variable Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
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9.6. The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Adviser shall be entitled to participate at its own expense in the defense thereof.
9.7. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. This Agreement shall terminate in accordance with the following provisions:
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
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(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
(i) | At the option of the Trust, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(1) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to
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reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
10.4. Except as necessary to implement Variable Contract owner initiated transactions, or as required by state insurance laws or regulations, the Company shall not redeem the shares attributable to the Variable Contracts (as opposed to the shares attributable to the Companys assets held in the Separate Accounts or invested directly), and the Company shall not prevent Variable Contract owners from allocating payments to a Fund that was otherwise available under the Variable Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Legal Department | ||
If to the Adviser: | Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Company: | Integrity Life Insurance Company | |
400 Broadway Street | ||
Cincinnati, Ohio 45202-3341 | ||
Attention: Kevin L. Howard, General Counsel | ||
Email: kevin.howard@westernsouthernlife.com | ||
benjamin.mollozzi@westernsouthernlife.com |
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Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
12.5. Each party 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.
12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
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IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST | LINCOLN FINANCIAL INVESTMENTS CORPORATION | |||||||
By: | /s/ William P. Flory Jr. |
By: | /s/ Benjamin Richer | |||||
Name: | William P. Flory Jr. | Name: | Benjamin Richer | |||||
Title: | VP, Treasurer and CAO | Title: | SVP, Head of Funds Management | |||||
LINCOLN FINANCIAL DISTRIBUTORS, INC. | ||||||||
By: | /s/ Thomas ONeill |
|||||||
Name: | Thomas ONeill | |||||||
Title: | SVP | |||||||
INTEGRITY LIFE INSURANCE COMPANY | ||||||||
By: | /s/ Sarah S. Herron |
|||||||
Name: | Sarah S. Herron | |||||||
Title: | Assistant Secretary | |||||||
By: | /s/ Jay Johnson |
|||||||
Name: | Jay Johnson | |||||||
Title: | Vice President, Treasurer |
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Exhibit A
The currently available Funds of the Trust are:
1. | LVIP JPMorgan U.S. Equity Fund |
2. | LVIP JP Morgan Small Cap Core Fund |
3. | LVIP JPMorgan Mid Cap Value Fund |
4. | LVIP JPMorgan Core Bond Fund |
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Exhibit B
Separate Accounts of the Company Registered Under the 1940 Act as Unit Investment Trusts
The following separate accounts are subject to this Agreement:
SEPARATE ACCOUNT I OF INTEGRITY LIFE INSURANCE COMPANY
Variable Annuity Contracts and Variable Life Insurance Contracts Registered Under the Securities Act of 1933
The following contracts are subject to this Agreement:
SEPARATE ACCOUNT I OF INTEGRITY LIFE INSURANCE COMPANY
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and NATIONAL LIFE INSURANCE COMPANY (Company), a life insurance company organized under the laws of the State of Vermont.
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable life insurance and/or variable annuity contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
WHEREAS, the Parties anticipate being able to use the services of the National Securities Clearing Corporation (NSCC) for trades in the LVIP Funds.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC.
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of
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such Variable Contract owners will be adjusted and the amount of any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. Submission of LVIP Fund Trades
(a) | NSCC Trades. Company will communicate to the Trust purchases and redemptions of units of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.7(c). |
(b) | To the extent that trades are submitted by NSCC, the Rules & Procedures Manual of the NSCC, as amended from time to time, are hereby made a part of this Agreement as it fully set forth herein and shall be a part of each trade cleared. The Parties represent that they, an affiliate and/or agent are, or with respect to the Funds are in the process of applying to be, members of the NSCC. |
(c) | Manual Trades. In the event that the NSCC should become unavailable for any reason for submission of Fund trades, the Parties agree to that Company will communicate the purchases and redemptions of units of Funds through a trade file in a mutually agreed upon format, submitted via SFTP or email by 7:30 AM, Eastern Time, on Day 2. |
1.8. For manual and direct-feed trades, if the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. For manual and direct-feed trades, if the Companys order requests a net redemption resulting in a payment of redemption proceeds to
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the Company, the Trust shall wire the redemption proceeds to the Company on the day the order is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. Payment for trades through the NSCC will be settled through the NSCC. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge.
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.10. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion.
1.11. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.12. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker- dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
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2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment, or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale, or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify.
2.8. The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust Company hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust Company hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust Company is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
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2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
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Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents, as specified in paragraph (b)(1) of Rule 30e-3 and paragraph (j)(1)(iii) of Rule 498A:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports that are referred to in Rule 30e-3 as the Current and Prior Report to Shareholders). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); and |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings). |
3.3. The Trust shall provide the Summary Prospectus and Statutory Prospectus for the Funds to the Company (or its designee) no later than 5 business days prior to May 1 of each year (to facilitate the required website posting) and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis (to facilitate the required website posting) but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted by Rule 30e-3.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (b)(3) of Rule 30e-3 and paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
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(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. The Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.7. The Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.8. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.9. The Trust shall:
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Contract owners (in order to comply with the requirements of paragraphs (e) and (f) of Rule 30e-3 and paragraphs (i)(1) and (j)(3) of Rule 498A). Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its designee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
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3.10. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.11. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.12. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.13. Except with respect to information regarding the Company provided in writing by that party, the Company shall not be responsible for the content of the prospectus or statement of additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
3.14. If at any point the Trust determines that a Portfolio will be liquidated or merged with another variable insurance products fund, the Trust must either provide the Company with at least sixty (60) days advance written notice or must provide prompt notice once the information about the liquidation or merger is made public if that period is less than sixty (60) days so that the Company can arrange to deliver a Statutory Prospectus in place of a Summary Prospectus. The Trust shall continue to maintain the Portfolio Documents Web Site for a minimum of 180 days.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or
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its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.2. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.3. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.4. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S- P. The provisions of this Section shall survive the termination of this Agreement.
4.5. Except as provided in Section 4.6 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
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4.6. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result
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of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
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6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. CLIENT AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. Distributor agrees, on behalf of itself and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent. |
7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates. |
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(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (a) or (b) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(b) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
(c) | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, |
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organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 8.1 to 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
(d) | Arise as a result of any failure by the Company to substantially provide the services and furnish the materials under the terms of this Agreement; or |
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(e) | 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. |
9.2. 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser. The Adviser agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 8.4 to 8.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | 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 Variable Contracts not supplied by the Adviser or persons under |
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its control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.6. The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Adviser shall be entitled to participate at its own expense in the defense thereof.
9.7. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. This Agreement shall terminate in accordance with the following provisions:
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(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
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(i) | At the option of the Trust, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
10.4. Except as necessary to implement Variable Contract owner initiated transactions, or as required by state insurance laws or regulations, the Company shall not redeem the shares attributable to the Variable Contracts (as opposed to the shares attributable to the Companys assets held in the Separate Accounts or invested directly), and the Company shall not prevent Variable Contract owners from allocating payments to a Fund that was otherwise available under the Variable Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address
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below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust 150 N. Radnor Chester Road Radnor, PA 19087 Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | |
If to the Distributor: | Lincoln Financial Distributors, Inc. 150 N. Radnor Chester Road Radnor, PA 19087 Attn: Legal Department | |
If to the Adviser: | Lincoln Financial Investments Corporation 150 N. Radnor Chester Road Radnor, PA 19087 Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | |
If to the Company: | National Life Insurance Company One National Life Drive Montpelier, VT 05602 Email: variableupdates@nationallife.com |
Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be
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charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
12.5. Each party 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.
12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST
By: /s/ William P. Flory Jr. Name: William P. Flory Jr. Title: VP, Treasurer and CAO |
LINCOLN FINANCIAL INVESTMENTS CORPORATION
By: /s/ Benjamin Richer Name: Benjamin Richer Title: SVP, Head of Funds Management | |
LINCOLN FINANCIAL DISTRIBUTORS, INC. By: /s/ Thomas ONeill Name: Thomas ONeill Title: SVP |
NATIONAL LIFE INSURANCE COMPANY By: /s/ Stephanie Burmester Name: Stephanie Burmester Title: Vice President & Actuary |
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Exhibit A
The currently available Funds of the Trust are:
1. LVIP JP Morgan Small Cap Core Fund
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Exhibit B
Separate Accounts of the Company Registered Under the 1940 Act as Unit Investment Trusts
The following separate accounts are subject to this Agreement:
NATIONAL VARIABLE LIFE INSURANCE ACCOUNT
NATIONAL VARIABLE ANNUITY ACCOUNT II
Variable Annuity Contracts and Variable Life Insurance Contracts Registered Under the Securities Act of 1933
The following contracts are subject to this Agreement:
VariTrak
Sentinel Estate Provider
Sentinel Benefit Provider
Investor Select
Sentinel Advantage
SAVA 5
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (Company), a life insurance company organized under the laws of the State of New Jersey on behalf of the Companys current and any future separate accounts as applicable (Variable Accounts).
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment, series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable life insurance contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, the Company, as depositor, has established or will establish the Variable Accounts to serve as investment vehicles in order to fund variable life insurance policies offered by the Company (Contracts); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
WHEREAS, the Parties anticipate being able to use the services of the National Securities Clearing Corporation (NSCC) for trades in the LVIP Funds.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC. A Business Day generally ends at 4:00 p.m. Eastern Time (or as of an earlier close of regular trading). A Business Day does not include a day on which the Securities and Exchange Commission has halted trading.
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution
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(each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of such Variable Contract owners will be adjusted and the amount of any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. Submission of LVIP Fund Trades
(a) | NSCC Trades. Company will communicate to the Trust purchases and redemptions of units of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.7(c). |
(b) | To the extent that trades are submitted by NSCC, the Rules & Procedures Manual of the NSCC, as amended from time to time, are hereby made a part of this Agreement as it fully set forth herein and shall be a part of each trade cleared. The Parties represent that they, an affiliate and/or agent are, or with respect to the Funds are in the process of applying to be, members of the NSCC. |
(c) | Manual Trades. In the event that the NSCC should become unavailable for any reason for submission of Fund trades, the Parties agree to that Company will communicate the purchases and redemptions of units of Funds through a trade file |
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in a mutually agreed upon format, submitted via e-mail by 7:30 AM, Eastern Time, on Day 2. |
1.8. If the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. If the Companys order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.10. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion.
1.11. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.12. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker- dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and cause each Separate Account to remain so registered to serve as a segregated asset account for the
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Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust immediately upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify.
2.8. The Company hereby consents to the use by the Trust of the name of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust Company hereby consents to the use by the Company of the name of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the
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Internet. The Trust Company hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust Company is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund. Trust acknowledges Companys exclusive ownership rights in Company name and agrees not to challenge or assist in any challenge to Companys rights. All use by the Trust of Company name insures to Companys sole benefit.
2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
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2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, to the extent permitted and required by law (a) the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request as required by a regulator; and (c) the Company will identify any suspicious activities to the Trust and the Distributor.
Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents, as specified in paragraph (b)(1) of Rule 30e-3 and paragraph (j)(1)(iii) of Rule 498A:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports that are referred to in Rule 30e-3 as the Current and Prior Report to Shareholders). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); and |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings). |
3.3. The Trust shall provide the Summary Prospectus and Statutory Prospectus for the Funds to the Company (or its designee) no later than 5 business days prior to May 1 of each year (to facilitate the required website posting) and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis (to facilitate the required website posting) but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted by Rule 30e-3.
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3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (b)(3) of Rule 30e-3 and paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. The Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.7. The Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.8. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.9. The Trust shall:
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable |
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judgment to meet anticipated requests from Contract owners (in order to comply with the requirements of paragraphs (e) and (f) of Rule 30e-3 and paragraphs (i)(1) and (j)(3) of Rule 498A). Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its desig- nee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.10. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.11. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.12. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.13. Except with respect to information regarding the Company provided in writing by that party, the Company shall not be responsible for the content of the prospectus or statement of
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additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this Section shall survive the termination of this Agreement.
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4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts of interest in connection with the Fund to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
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5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict of interest in connection with the Fund exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. FUND SUBSTITUION
If Company desires to remove a Fund from a Contract, Company will pay reasonable expenses incurred by the other Parties as a result of removing such Fund as an available investment option. The Company agree to provide reasonable advance notice of their election to remove a Fund. The Company and the Trust acknowledge that Distributor may need to seek the approval of the SEC under Section 26(c) of the 1940 Act for any fund substitution.
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Article VII. VOTING
7.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
7.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VIII. CLIENT AND TRANSACTION INFORMATION.
Article IX. Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the
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Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares.
Article X. Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
Article XI. Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request.
Article XII. Limitations on Use of Information. Distributor agrees, on behalf of itself and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent.
Article XIII. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
Article XIV. Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates.
Article XV. Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions.
Article XVI. Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed.
Article XVII. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
Article XVIII. provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or
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Article XIX. restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above.
Article XX. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
Article XXI. ANTI-MONEY LAUNDERING
21.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | as part of processing an application for a Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Contract; |
(b) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Contract Owners, including the identity of principal and beneficial owners of Contracts held by non-natural persons; |
(c) | as part of processing an application for a Contract, it will verify that no applicant, including prospective principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
(d) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Contract Owner, including a principal or beneficial Contract Owners, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
(g) | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws |
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or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
Article XXII. INDEMNIFICATION
22.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 8.1 to 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
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(d) | Arise as a result of any failure by the Company to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | 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. |
22.2. 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable.
22.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
22.4. Indemnification by the Adviser. The Adviser agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 8.4 to 8.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
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(b) | 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 Variable Contracts not supplied by the Adviser or persons under its control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to substantially provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
22.5. The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
22.6. The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Adviser shall be entitled to participate at its own expense in the defense thereof.
22.7. The provisions of this Article IX shall survive the termination of this Agreement.
Article XXIII. TERM; TERMINATION
23.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
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23.2. This Agreement shall terminate in accordance with the following provisions:
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the |
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Trust within ten days after written notice of such breach is delivered to the Company; |
(i) | At the option of the Trust, if the Variable Contracts are not registered, issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
23.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
23.4. Except as necessary to implement Variable Contract owner initiated transactions, or as required by state insurance laws or regulations, the Company shall not redeem the shares attributable to the Variable Contracts (as opposed to the shares attributable to the Companys assets held in the Separate Accounts or invested directly), and the Company shall not prevent Variable Contract owners from allocating payments to a Fund that was otherwise available under the Variable Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so.
Article XXIV. NOTICES
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Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Legal Department | ||
If to the Adviser: | Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | ||
If to the Company: | The Prudential Insurance Company of America 751 Broad Street | |
Newark, NJ 07102 | ||
Attn: Chief Legal Officer Group Insurance |
Article XXV. MISCELLANEOUS
25.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
25.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
25.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
25.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be
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charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
25.5. Each party 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.
Each party will maintain and preserve all records as required by law to be maintained and preserved in connection with the provision of services contemplated hereunder. During the term of this Agreement, upon any reasonable request from the Company, the Trust or their respective representatives, Distributor shall (i) provide to the Company, the Trust and/or their respective representatives reasonable access during normal business hours to review the books and records (including any such materials developed on or after the date of this Agreement by a party hereto or its affiliates) under the control of Distributor pertaining to the services to be provided under this Agreement.. Nothing herein shall require Distributor to disclose any information to the Company, the Trust or their respective representatives (i) in contravention of the terms of a non-disclosure agreement with a third party, (ii) that may constitute privileged attorney-client communications or attorney work product and the transfer of which, or the provision of access to which, as reasonably determined by Distributors counsel, constitutes a waiver of any such privilege, or (iii) if the provision of access to such document (or portion thereof) or information, as determined by Distributors counsel, would reasonably be expected to conflict with applicable law. 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.
25.6. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST | LINCOLN FINANCIAL INVESTMENTS CORPORATION | |||||||
By: | /s/ William P. Flory Jr. |
By: | /s/ Benjamin Richer | |||||
Name: | William P. Flory Jr. | Name: | Benjamin Richer | |||||
Title: | VP, Treasurer and CAO | Title: | SVP, Head of Funds Management | |||||
LINCOLN FINANCIAL DISTRIBUTORS, INC. | THE PRUDENTIAL INSURANCE COMPANY OF AMERICA |
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By: | /s/ Thomas ONeill |
By: | /s/ Jennifer Amaral | |||||
Name: | Thomas ONeill | Name: | Jennifer Amaral | |||||
Title: | SVP | Title: | Group Life Product VP |
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Exhibit A
The currently available Funds of the Trust are:
1. | LVIP JPMorgan U.S. Equity Fund |
2. | LVIP JP Morgan Small Cap Core Fund |
3. | LVIP JPMorgan Core Bond Fund |
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Exhibit B
Separate Accounts of the Company Registered Under the 1940 Act as Unit Investment Trusts
The following separate accounts are subject to this Agreement: The Prudential Variable Contract Account GI-2
Variable Annuity Contracts and Variable Life Insurance Contracts Registered Under the Securities Act of 1933
The following contracts are subject to this Agreement: Group Variable Universal Life
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PARTICIPATION AGREEMENT
Among
First Security Benefit Life Insurance and
Annuity Company of New York,
Lincoln Variable Insurance Products Trust,
Lincoln Financial Investments Corporation,
and
Lincoln Financial Distributors, Inc.
THIS AGREEMENT, dated as of the 1st day of May, 2023, by and among First Security Benefit Life Insurance and Annuity Company of New York, (the Company), a stock life insurance company organized under the laws of the State of New York, on its own behalf and on behalf of each segregated asset account of the Company currently in existence or hereafter created, as set forth on Schedule A hereto, which may be updated from time to time for the convenience of the parties, (each an Account), Lincoln Variable Insurance Products Trust (the Trust), a Delaware statutory Trust , Lincoln Financial Investments Corporation (the Adviser), a Tennessee corporation, and Lincoln Financial Distributors, Inc. (the Distributor), a Connecticut corporation.
WHEREAS, the shares of beneficial interest/common stock of the Trust are divided into several series of shares, each representing the interest in a particular managed Fund of securities and other assets (each a Fund); and
WHEREAS, the Trust is registered as an open-end management investment company under the Investment Company Act of 1940 (the 1940 Act) and shares of the Funds are registered under the Securities Act of 1933, as amended (the 1933 Act); and
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812- 13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans); and
WHEREAS, the Adviser, which serves as investment adviser to the Trust, is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA); and
WHEREAS, the Company has issued or will issue certain variable annuity contracts supported wholly or partially by the Account (the Contracts), and said Contracts are listed in Schedule A hereto, which may be updated from time to time for convenience of the parties; and
WHEREAS, the Account is duly established and maintained as a segregated asset account, duly established by the Company, to set aside and invest assets attributable to the aforesaid Contracts; and
WHEREAS, the Company intends to purchase shares in the Funds of the Trusts on behalf of the Account to Trust the aforesaid Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust and the Adviser agree as follows:
ARTICLE I. Sale of Trust Shares
1.1. Subject to Article XII hereof, the Trust agrees to make available to the Company for purchase on behalf of the Account, shares of the Funds, such purchases to be effected at net asset value in accordance with Section 1.4 of this Agreement. Notwithstanding the foregoing, (i) the Funds (other than those listed on Schedule A) in existence now or that may be established in the future will be made available to the Company only as the Trust may so provide, and (ii) the Board of Trustees of the Trust (the Board) may suspend or terminate the offering of shares of any Fund or class thereof upon written notice to the Company, if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Board acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, suspension or termination is necessary and in the best interests of the shareholders of such Fund.
1.2. The Trust shall redeem, at the Companys request, any full or fractional Fund shares held by the Company on behalf of the Account, such redemptions to be effected at net asset value in accordance with Section 1.4 of this Agreement. Notwithstanding the foregoing, the Trust may delay redemption of Trust shares of any Fund to the extent permitted by the 1940 Act, and any rules, regulations or orders thereunder.
1.3 The Trust reserves the right to process redemptions in kind, as limited in accordance with Rule 18f-1 under the 1940 Act.
1.4 Purchase and Redemption Procedures
(a) The parties agree to place and settle trades for shares through the National Securities Clearing Corporation (NSCC). The Trust hereby appoints the Company as an agent of the Trust for the limited purpose of receiving and accepting 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 Funds made available hereunder, based on allocations of amounts to the Account or subaccounts thereof under the Contracts and other transactions relating to the Contracts or the Account. Receipt and acceptance of any such request (or relevant transactional information therefore) on any day the New York Stock Exchange is open for trading and on which a Fund calculates its net asset value (a Business Day) pursuant to the rules of the Securities and Exchange Commission (SEC), by the Company as such limited agent of the Trust prior to the time that the Trust ordinarily calculates its net asset value as described from time to time in the Trusts prospectus shall constitute receipt and acceptance by the Fund on that same Business Day.
(b) Company will communicate to the Trust purchases and redemptions orders of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.4(d).
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(c) To the extent that trades are submitted by NSCC, the Rules & Procedures Manual of the NSCC, as amended from time to time, is hereby made a part of this Agreement as if fully set forth herein and shall be a part of each trade cleared. The Parties represent that they, or an affiliate and/or agent, are in the process of applying to be, members of the NSCC.
(d) In the event that Company is unable to place and settle trades through the NSCC, Company will calculate and forward net orders through a trade file in a mutually agreed upon format via SFTP by 8:30 a.m. Eastern Time on the next following Business Day.
(e) Payment for trades submitted through the NSCC will be settled through the NSCC.
(f) For manual trades, the Company shall pay for net orders of each Fund on the same Business Day that it notifies the Trust of a purchase request for such shares. Payment for Fund shares shall be made in federal funds transmitted to the Trust or other designated person by wire to be received by the close of the Federal Reserve wire system on the Business Day the Trust is notified of the purchase request for Fund shares (unless the Trust determines and so advises the Company that sufficient proceeds are available from redemption of shares of other Funds effected pursuant to redemption requests tendered by the Company on behalf of the Account, or unless the Trust otherwise determines and so advises the Company to delay the date of payment, to the extent the Trust may do so under the 1940 Act). If federal Trusts are not received on time, such Trusts will be invested, and Fund shares purchased thereby will be issued, as soon as practicable and the Company shall promptly, upon the Trusts request, reimburse the Trust for any charges, costs, fees, interest or other expenses incurred by the Trust in connection with any advances to, or borrowing or overdrafts by, the Trust, or any similar expenses incurred by the Trust, as a result of Fund transactions effected by the Trust based upon such purchase request. Upon receipt of federal Trusts so wired, such Trusts shall cease to be the responsibility of the Company and shall become the responsibility of the Trust.
(g) For manual trades, payment for net Fund shares redeemed by the Account or the Company shall be made by the Trust in federal Trusts transmitted by wire to the Company or any other designated person by the close of the Federal Reserve wire system on the same Business Day the Trust is properly notified of the redemption order of such shares (unless redemption proceeds are to be applied to the purchase of shares of other Funds in accordance with Section 1.4(f)) of this Agreement), except that the Trust reserves the right to delay payment of redemption proceeds to the extent permitted under Section 22(e) of the 1940 Act and any rules thereunder, and in accordance with the procedures and policies of the Trust as described in the then-current prospectus.
Any purchase or redemption request for Fund shares held or to be held in the Companys general account shall be effected at the net asset value per share next determined after the Trusts receipt and acceptance 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 Trusts prior to close of business for determination of such value, as defined from time to time in the Trusts prospectus.
1.5 The Trust shall use its best efforts to make the net asset value per share for each Fund available to the Company by 6:30 p.m. Eastern Time each Business Day, and in any event, as soon as reasonably practicable after the net asset value per share for such Fund is calculated, and shall calculate such net asset value in accordance with the Trusts prospectus. If the Trust provides the Company with materially incorrect share net asset value information, the Company on behalf of the Account, shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct share net asset value. Any material error in the calculation of the net asset value per share,
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dividend or capital gain information shall be reported promptly to the Company upon discovery. In the event that any such material error is the result of the gross negligence of the Trust, or its designated agent for calculating the net asset value, any administrative or other costs or losses incurred for correcting underlying Contract owner accounts shall be at the Advisers expense.
1.6 The Trust shall use its best efforts to furnish notice (by wire or telephone followed by written confirmation) to the Company of any income dividends or capital gain distributions payable on any Fund shares by the record date, but in no event later than 6:30 p.m. Eastern Time on the ex-dividend date. 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 Fund shares in the form of additional shares of that Fund. 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 Fund shares so issued as payment of such dividends and distributions.
1.7 Issuance and transfer of Trust shares shall be by book entry only. Share 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.
1.8(a) The parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Trusts shares may be sold to other insurance companies and the cash value of the Contracts may be invested in other investment companies.
(b) The Company shall not, without prior notice to the Adviser (unless otherwise required by applicable law), take any action to operate the Account as a management investment company under the 1940 Act.
(c) The Company shall not induce Contract owners to change or modify the Trust or change the Trusts investment adviser.
(d) The Company shall not, without prior notice to the Trust, induce Contract owners to vote on any matter submitted for consideration by the shareholders of the Trust in a manner other than as recommended by the Board.
1.9 The Company shall notify the Trust at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a) are, or prior to issuance will be, registered under the 1933 Act, or (b) are not registered because they are properly exempt from registration under the 1933 Act or will be offered exclusively in transactions that are properly exempt from registration under the 1933 Act. The Company further represents and warrants that the Contracts will be issued and sold in compliance in all material respects with all applicable federal securities and state securities and insurance laws. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law, that it has legally and validly established the Account as a segregated asset account under New York insurance laws, and that it (a) has registered or,
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prior to any issuance or sale of the Contracts, will register the Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts, or alternatively (b) has not registered the Account in proper reliance upon an exclusion from registration under the 1940 Act.
2.2. The Trust represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, shall be duly authorized for issuance and sold in compliance with applicable state and federal securities laws and that the Trust is and shall remain registered under the 1940 Act. The Trust shall amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Trust shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Trust.
2.3. The Trust represents and warrants that it is lawfully organized and validly existing under the laws of the State of Delaware and that it does and will comply in all material respects with the 1940 Act, including, without limitation, Rule 38a-1 under the 1940 Act.
2.4. The Adviser represents and warrants that it is registered as an investment adviser with the SEC and that it does and will comply in all material respects with the Investment Advisers Act of 1940, including, without limitation, Rule 206(4)-7 under the Investment Advisers Act.
2.5. The Trust and the Adviser represent and warrant that all of their trustees/directors, officers, employees, and other individuals or entities 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 minimum 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.
2.6 The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.7 The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust Company hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust Company hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust Company is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
2.8 The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
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2.9 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.
2.10 The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.11 The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Trust shall provide the Company with as many printed copies of the current prospectus, current Statement of Additional Information (SAI), supplements, proxy statements, and annual or semi-annual reports of each Fund as the Company may reasonably request, with expenses to be borne in accordance with Schedule B hereof. If requested by the Company in lieu thereof, the Trust shall provide such documents (including a print-ready PDF, or an electronic copy of the documents in a format suitable for printing and posting on the Companys website, all as the Company may reasonably request) and such other assistance as is reasonably necessary in order for the Company to have prospectuses, SAIs, supplements and annual or semi-annual reports for the Contracts and the Trust printed together in a single document or posted on the Companys web-site or printed individually by the Company if it so chooses.
3.2. The Trusts prospectus shall state that the current SAI for the Trust is available.
3.3. The Trust shall provide the Company with information regarding the Trusts expenses, which information may include a table of fees and related narrative disclosure for use in any prospectus or other descriptive document relating to a Contract. The Company agrees that it will use such information substantially in the form provided. The Company shall provide prior written notice of any proposed modification of such information, which notice will describe the manner in which the Company proposes to modify the information, and agrees that it may not modify such information in any way without the prior consent of the Trust, which consent shall not be unreasonably withheld.
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3.4. Pursuant to Rule 30e-3 under the Investment Company Act of 1940 (Rule 30e- 3), the Company shall ensure that the following Trust materials are posted to a website hosted and maintained by the Company or its third party vendor: (i) current report to shareholders; (ii) prior report to shareholders; (iii) complete Fund holdings from reports containing a summary schedule of investments; and (iv) Fund holdings for most recent first and third fiscal quarters (items (i) through (iv) collectively, the Required Materials). To assist the Company in fulfilling its Rule 30e-3 obligations, the Trust shall send a .pdf file of the Required Materials to rpsupport@dfinsolutions.com as soon as practicable after filing with the SEC but no later than five business days before the date each time that the Required Materials are required to be posted by Rule 30e-3.. The Company shall provide a paper notice to Contract owners, fulfill ad hoc requests from Contract owners for a paper copy of any of the Required Materials, and fulfill Contract owner elections to receive future Trust shareholder reports in paper, all as required by Rule 30e-3. Contract owner elections to receive future Trust shareholder reports in paper shall be governed by Section 3.1. Rule 30e-3 expenses shall be borne in accordance with Schedule B hereto.
3.5 The Company shall host and maintain the websites specified in paragraph (j)(1)(iii) of Rule 498A under the 1933 Act (Rule 498A), so that the following documents (collectively, Trust Documents) are publicly accessible, free of charge, at those websites, in accordance with the conditions set forth in that paragraph, provided that the Trust and Adviser fulfill their obligations herein: (1) summary prospectus for the Funds; (2) statutory prospectus for the Funds; (3) statement of additional information (SAI) for the Funds; and (4) most recent annual and semi-annual reports to shareholders (under Rule 30e-1 under the 1940 Act) for the Funds. The Trust shall send a .pdf file of the Trust Documents to rpsupport@dfinsolutions.com as soon as practicable after filing with the SEC but no later than five business days prior to May 1. The Trust shall provide updated versions of the Trust Documents as necessary. Rule 498A expenses shall be borne in accordance with Schedule B hereto.
The Company shall ensure that an Initial Summary Prospectus is used for each currently offered Contract described under the related registration statement, in accordance with paragraph (j)(1)(i) of Rule 498A. The Trust shall ensure that a summary prospectus is used for each Trust, in accordance with paragraph (j)(1)(ii) of Rule 498A.
Upon request by the Company, the Trust shall provide such data regarding each Funds expense ratios and investment performance to facilitate the registration and sale of the Contracts. Without limiting the generality of the forgoing, the Trust shall provide the following Fund expense and performance data on a timely basis to facilitate the Companys preparation of its annually updated registration statement for the Contracts (and as otherwise reasonably requested by the Company):
(a) the gross Annual Fund Company Expenses for each Fund, calculated in accordance with Item 3 of Form N-1A, before any expense reimbursements or fee waiver arrangements (and in accordance with (i) Instruction 16 to Item 4 of Form N-4, and (ii) Instruction 4(a) to Item 4 of Form N-6); and
(b) the net Annual Fund Company Expenses (aka Total Annual Trust Operating Expenses) for each Fund, calculated in accordance with Item 3 of Form N-1A, that include any expense reimbursements or fee waiver arrangements (and in accordance with (i) Instruction 17 to Item 4 of Form N-4 and (ii) Instruction 4 to Item 17 of Form N-4, and (iii) Instruction 4(b) to Item 4 of Form N-6, and (iv) Instruction 4 to Item 18 of Form N-6), and the period for which the expense reimbursements or fee waiver arrangement is expected to continue and whether it can be terminated by the Fund (or Trust); and
(c) the Average Annual Total Returns for each Fund (before taxes), calculated pursuant to Item 4(b)(2)(iii) of Form N-1A (for the 1, 5, and 10 year periods, and in accordance with (i) Instruction 7 to Item 17 of Form N-4, and (ii) Instruction 7 to Item 18 of Form N-6).
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3.6 So long as, and to the extent the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contract owners, or to the extent otherwise required by law, the Company shall, at the Companys option, follow one of the two methods described below to provide pass-through voting privileges to contract owners:
(a) Provide a list of Contract owners with value allocated to a Fund as of the record date to the Trust or its agent in order to permit the Trust to send solicitation material and gather voting instructions from Contract owners on behalf of the Company. The Company shall also provide such other information to the Trust as is reasonably necessary in order for the Trust to properly tabulate votes for Trust initiated proxies. In the event that the Company chooses this option, the Trust shall be responsible for properly echo voting shares of a Fund for which no voting instructions have been received.
(b) Solicit voting instructions from Contract owners itself and vote shares of the Fund in accordance with instructions received from Contract owners. The Company shall vote the shares of the Funds for which no instructions have been received in the same proportion as shares of the Fund for which instructions have been received.
3.7 The Company reserves the right to vote Fund shares held in its general account in its own right, to the extent permitted by applicable laws.
3.8 If the Trust and the Company agree to distribute Trust summary prospectuses to Contract owners pursuant to Rule 498 of the 1933 Act, as set forth in Schedule C of this Agreement, then each party to the Agreement represents and warrants that it complies with the requirements of Rule 498 and applicable SEC guidance regarding the Rule in connection therewith, and that it maintains policies and procedures reasonably designed to ensure that it can meet its obligations in connection with Trust summary prospectuses. The parties agree to comply with the terms included in the attached Schedule C as of the effective date of this Agreement.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Trust or its designee, each piece of sales literature or other promotional material that the Company develops and in which the Trust (or a Fund thereof) or the Adviser is named. No such material shall be used until approved by the Trust or its designee, and the Trust will use its best efforts for it or its designee to review such sales literature or promotional material within five (5) Business Days after receipt of such material. Materials not approved or disapproved within five (5) Business Days shall be deemed approved. The Trust or its designee reserves the right to reasonably object to the continued use of any such sales literature or other promotional material in which the Trust (or a Fund thereof) or the Adviser is named, and no such material shall be used if the Trust or its designee so objects.
4.2. The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust or the Adviser in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus or SAI for the Trust shares, as such registration statement and prospectus or SAI may be amended or supplemented from time to time, or in reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust or its designee, except with the permission of the Trust or its designee.
4.3. The Trust and the Adviser, or their designee, shall furnish, or cause to be furnished, to the Company, each piece of sales literature or other promotional material that it develops and in which
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the Company, and/or the Account, is named. No such material shall be used until approved by the Company, and the Company will use its best efforts to review such sales literature or promotional material within five (5) Business Days after receipt of such material. Materials not approved or disapproved within five (5) Business Days shall be deemed approved. The Company reserves the right to reasonably object to the continued use of any such sales literature or other promotional material in which the Company and/or its Account is named, and no such material shall be used if the Company so objects.
4.4. 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 a registration statement, prospectus (which shall include an offering memorandum, if any, if the Contracts issued by the Company or interests therein are not registered under the 1933 Act), or SAI for the Contracts, as such registration statement, prospectus, or SAI may be amended or supplemented from time to time, or in published reports for the 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, except with the permission of the Company.
4.5. Upon request, the Trust will provide to the Company at least one complete copy of all registration statements, prospectuses, SAIs, 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 Funds or their shares, after the filing of such document(s) with the SEC or other regulatory authorities.
4.6. Upon request, the Company will provide to the Trust at least one complete copy of all registration statements, prospectuses (which shall include an offering memorandum, if any, if the Contracts issued by the Company or interests therein are not registered under the 1933 Act), SAIs, 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, after the filing of such document(s) with the SEC or other regulatory authorities. The Company shall provide to the Trust and the Adviser any complaints received from the Contract owners pertaining to the Trust or a Fund.
4.7. The Trust will provide the Company with as much notice as is reasonably practicable of any material change in the Trusts registration statement, particularly any change resulting in a change to the registration statement or prospectus for any Account. The Trust will work with the Company so as to enable the Company to make changes to its prospectus or registration statement, in an orderly manner.
ARTICLE V. Fees and Expenses
5.1. The Trust shall pay no fee or other compensation to the Company under this Agreement, except that if the Trust or any Fund adopts and implements a plan pursuant to Rule 12b-1 to finance distribution or administrative expenses, then the Trust may make payments to the Company or to the underwriter for the Contracts if and in amounts agreed to by the Trust in writing.
5.2. All expenses incident to performance by the parties under this Agreement shall be paid in accordance with Schedule B hereof.
ARTICLE VI. Qualification
6.1 The Trust will invest its assets in such a manner as to ensure that the Contracts will be treated as annuity or life insurance contracts, whichever is appropriate, under the Internal Revenue Code
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of 1986, as amended (Code) and the regulations issued thereunder (or any successor provisions). Without limiting the scope of the foregoing, each Fund represents and warrants that it has complied and will continue to comply with Section 817(h) of the Code and Treasury Regulation §1.817-5, and any Treasury interpretations thereof, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts, and any amendments or other modifications or successor provisions to such Section or Regulations. In the event of a breach of this Article VI by the Trust, it will take all reasonable steps (a) to notify the Company of such breach and (b) to adequately diversify the Trust so as to achieve compliance within the grace period afforded by Regulation 1.817-5.
6.2 The Trust represents and warrants that it is qualified as a regulated investment company under Subchapter M of the Code and that it will maintain such qualification (under Subchapter M or any successor or similar provisions) and that it will notify the Company promptly upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future.
6.3 The Company represents that the Contracts are currently, and at the time of issuance shall be, treated as life insurance or annuity insurance contracts, under applicable provisions of the Code, and that it will maintain such treatment, and that it will notify the Trust immediately upon having a reasonable basis for believing the Contracts have ceased to be so treated or that they might not be so treated in the future. The Company agrees that any prospectus offering a contract that is a modified endowment contract as that term is defined in Section 7702A of the Code (or any successor or similar provision), shall identify such contract as a modified endowment contract.
ARTICLE VII. Potential Conflicts
7.1 The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
7.1 | The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners. |
7.2 | If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to |
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some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners. |
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
7.3 | The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company. |
7.4 | No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate. |
ARTICLE VIII CLIENT AND TRANSACTION INFORMATION
8.1 | Agreement to Provide Information. Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any or all Clients who have purchased, redeemed, transferred or exchanged Shares held through an Account with Company during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with the Clients or Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Shares. |
8.1.1 | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
8.1.2 | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee |
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promptly, but in any event not later than 10 Business Days after receipt of a Request. |
8.1.3 | Limitations on Use of Information. Distributor agrees, on behalf of itself and the Fund, not to use the information received for marketing or any other similar purpose without Companys prior written consent. |
8.2 | Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Shares by a Client that has been identified by the Fund as having engaged in transactions in Shares (directly or indirectly through an Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares. |
8.2.1 | Form of Instructions. Such Request 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 equivalent identifying number of the Clients or Accounts or other agreed upon information to which the instruction relates. |
8.2.2 | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
8.2.3 | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
8.3 | Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 8(a) of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either: |
8.3.1 | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Shares through the Indirect Intermediary; or |
8.3.2 | restrict or prohibit the Indirect Intermediary from purchasing Shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
8.4 | To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund. |
ARTICLE IX ANTI-MONEY LAUNDERING
9.1 | The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust |
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information about individuals suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that: |
9.1.1 | as part of processing an application for a Contract, it will verify the identity of applicants; |
9.1.2 | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Contract Owners; |
9.1.3 | as part of processing an application for a Contract, it will verify that no applicant, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
9.1.4 | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Contract Owner, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
9.1.5 | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
9.1.6 | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Account units arising from accounts of one or more such Contract Owners with the Company or of one or more of the Companys accounts with the Trust; |
9.1.7 | The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. |
ARTICLE X. Indemnification
10.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless each of the Trust and the Adviser and each of its trustees/directors and officers, and each person, if any, who controls the Trust or Adviser within the meaning of Section 15 of the 1933 Act or who is under common control with the Trust or the Adviser (collectively, the Indemnified Parties for purposes of this Section 10.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
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(i) arise out of or are based upon any untrue statement or alleged untrue statements of any material fact contained in the registration statement, prospectus (which shall include a written description of a Contract that is not registered under the 1933 Act), or SAI 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 Trust or the Adviser for use in the registration statement, prospectus or SAI 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
(ii) arise out of or as a result of statements or representations by or on behalf of the Company (other than statements or representations contained in the registration statement, prospectus, SAI, or sales literature of the Trust not supplied by the Company or persons under its control) or wrongful conduct of the Company or its agents or persons under the Companys authorization or control, with respect to the sale or distribution of the Contracts, or
(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI, or sales literature of the Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Trust by or on behalf of the Company for use in the registration statement, prospectus or SAI of the Trust or in sales literature; or
(iv) arise as a result of any material failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 10.1(b) and 10.1(c) hereof.
(b) The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of its obligations or duties under this Agreement.
(c) The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification
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provision. In case any such action is brought against an Indemnified Party, 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 reasonably satisfactory to the party named in the action. After notice from the Company to such party of the Companys 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.
(d) The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Trust shares or the Contracts or the operation of the Trust.
10.2 Indemnification by the Adviser
(a) The Adviser agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of this Section 10.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser or Trust by or on behalf of the Company for use in the registration statement, prospectus or SAI for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations by or on behalf of the Trust or the Adviser (other than statements or representations contained in the registration statement, prospectus, SAI or sales literature for the Contracts not supplied by the Trust or the Adviser) or wrongful conduct of the Adviser or the Trust with respect to the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI 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 Adviser or the Trust; or
(iv) arise as a result of any failure by the Trust or the Adviser to provide the services and furnish the materials under the terms of this Agreement (including a failure of the Trust, whether unintentional or in good faith or otherwise, to comply with the
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diversification and other qualification requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation and/or warranty made by or on behalf of the Adviser or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by or on behalf of the Adviser or the Trust;
as limited by and in accordance with the provisions of Sections 10.2(b) and 10.2(c) hereof.
(b) The Adviser shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would otherwise be subject by reason of such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable.
(c) The Adviser 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 Adviser 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 Adviser of any such claim shall not relieve the Adviser 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 Party, the Adviser will be entitled to participate, at its own expense, in the defense thereof. The Adviser also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the party named in the action. After notice from the Adviser to such party of the Advisers election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Adviser 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.
(d) The Company agrees promptly to notify the Adviser of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of the Account.
10.3 Indemnification by the Trust
(a) The Trust agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of this Section 10.3) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Trust) or litigation (including legal and other expenses) to which the Indemnified Parties may be required to pay or may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, expenses, damages, liabilities or expenses (or actions in respect thereof) or settlements, are related to the operations of the Trust and:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a
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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 Adviser or Trust by or on behalf of the Company for use in the registration statement, prospectus or SAI for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations by or on behalf of the Trust or the Adviser (other than statements or representations contained in the registration statement, prospectus, SAI or sales literature for the Contracts not supplied by the Trust or the Adviser) or wrongful conduct of the Adviser or the Trust with respect to the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI 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 Adviser or the Trust; or
(iv) arise as a result of any failure by the Trust to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification and other qualification requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation and/or warranty made by or on behalf of the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by or on behalf of the Trust;
as limited by and in accordance with the provisions of Sections 10.3(b) and 10.3(c) hereof.
(b) The Trust 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable.
(c) The Trust shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the 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 Trust of any such claim shall not relieve the Trust from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Trust will be entitled to participate, at its own expense, in the defense thereof. The Trust also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the party named in the action. After notice from the Trust to such party of the Trusts election to assume the defense thereof, the Indemnified Party shall bear the
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fees and expenses of any additional counsel retained by it, and the Trust will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
(d) The Company agrees promptly to notify the Trust of the commencement of any litigation or proceeding against it or any of its respective officers or directors in connection with the Agreement, the issuance or sale of the Contracts, the operation of the Account, or the sale or acquisition of shares of the Trust.
10.4 Indemnification by the Distributor
The Distributor agrees to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of this Section 10.4) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute or regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or SAI or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 by or on behalf of the Company for use in the registration statement, prospectus or SAI for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations by or on behalf of the Distributor (other than statements or representations contained in the registration statement, prospectus, SAI or sales literature for the Contracts not supplied by the Trust or the Adviser) or wrongful conduct of the Distributor with respect to the sale or distribution of the Contracts or Trust shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI 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 Distributor; or
(iv) arise as a result of any failure by Distributor to provide the services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation and/or warranty made by or on behalf of the Distributor in this Agreement or arise out of
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or result from any other material breach of this Agreement by or on behalf of the Distributor;
as limited by and in accordance with the provisions of Sections 10.4(b) and 10.4(c) hereof.
(b) 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable.
(c) 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 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 Distributor of any such claim shall not relieve the Distributor 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 Party, the Distributor will be entitled to participate, at its own expense, in the defense thereof. The Distributor also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the party named in the action. After notice from the Distributor to such party of the Distributors election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Distributor will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation.
(d) The Company agrees promptly to notify the Distributor of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of the Account.
ARTICLE XI. Applicable Law
11.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware, without regard to the conflict of laws provisions thereof.
11.2. This Agreement shall be subject to the provisions of the 1933 and 1940 Acts as well as the Exchange Act of 1934, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant, and the terms hereof shall be interpreted and construed in accordance therewith. If, in the future, the Mixed and Shared Funding Order discussed in Article VII should no longer be necessary under applicable law, then Article VII hereof shall no longer apply.
ARTICLE XII. Termination
12.1. This Agreement shall continue in full force and effect until the first to occur of:
(a) termination by any party, for any reason with respect to some or all Funds, by six (6) months advance written notice delivered to the other parties; or
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(b) termination by the Company by written notice to the other parties based upon the Companys determination that shares of the Trust are not reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the other parties in the event any of the Funds shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by the Company; or
(d) termination by the Trust or Adviser by written notice to the Company in the event that formal administrative proceedings are instituted against the Company by FINRA, the SEC, the Insurance Commissioner or like official of any state or any other regulatory body regarding the Companys duties under this Agreement or related to the sale of the Contracts, the operation of any Account, or the purchase of the Funds shares; provided, however, that the Trust or Adviser determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or
(e) termination by the Company by written notice to the other parties in the event that formal administrative proceedings are instituted against the Trust or Adviser by the SEC or any state securities department or any other regulatory body; provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Trust or Adviser to perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the other parties in the event that any Fund ceases to qualify as a regulated investment company under Subchapter M or fails to comply with the Section 817(h) diversification requirements specified in Article VI hereof, or if the Company reasonably believes that any such Fund may fail to so qualify or comply with either provision; or
(g) termination by either the Trust or the Adviser by written notice to the other parties, if either one or both the Trust and the Adviser, respectively, shall determine, in their sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations, financial condition, or prospects since the date of this Agreement or is the subject of material adverse publicity; or
(h) termination by the Company by written notice to the other parties, if the Company shall determine, in its sole judgment exercised in good faith, that the Trust or the Adviser has suffered a material adverse change in its business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or
(i) termination by the Company upon any substitution of the shares of another investment company or series thereof for shares of a Fund of the Trust in accordance with the terms of the Contracts, provided that the Company has given at least 45 days prior written notice to the Trust and Adviser of the date of substitution.
12.2. Notwithstanding any termination of this Agreement, the Trust and the Adviser shall, at the option of the Company, continue to make available additional shares of the Trust pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as Existing Contracts), unless the Company seeks an order pursuant to Section 26(c) of the 1940 Act to permit the substitution of other securities for the shares of the Funds. Specifically, the owners of the Existing Contracts shall be permitted to reallocate investments in
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the Trust, redeem investments in the Trust and/or invest in the Trust upon the making of additional purchase payments under the Existing Contracts (subject to any such election by the Company).
12.3. Notwithstanding any termination of this Agreement, each partys obligation under Article X to indemnify the other parties shall survive.
ARTICLE XIII. 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 Company, at its |
First Security Benefit Life Insurance and Annuity | |
Administrative Office: |
Company of New York | |
Attention General Counsel | ||
One Security Benefit Place | ||
Topeka, Kansas 66636 - 0001 | ||
If to the Trust: |
Lincoln Variable Insurance Products Trust 150 N. Radnor Chester Road | |
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: |
Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Legal Department | ||
If to the Adviser: |
Lincoln Financial Investments Corporation 150 N. Radnor Chester Road | |
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management Email: Ronald.holinsky@lfg.com |
ARTICLE XIV. Miscellaneous
14.1. All persons dealing with the Trust must look solely to the property of the respective Funds listed on Schedule A hereto as though each such Fund had separately contracted with the Company and the Adviser for the enforcement of any claims against the Trust. The parties agree that neither the Board, officers, agents or shareholders of the Trust assume any personal liability or responsibility for obligations entered into by or on behalf of the Trust.
14.2. Subject to the requirements of legal process and regulatory authority, the Trust and the Adviser shall treat as confidential the names and addresses of the owners of the Contracts. Each party shall treat as confidential all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such
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information without the express written consent of the affected party until such time as such information has come into the public domain.
14.3. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.
14.4. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
14.5. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby.
14.6. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, 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. Notwithstanding the generality of the foregoing, each party hereto further agrees to furnish the New York Insurance Commissioner with any information or reports in connection with services provided under this Agreement which such Commissioner may request in order to ascertain whether the variable insurance operations of the Company are being conducted in a manner consistent with the New York insurance laws and regulations and any other applicable law or regulations.
14.7. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies, and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
14.8. This Agreement may be amended by written agreement between all parties. This Agreement or any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto.
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.
First Security Benefit Life Insurance and | By its authorized officer | |||||
Annuity Company of New York | ||||||
By: | /s/ Roger Offermann | |||||
Title: | Chief Actuary and Chief Product Officer | |||||
Date: | 4/26/2023 | |||||
Lincoln Variable Insurance Products Trust | By its authorized officer | |||||
By: | /s/ William P. Flory Jr. | |||||
Title: | VP, Treasurer and CAO | |||||
Date: | 4/27/2023 |
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Lincoln Financial Investments Corporation | By its authorized officer | |||||
By: | /s/ Benjamin Richer | |||||
Title: | SVP, Head of Funds Management | |||||
Date: | 4/28/2023 | |||||
Lincoln Financial Distributors, Inc. | By its authorized officer | |||||
By: | /s/ Thomas ONeill | |||||
Title: | SVP | |||||
Date: | 4/28/2023 |
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[Date]
Schedule A
Account(s) | Contract(s) | |||
Account A | AdvisorDesigns | |||
EliteDesigns, | ||||
EliteDesigns II | ||||
Account B | AdvanceDesigns | |||
SecureDesigns |
Additionally, Accounts and Contracts will include any new Accounts and Contracts created subsequent to the date hereof.
Trust and Funds
The currently available Funds of the Lincoln Variable Insurance Products Trust are:
1. | LVIP JPMorgan U.S. Equity Fund |
2. | LVIP JP Morgan Small Cap Core Fund |
3. | LVIP JPMorgan Mid Cap Value Fund |
4. | LVIP JPMorgan Core Bond Fund |
Additionally, Funds will include any Fund created subsequent to the date hereof.
A-1
SCHEDULE B
EXPENSES
The Trust and the Company will coordinate the functions and pay the costs of completing these functions based upon an allocation of costs in the tables below.
Item | Function | Party Responsible for Expense | ||
Trust Prospectus | Printing and Distribution (including postage) |
Trust (Company may choose to do the printing at Trusts expense) | ||
Trust Prospectus and SAI Supplements | Printing and Distribution (including postage) |
Trust (Company may choose to do the printing at Trusts expense) | ||
Trust SAI | Printing and Distribution (including postage) |
Trust | ||
Proxy Material for Trust | Printing, Distribution to Current (including postage), tabulation and solicitation | Trust | ||
Trust Annual & Semi-Annual Report | Printing and Distribution (including postage) |
Trust (Company may choose to do the printing at Trusts expense) | ||
30e-3 Notice | Printing and Distribution (including postage) |
Trust (Company may choose to do the printing at Trusts expense) | ||
30e-3 Required Materials | Website Hosting and Maintenance | Companys Website Company Trusts Website - Trust | ||
Contract Prospectus | Printing and Distribution (including postage) |
Company | ||
Contract Prospectus and SAI Supplements | Printing and Distribution (including postage) |
Company | ||
Contract SAI | Printing and Distribution (including postage) |
Company | ||
498A Trust Documents | Website Hosting and Maintenance | Trust | ||
Other communication to Prospective and Current | Printing and Distribution (including postage) |
If Required by Law case by case basis If Required by Trust Trust If Required by Company Company | ||
Operations of the Trust | All operations and related expenses, including the cost of registration and qualification of shares, taxes on the issuance or transfer of shares, cost of management of the business affairs of a Trust, and expenses paid or assumed by a Trust pursuant to any Rule 12b-1 plan | Trust |
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Item | Function | Party Responsible for Expense | ||
Operations of the Accounts | Federal registration of units of separate account (24f-2 fees) | Company |
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SCHEDULE C
USE OF SUMMARY PROSPECTUSES
All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to such term in the Agreement.
1. | For purposes of this Schedule C, the terms Summary Prospectus and Statutory Prospectus shall have the same meaning as set forth in Rule 498. |
2. | The Trust shall provide the Company with copies of the Summary Prospectuses and any supplements thereto in the same manner and at the same times as the Agreement requires that the Trust provide the Company with Statutory Prospectuses. |
3. | The Trust and the Adviser each represents and warrants that the Summary Prospectuses and the web site hosting of such Summary Prospectuses will comply with the requirements of Rule 498 applicable to the Trust and its Funds. The Trust further represents and warrants that it has appropriate policies and procedures in place in accordance with Rule 498(e)(4) to ensure that such web site continuously complies with Rule 498. |
4. | The Trust and the Adviser each agrees that the URL indicated on each Summary Prospectus will lead Contract owners directly to the web page used for hosting Summary Prospectuses and that such web page will host the current Trust documents required to be posted in compliance with Rule 498. The Trust shall immediately notify the Company of any unexpected interruptions in availability of this web page. The Trust agrees that the web landing page used for hosting Summary Prospectuses will not contain any marketing materials (other than those Trust documents provided for under Rule 498) and that the landing page will contain Summary Prospectuses only for the Trust or its affiliated funds. |
5. | The Trust and the Adviser represent and warrant that they will be responsible for compliance with the provisions of Rule 498(f)(i) involving Contract owner requests for additional Trust documents made directly to the Trust or the Adviser, or one of their affiliates. The Trust and the Adviser further represent and warrant that any information obtained about Contract owners pursuant to this provision will be used solely for the purposes of responding to requests for additional Trust documents. |
6. | The Company represents and warrants that it will respond to requests for additional Trust documents made by Contract owners directly to the Company or one of its affiliates. |
7. | The Company represents and warrants that any bundling of Summary Prospectuses and Statutory Prospectuses will be done in compliance with Rule 498. |
8. | At the Companys request, the Adviser and the Trust will provide the Company with URLs to the current Trust documents for use with Companys electronic delivery of Trust documents or on the Companys website. The Adviser and the Trust will be responsible for ensuring the integrity of the URLs and for maintaining the Trusts current documents on the site to which such URLs originally navigate to. |
9. | If the Trust determines that it will end its use of the Summary Prospectus delivery option, the Trust will provide the Company with at least 60 days advance notice of its intent so that the Company can arrange to deliver a Statutory Prospectus in place of a Summary Prospectus. In order to comply with Rule 498(e)(1), the Trust shall continue to maintain its website in compliance with the requirements of this Agreement and Rule 498 for a minimum of 90 days after the termination of any such notice period. |
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10. | The parties agree that all other provisions of the Participation Agreement, including the Indemnification provisions, will apply to the terms of this Schedule C as applicable. |
11. | The parties agree that the Company is not required to distribute Summary Prospectuses to its Contract owners, but rather use of the Summary Prospectus will be at the discretion of the Company. The Company agrees that it will give the Adviser and the Trust sufficient notice of its intended use of the Summary Prospectuses or the Statutory Prospectuses. |
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and ZURICH AMERICAN LIFE INSURANCE COMPANY (Company), a life insurance company organized under the laws of the State of Illinois .
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable life insurance policies and variable annuity contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
WHEREAS, the parties anticipate being able to use the services of the National Securities Clearing Corporation (NSCC) for trades in the LVIP Funds.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC.
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of
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such Variable Contract owners will be adjusted and the amount of any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. Submission of LVIP Fund Trades
(a) | NSCC Trades. Company will communicate to the Trust purchases and redemptions of units of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.7(c). |
(b) | To the extent that trades are submitted by NSCC, such trades shall be handled in accordance with the Rules & Procedures Manual of the NSCC, as amended from time to time. The parties represent that they, an affiliate and/or agent are, or with respect to the Funds are in the process of applying to be, members of the NSCC. |
(c) | Manual Trades. In the event that the NSCC should become unavailable for any reason for submission of Fund trades, the parties agree that Company will communicate the purchases and redemptions of units of Funds through a trade file in a mutually agreed upon format, submitted via email by 7:30 AM, Eastern Time, on Day 2. |
1.8. For manual and direct-feed trades, if the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. For manual and direct-feed trades, if the Companys order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order
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is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. Payment for trades through the NSCC will be settled through the NSCC. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.10. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion, subject to and in accordance with applicable laws.
1.11. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.12. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker- dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and will cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
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2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust promptly upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply and will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify or that it might not be so qualified in the future.
2.8. The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
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2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Variable Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
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Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings); and |
(g) | Any amendments or supplements to the foregoing. |
3.3. The Trust shall provide the Summary Prospectus, and, Statutory Prospectus for the Funds to the Company (or its designee) no later than 5 business days prior to May 1 of each year and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted on a website by Rule 30e-1.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
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(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. If the Company elects to rely on on-line delivery of Trust Documents under Rule 498A, the Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.7. If the Company elects to rely on on-line delivery of Trust Documents under Rule 498A, the Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.8. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.9. | The Trust shall: |
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Variable Contract owners. Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its designee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust |
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Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.10. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Variable Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.11. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.12. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.13. Except with respect to information regarding the Company provided in writing by the Company, the Company shall not be responsible for the content of the prospectus or statement of additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
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4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S- P. The provisions of this Section shall survive the termination of this Agreement.
4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is
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otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract
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owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other
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Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
6.3 Notwithstanding anything in Section 6.1 to the contrary, for any Separate Account not registered under the 1940 Act pursuant to Section 3(c)(1) or 3(c)(7) thereof and to the extent required by Section 12(d)(1)(E)(iii) of the 1940 Act, the Company shall (i) either seek instructions from Variable Contract owners with regard to the voting of all proxies with respect to Fund shares held by the Separate Account and vote such proxies only in accordance with such instructions, or vote the Fund shares held by the Separate Account in the same proportion as the vote of all other holders of such shares, and (ii) refrain from substituting Fund shares unless the SEC shall have approved such substitution in the manner provided in Section 26 of the 1940 Act.
Article VII. VARIABLE CONTRACT OWNER AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Subject to the provisions of this section, Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any Variable Contract owners as to which Fund shares have been purchased, redeemed, transferred or exchanged through a Separate Account during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with such Variable Account owners or Separate Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Fund shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its shares. |
(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. The Trust, Distributor and Adviser agree, on behalf of themselves and the Fund, not to use the information received for any |
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purpose, other than the purpose stated in Section 7.1(a), without Companys prior written consent. |
7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Fund shares with respect to a Variable Contract owner that has been identified by the Fund as having engaged in transactions in Fund shares (directly or indirectly through a Separate Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Variable Contract owner or other agreed upon information to which the instruction relates. |
(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 7.1 of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Fund shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Fund shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
7.5 Notwithstanding the foregoing, the parties acknowledge that the Companys ability to execute Funds instructions may be limited by contractual obligations contained in the Variable Contracts, rights contained in the Contract prospectuses or other disclosure documents, applicable state insurance laws and regulations, or otherwise. If pursuant to any such limitation,
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the Company reasonably believes that it is prevented from complying with a request from the Fund to prohibit trading, the Company will notify the Fund within three days of receiving such request and will work cooperatively with Fund to determine whether other actions may be taken by the Company in order to protect Fund shareholders from dilution of the value of outstanding securities issued by the Fund, including restricting purchase and exchange activity by accepting purchase or exchange requests via US mail only.
Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | as part of processing an application for a Variable Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Variable Contract; |
(b) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Variable Contract owners, including the identity of principal and beneficial owners of Variable Contracts held by non-natural persons; |
(c) | as part of processing an application for a Variable Contract, it will verify that no applicant, including prospective principal or beneficial owners of the Variable Contract, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
(d) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Variable Contract owner, including a principal or beneficial owner of the Variable Contract, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Fund shares pertaining to such principal or beneficial owners of Variable Accounts. |
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8.2. The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act.
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 9.1 to 9.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
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(d) | 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 |
(e) | 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. |
9.2. 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser and the Distributor. The Adviser and the Distributor, and each of them separately, agree to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 9.4 to 9.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser and the Distributor which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
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(b) | 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 Variable Contracts not supplied by the Trust, the Distributor or the Adviser or persons under their control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser and the Distributor 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.6. 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 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 Adviser and the Distributor of any such claim shall not relieve 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 Adviser and the Distributor shall be entitled to participate at their own expense in the defense thereof.
9.7. Indemnification by the Trust. The Trust agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 9.7 to 9.9) against any and all losses, claims,
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damages, liabilities (including amounts paid in settlement with the written consent of the Trust which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise as a result of a failure by the Trust to provide the services and furnish the materials under the terms of this Agreement; or |
(b) | Arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust. |
9.8. The Trust shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.9. The Trust shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the 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 Trust of any such claim shall not relieve the Trust from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Trust shall be entitled to participate at its own expense in the defense thereof.
9.10. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. This Agreement shall terminate in accordance with the following provisions:
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
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(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
(i) | At the option of the Trust, if the Variable Contracts are not registered (in the absence of an available exemption), issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any |
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Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road Radnor, PA 19087 | ||
Attn: Legal Department |
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If to the Adviser: | Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Company: | Zurich American Life Insurance Company | |
4 World Trade Center | ||
150 Greenwich Street | ||
New York, NY 10007 | ||
Attn: General Counsel | ||
Email: usz_zalico@zurichna.com |
Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
12.5. Each party 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.
12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete
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an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST | LINCOLN FINANCIAL INVESTMENTS CORPORATION | |||||||
By: | /s/ William P. Flory Jr. |
By: | /s/ Benjamin Richer | |||||
Name: | William P. Flory Jr. | Name: | Benjamin Richer | |||||
Title: | VP, Treasurer and CAO | Title: | SVP, Head of Funds Management | |||||
LINCOLN FINANCIAL DISTRIBUTORS, INC. | ZURICH AMERICAN LIFE INSURANCE COMPANY | |||||||
By: | /s/ Thomas ONeill |
By: | /s/ Dave Dampman | |||||
Name: | Thomas ONeill | Name: | Dave Dampman | |||||
Title: | SVP | Title: | VP, Operations |
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Exhibit A
The currently available Funds of the Trust are:
1. LVIP JPMorgan U.S. Equity Fund
2. LVIP JP Morgan Small Cap Core Fund
3. LVIP JPMorgan Mid Cap Value Fund
4. LVIP JPMorgan Core Bond Fund
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Exhibit B
Separate Accounts
The following separate accounts are subject to this Agreement:
Name of Account and Subaccounts | Date Established by Board of Directors of the Company |
Type of Product Supported by Account | ||
ZALICO HNW PPVUL Series Account - 1 |
12/8/2011 | PPIVUL (Individual Life) | ||
ZALICO HNW PPVA Series Account --1 |
11/1/2013 | Private Placement Individual Flexible Premium Variable Annuity Contract | ||
ZALICO VL Series Account -- 1 |
3/18/2011 | VL-1 | ||
ZALICO VL Series Account 2 |
3/18/2011 | VL-2 | ||
Group Variable Annuity Series I Separate Account |
6/1/2019 | GPPVA |
Classes of Contracts
Supported by Separate Accounts
Listed on the Schedule
Contract Marketing Name |
Contract Form Number | Annuity or Life | ||
PPIVUL | 121PPVULSD-02 | Life | ||
PPVA | ICC12-PPVA-01 | Annuity | ||
VL-1 | S-6004 | Life | ||
VL-2 | S-6004 Rev 3/11 | Life | ||
GPPVA | PPVA-GVA-INST-01-U | Annuity |
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FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made as of May 1, 2023, by and between LINCOLN VARIABLE INSURANCE PRODUCTS TRUST, a Delaware statutory trust (Trust), on its behalf and on behalf of its investment series set forth in Exhibit A (each, a Fund), LINCOLN FINANCIAL DISTRIBUTORS, INC., a Connecticut corporation (Distributor), LINCOLN FINANCIAL INVESTMENTS CORPORATION, a Tennessee corporation (Adviser), and ZURICH AMERICAN LIFE INSURANCE COMPANY NEW YORK (Company), a life insurance company organized under the laws of the State of New York.
WHEREAS, the Trust is registered with the Securities and Exchange Commission (SEC) under the Investment Company Act of 1940 (1940 Act) as an open-end, diversified management investment company;
WHEREAS, the Trust is organized as a series fund comprised of separate investment series, including each Fund;
WHEREAS, the Trust was organized to act as the funding vehicle for certain variable life insurance and/or variable annuity contracts offered by life insurance companies through separate accounts of such life insurance companies and also may offer its shares to certain qualified pension and retirement plans;
WHEREAS, the Trust operates under an order from the SEC, dated June 4, 2007 (File No. 812-13287) (Order), granting relief from various provisions of the 1940 Act and the rules thereunder to the extent necessary to permit Fund shares to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated participating insurance companies accounts (Participating Insurance Companies) and qualified pension and retirement plans outside the separate account context and any other trust, plan, account, contract or annuity trust that is within the scope of Treasury Regulation §1.817.5(f)(3)(iii) (collectively, the Plans);
WHEREAS, the Company has established or will establish one or more separate accounts (Separate Accounts) to offer variable life insurance policies and variable annuity contracts (Variable Contracts), set forth on Exhibit B, and it seeks to have each Fund serve as certain of the underlying funding vehicles for such Variable Contracts;
WHEREAS, the Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940;
WHEREAS, the Distributor is duly registered as a broker-dealer under the Securities Exchange Act of 1934 (the 1934 Act) and is a member in good standing of the Financial Industry Regulatory Authority (FINRA);
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase Fund shares to serve as investment options under the Variable Contracts and each Fund is authorized to sell such shares to the Company at net asset value (NAV); and
WHEREAS, the parties anticipate being able to use the services of the National Securities Clearing Corporation (NSCC) for trades in the LVIP Funds.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Trust, the Distributor and the Adviser agree as follows:
Article I. SALE OF FUND SHARES
1.1. The Trust agrees to make available to the Separate Accounts shares of each Fund as listed in Exhibit A for investment of proceeds from Variable Contracts allocated to the designated Separate Accounts, such shares to be offered as provided in Funds Prospectus.
1.2. The Trust agrees to sell to the Company those Fund shares which the Company orders, executing such orders on a daily basis at the NAV next computed after receipt by the Trust or its designee of the order. For purposes of this Section, the Company shall be the designee of the Trust for receipt of such orders from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on the next Business Day (Day 2) of such order as set forth in Section 1.7. Business Day shall mean any day on which the New York Stock Exchange is open for trading and on which the Funds calculate their net asset value pursuant to the rules of the SEC.
1.3. The Trust agrees to redeem for cash, on the Companys request, any full or fractional Fund shares held by the Company, executing such requests on a daily basis at the NAV next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section, the Company shall be the designee of the Trust for receipt of requests for redemption from the Company and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice on Day 2 of such request for redemption as set forth in Section 1.7.
1.4. The Trust shall furnish, on or before the ex-dividend date, notice to the Company of any income dividends or capital gain distributions payable on the shares of any Fund. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Funds shares in additional shares of the Fund. The Trust shall notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election by written notice to the Trust.
1.5. The Trust shall make the NAV per share for the selected Fund(s) available to the Company on a daily basis as soon as reasonably practicable after the NAV per share is calculated but shall use its best efforts to make such NAV available by 6:30 p.m. Eastern time. In the event of an error in the computation of a Funds NAV or any dividend or capital gain distribution (each, a pricing error), the Distributor or the Fund shall promptly notify the Company as soon as possible after discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing. A pricing error shall be corrected in accordance with the Funds policy for correction of pricing errors (Pricing Policy); provided such Pricing Policy meets the requirements of the 1940 Act and any views expressed by the SEC staff. If an adjustment is necessary to correct a material error which has caused Variable Contract owners to receive less than the amount to which they are entitled, the number of shares of the applicable sub-account of
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such Variable Contract owners will be adjusted and the amount of any underpayments shall be credited by the Distributor to the Company for crediting of such amounts to the applicable Variable Contract owners accounts. Upon notification by the Distributor of any overpayment due to a material error, the Company shall promptly remit to the Distributor any overpayment that has not been paid to the Variable Contract owners. A pricing error shall be deemed to be materially incorrect or constitute a material error in accordance with the Funds Pricing Policy for purposes of this Agreement. The standards set forth in this Section are based on the parties understanding of the views expressed by the staff of the SEC as of the date of this Agreement. In the event the views of the SEC staff are later modified or superseded by SEC or judicial interpretation, the parties shall amend the foregoing provisions of this Agreement to comport with the appropriate applicable standards, on terms mutually satisfactory to all parties.
1.6. At the end of each Business Day, the Company shall use the information described in Section 1.5 to calculate Separate Account unit values for the day. Using these unit values, the Company shall process each such Business Days Separate Account transactions based on requests and premiums received by it by the time as of which the Fund calculates its share price as disclosed in the Funds prospectus (which as of the date of execution of this Agreement is 4:00 p.m. Eastern Time) to determine the net dollar amount of the Fund shares which shall be purchased or redeemed at that days closing NAV per share. The net share purchase or redemption orders so determined shall be transmitted to the Trust by the Company on Day 2 as set forth in Section 1.7.
1.7. | Submission of LVIP Fund Trades |
(a) | NSCC Trades. Company will communicate to the Trust purchases and redemptions of units of the Funds through the National Securities Clearing Corporation (NSCC) by NSCC Cycle 8. If the NSCC is unavailable for any reason, and Company is unable to communicate such orders by NSCC Cycle 8, it shall follow the procedure for manual trades set forth herein in Section 1.7(c). |
(b) | To the extent that trades are submitted by NSCC, such trades shall be handled in accordance with the Rules & Procedures Manual of the NSCC, as amended from time to time. The parties represent that they, an affiliate and/or agent are, or with respect to the Funds are in the process of applying to be, members of the NSCC. |
(c) | Manual Trades. In the event that the NSCC should become unavailable for any reason for submission of Fund trades, the parties agree that Company will communicate the purchases and redemptions of units of Funds through a trade file in a mutually agreed upon format, submitted via email by 7:30 AM, Eastern Time, on Day 2. |
1.8. For manual and direct-feed trades, if the Companys order requests the net purchase of the Trust shares, the Company shall pay for such purchase by wiring federal funds to the Trust or its designated custodial account on the day the order is actually transmitted by the Company by the close of the Federal Reserve wire system. For manual and direct-feed trades, if the Companys order requests a net redemption resulting in a payment of redemption proceeds to the Company, the Trust shall wire the redemption proceeds to the Company on the day the order
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is actually received by the Trust by the close of the Federal Reserve wire system. If the Companys order requests the application of redemption proceeds from the redemption of shares to the purchase of shares of another fund administered or distributed by the Distributor, the Trust shall so apply such proceeds on the same Business Day that the Company transmits such order to the Trust. Payment for trades through the NSCC will be settled through the NSCC. The Company shall notify the Distributor at least five days in advance of a single purchase, redemption or exchange order for one million dollars ($1,000,000) or more of which it has prior knowledge
1.9. Notwithstanding Section 1.8, the Trust reserves the right to suspend the right of redemption or postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules thereunder.
1.10. Notwithstanding Section 1.8, the Trust reserves the right process redemptions in kind, in its sole discretion, subject to and in accordance with applicable laws.
1.11. The Trust agrees that all Fund shares will be sold only to Participating Insurance Companies which have agreed to purchase Fund shares to fund their Separate Accounts and/or to certain qualified pension and other retirement plans, all in accordance with the requirements of Section 817(h) of the Internal Revenue Code of 1986 (Code) and Treasury Regulation 1.817-5. Fund shares will not be sold directly to the general public.
1.12. The Trust may refuse to sell shares of any Fund to any person, or suspend or terminate the offering of the shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board of Trustees of the Trust, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, deemed necessary and in the best interests of the shareholders of each Fund.
Article II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the state in which it is organized and that it has legally and validly established each Separate Account as a segregated asset account under such laws, and that the principal underwriter for the Variable Contracts, is registered as a broker- dealer under the 1934 Act.
2.2. The Company represents and warrants that it has registered each Separate Account as a unit investment trust in accordance with the provisions of the 1940 Act and will cause each Separate Account to remain so registered to serve as a segregated asset account for the Variable Contracts, unless an exemption from registration is available. The Company represents and warrants that interests in the Separate Account under the Variable Contracts will be registered under the Securities Act of 1933 (1933 Act) unless an exemption from registration is available prior to any issuance or sale of the Variable Contracts and that the Variable Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and further that the sale of the Variable Contracts shall comply in all material respects with state insurance law suitability requirements.
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2.3. The Company represents and warrants that the Variable Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust promptly upon having a reasonable basis for believing that the Variable Contracts have ceased to be so treated or that they might not be so treated in the future.
2.4. The Company represents and warrants that it shall deliver such prospectuses, statements of additional information, proxy statements and periodic reports of each Fund as required to be delivered under applicable federal or state law in connection with the offer, sale or acquisition of the Variable Contracts.
2.5. The Trust represents and warrants that the Fund shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and shall be duly authorized for issuance and sold in accordance with all applicable federal and state laws, and the Trust shall be registered under the 1940 Act prior to and at the time of any issuance or sale of such shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act as required in order to effect the continuous offering of Fund shares.
2.6. The Trust represents and warrants that each Fund currently complies, and will continue to comply with the diversification requirements set forth in Section 817(h) of the Code, and the rules and regulations thereunder, and will notify the Company immediately upon having a reasonable basis for believing any Fund has ceased to comply and will take reasonable steps to adequately diversify the Fund to achieve compliance within the grace period afforded by Regulation 1.817-5.
2.7. The Trust represents and warrants that each Fund invested in by the Separate Account is currently qualified as a regulated investment company under Subchapter M of the Code, that it will maintain such qualification under Subchapter M (or any successor or similar provisions) and will notify the Company upon having a reasonable basis for believing any Fund has ceased to so qualify or that it might not be so qualified in the future.
2.8. The Company hereby consents to the use by the Trust of the name and telephone number of the Company and to the reference by the Trust to the relationship between the Company and the Trust as part of an informational page on the Trusts site on the World Wide Web portion of the Internet. The Company hereby further consents to the Trusts establishing a link between the Trusts site and the Companys site from the same place that the Company is listed on the Trusts site. The Trust hereby consents to the use by the Company of the name and telephone number of the Trust and to the reference by the Company to the relationship between the Company and the Trust as part of an informational page on the Companys site on the World Wide Web portion of the Internet. The Trust hereby further consents to the Companys establishing a link between the Trusts site and the Companys site from the same place that the Trust is listed on the Companys site, including a link to the prospectus and statement of additional information of the Fund.
2.9. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware.
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2.10. The Trust represents and warrants that its directors, officers, 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 minimum coverage as required by Rule 17g-(1) under the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company.
2.11. The Adviser represents and warrants that it is registered as an investment adviser and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Tennessee and any applicable state and federal securities laws.
2.12. The Distributor represents and warrants that it is registered as a broker-dealer and shall remain duly registered under all applicable federal and state securities laws and that it shall perform its obligations for the Trust in compliance in all material respects with the applicable laws of the State of Connecticut and any applicable state and federal securities laws.
2.13. 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.
2.14. The Company represents and warrants that all orders for the purchase and sale of Fund shares submitted to the Trust (or counted by the Company in submitting a net order under this Agreement) will have been received in good order by the Company prior to the time as of which the Fund calculates its NAV on that Business Day, as disclosed in the prospectus for the pertinent Fund (the trading deadline), in accordance with Rule 22c-1 under the 1940 Act (subject only to exceptions as permitted under Rule 22c-1(c) under the 1940 Act, respecting initial purchase payments on variable annuity contracts, and to the established administrative procedures of the Company as described under Rule 6e-3(T)(b)(12)(iii) under the 1940 Act respecting premium processing for variable life insurance contracts). The Company will, upon reasonable request, certify to the Trust and the Distributor that the Company is in compliance with this Section.
2.15. The Company represents and warrants that is has implemented policies and procedures reasonably designed to guard against money laundering activities, to detect and report suspicious activities and to comply with the applicable provisions of the Bank Secrecy Act, as amended by the USA PATRIOT Act, and any and all related regulations. In this regard, (a) to the extent required by law, the Company or its agents have obtained and will obtain in the future, evidence that satisfactorily establishes the identity of each of its Variable Contract owners; (b) such information will be made available to the Trust and the Distributor or their agents upon their request for regulatory purposes; and (c) the Company will identify any suspicious transactions to the Trust and the Distributor.
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Article III. TRUST DOCUMENTS; PROXY STATEMENTS
3.1. The Trust shall prepare and file with the SEC and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust.
3.2. The Trust is responsible for preparing, filing and providing the following Trust Documents:
(a) | Summary Prospectus for each of the Funds; |
(b) | Statutory Prospectus for each of the Funds; |
(c) | Statement of Additional Information (SAI) for each of the Funds; |
(d) | Most Recent Annual and Semi-Annual Reports to Shareholders (under Rule 30e-1 under the 1940 Act) for the Funds (together, the Shareholder Reports). |
(e) | Complete Fund Holdings From the Shareholder Reports Containing a Summary Schedule of Investments (the Complete Fund Holdings); |
(f) | Fund Holdings For Most Recent First and Third Fiscal Quarters (and together with the Complete Fund Holdings, the Fund Holdings); and |
(g) | Any amendments or supplements to the foregoing. |
3.3. The Trust shall provide the Summary Prospectus, and, Statutory Prospectus for the Funds to the Company (or its designee) no later than 5 business days prior to May 1 of each year and provide updated versions as necessary, in order to facilitate a continuous offering of the Trusts securities and the Variable Contracts.
3.4. The Trust shall provide the Shareholder Reports and the Fund Holdings to the Company (or its designee) on a timely basis but no later than 5 business days before the date each time that the Shareholder Reports and Fund Holdings are required to be posted on a website by Rule 30e-1.
3.5. The Trust shall provide the Trust Documents to the Company (or its designee) in an electronic format that is suitable for website posting, and in a format, or formats, that:
(a) | are both human-readable and capable of being printed on paper in human- readable format (in accordance with paragraph (h)(2)(i) of Rule 498A); |
(b) | permit persons accessing the Statutory Prospectus and SAI for the Funds to move directly back and forth between each section heading in a table of contents of such document and the section of the document referenced in that section heading (that is, these documents must include linking, in accordance with paragraph (h)(2)(ii) of Rule 498A); |
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(c) | are compliant with applicable provisions of the Americans with Disabilities Act; and |
(d) | permit persons accessing the Trust Documents to permanently retain, free of charge, an electronic version of such Documents that meet the requirements of subparagraphs (h)(2)(i) and (ii) of Rule 498A (in accordance with paragraph (h)(3) of Rule 498A). |
3.6. If the Company elects to rely on on-line delivery of Trust Documents under Rule 498A, the Company or its designee shall host and maintain the website specified in paragraph (j)(1)(iii) of Rule 498A, so that the Trust Documents are publicly accessible and free of charge at that website, in accordance with the conditions set forth in that paragraph, provided that the Trust fulfills its obligations under this Article III.
3.7. If the Company elects to rely on on-line delivery of Trust Documents under Rule 498A, the Company shall ensure that a Summary Prospectus for the Funds is used, in accordance with paragraph (j)(1)(ii) of Rule 498A.
3.8. The Trust shall be responsible for the content and substance of the Trust Documents as provided to the Company, including, but not limited to, the accuracy and completeness of the Trust Documents. Without limiting the generality of the foregoing in any manner, the Trust shall be responsible for ensuring that the Trust Documents as provided to the Company:
(a) | Meet the applicable standards of the 1933 Act, the 1934 Act; the 1940 Act; and all rules and regulations under those Acts; and |
(b) | Do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading. |
3.9. | The Trust shall: |
(a) | At Companys expense, as the Company or its agents may reasonably request from time to time, provide the Company or its agents with sufficient paper copies of the then current Trust Documents, so that the Company or its agents may maintain a supply of such current paper documents sufficient in its reasonable judgment to meet anticipated requests from Variable Contract owners. Such Company or agent requests shall be fulfilled reasonably promptly, but in no event more than three (3) business days after the request from the Company or its agent is received by either the Trust or the Distributor. |
(b) | Alternatively, if requested by the Company in lieu thereof, the Trust or its designee shall provide such electronic or other documentation (including camera ready copies of the current Trust Documents as set in type, or at the request of the Company, a diskette in a form suitable to be sent to a financial printer), and such other assistance as is reasonably necessary to have the then current Trust |
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Documents printed for distribution; the reasonable costs of providing the electronic documentation and of such printing to be borne by the Trust. |
3.10. The Trust will bear the printing and mailing costs associated with the delivery of current proxy materials (including, but not limited to, the proxy cards, notice and statement, as well as the costs associated with tabulating votes) to existing Variable Contract owners of the Company who are invested in the Trust. The Company will submit any bills for printing, duplicating and/or mailing costs, relating to the Trust documents described above, to the Trust for reimbursement by the Trust. The Company shall monitor such costs and shall use its best efforts to control these costs. The Trust will provide Company with copies of current proxy materials suitable for printing with respect to existing Variable Contract owners who are prospective purchasers of the Trust and with respect to prospective Variable Contract owners of the Company. The Company will pay all the expenses for printing and mailing these documents.
3.11. The Trust will provide the Company with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to the Fund after the filing of each such document with the SEC or other regulatory authority. The Company will provide the Trust with at least one complete copy of all prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, exemptive applications and all amendments or supplements to any of the above that relate to a Separate Account after the filing of each such document with the SEC or other regulatory authority.
3.12. The Company agrees that it will cooperate with the Distributor and the Trust by providing to the Distributor and the Trust, within thirty (30) days prior to any deadline imposed by applicable laws, rules or regulations, information regarding shares sold and redeemed by Separate Accounts and whether the Separate Accounts are registered or unregistered under the 1940 Act and any other information pertinent to enabling the Distributor and the Trust to pay registration or other fees with respect to the Trust shares sold during the fiscal year in accordance with Rule 24f-2 or to register and qualify Trust shares under any applicable laws, rules or regulations in a timely manner.
3.13. Except with respect to information regarding the Company provided in writing by the Company, the Company shall not be responsible for the content of the prospectus or statement of additional information for the Trust. Also, except with respect to information regarding the Trust, Distributor, Adviser or the Fund provided in writing by the Trust, Distributor or Adviser, neither the Trust, the Distributor nor Adviser are responsible for the content of the prospectus or statement of additional information for the Variable Contracts.
Article IV. SALES MATERIALS; PRIVACY
4.1. The Company will furnish, or will cause to be furnished, to the Trust and the Distributor, each piece of sales literature or other promotional material in which the Trust, the Distributor or Adviser is named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Trust or the Distributor objects to its use in writing within ten (10) Business Days after receipt of such material.
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4.2. The Trust and the Distributor will furnish, or will cause to be furnished, to the Company, each piece of sales literature or other promotional material in which the Company or its Separate Accounts are named, at least ten (10) Business Days prior to its intended use. No such material will be used if the Company objects to its use in writing within ten (10) Business Days after receipt of such material.
4.3. The Trust and its affiliates and agents shall not give any information or make any representations on behalf of the Company or concerning the Company, the Separate Accounts, or the Variable Contracts issued by the Company, other than the information or representations contained in a registration statement or prospectus for such Variable Contracts, as such registration statement and prospectus, or in reports of the Separate Accounts or reports prepared for distribution to owners of such Variable Contracts, or in sales literature or educational or other promotional material approved by the Company or its designee, except with the written permission of the Company.
4.4. The Company and its affiliates and agents shall not give any information or make any representations on behalf of the Trust or a Fund or concerning the Trust or a Fund other than the information or representations contained in a registration statement or prospectus for the Trust, as such registration statement and prospectus, or in sales literature or other educational or promotional material approved by the Trust or its designee, except with the written permission of the Trust.
4.5. Subject to law and regulatory authority, each party to this Agreement shall treat as confidential all information pertaining to the owners of the Variable Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information until such time as it may come into the public domain without the express written consent of the affected party. Each party shall be solely responsible for the compliance of their officers, directors, employees, agents, independent contractors, and any affiliated and non-affiliated third parties with all applicable privacy-related laws and regulations including but not limited to the Gramm-Leach-Bliley Act and Regulation S-P. The provisions of this Section shall survive the termination of this Agreement.
4.6. Except as provided in Section 4.7 below, neither party shall disclose to any third party any confidential information obtained under this Agreement. For purposes of this Agreement, confidential information includes, without limitation, information about the business operations of the parties; and financial information, methods, plans, techniques, processes, and trade secrets, regardless of whether any such information would be considered material under the federal securities laws. Each party shall use confidential information only in furtherance of performing its duties hereunder and shall maintain policies and procedures reasonably designed to prevent its unauthorized disclosure. For the sake of clarity, confidential information does not include information that (1) is, or becomes, public knowledge through no act or failure to act of the receiving party, its employees, or its agents, (2) is publicly available, (3) is lawfully obtained by the receiving party from a third party not known by the receiving party after reasonable inquiry to have an obligation to maintain the confidentiality of such information, (4) is independently developed by the receiving party from sources or through persons that receiving party can demonstrate had no access to the information of the disclosing party, or (5) is
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otherwise in the possession of the receiving party, or becomes available to the receiving party, without confidentiality restrictions.
4.7. A party may disclose confidential information to a third party: (i) with the prior written consent of the other party; (ii) as required by applicable federal or state law, regulation, court order, or the rules and regulations or request of any governmental or self-regulatory body or official having jurisdiction over such party; or (iii) to its associates, delegates and other agents who reasonably require access to such information in order to provide the services contemplated by this Agreement.
Article V. POTENTIAL CONFLICTS
5.1. The Board of Trustees of the Trust (the Board) will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Variable Contract owners of Participating Insurance Company Separate Accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) state insurance regulatory authority action; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of the Trust are being managed; (e) a difference in voting instructions given by variable annuity and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard voting instructions of Variable Contract owners.
5.2. The Company will report any potential or existing conflicts to the Board. The Company will be responsible for assisting the Board in carrying out its responsibilities under the Conditions set forth in the notice issued by the SEC for the Trust on May 11, 2007 (the Notice) (Investment Company Act Release No. IC-27821), by providing the Board with all information reasonably necessary for it to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Board whenever Variable Contract owner voting instructions are disregarded by the Company. These responsibilities will be carried out with a view only to the interests of the Variable Contract owners.
5.3. If a majority of the Trusts Trustees or a majority of its disinterested trustees (Independent Trustees) determines that a material irreconcilable conflict exists, affecting the Company, the Company, at its expense and to the extent reasonably practicable (as determined by a majority of Independent Trustees), will take any steps necessary to remedy or eliminate the irreconcilable material conflict, which may include: (a) withdrawing the assets allocable to some or all of the Separate Accounts from the Trust or any Fund thereof and reinvesting those assets in a different investment medium, which may include another Fund of the Trust or another investment company, (b) submitting the question as to whether such segregation should be implemented to a vote of all affected Variable Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., Variable Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, (c) offering to the affected Variable Contract owners the option of making such a change, and (d) establishing a new registered management investment company or managed separate account. If a material irreconcilable conflict arises because of the Companys decision to disregard Variable Contract
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owner voting instructions, and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the election of the Trust, to withdraw its Separate Accounts investment in the Trust, and no charge or penalty will be imposed as a result of such withdrawal. The responsibility to take such remedial action shall be carried out with a view only to the interests of the Variable Contract owners.
For the purposes of this Section, a majority of the Independent Trustees shall determine whether or not any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for any Variable Contract. Further, the Company shall not be required by this Section to establish a new funding medium for any Variable Contract if any offer to do so has been declined by a vote of a majority of Variable Contract owners materially affected by the irreconcilable material conflict.
5.4. The Boards determination of the existence of a material irreconcilable conflict and its implications shall be made known promptly and in writing to the Company.
5.5. No less than annually, the Company shall submit to the Board such reports, materials or data as the Board may reasonably request so that the Board may fully carry out the obligations imposed upon it by these Conditions. Such reports, materials, and data shall be submitted more frequently if the Board deems appropriate.
Article VI. VOTING
6.1. To the extent required by Section 12(d)(1)(E)(iii)(aa) of the 1940 Act or Rule 6e-2 or Rule 6e-3(T) thereunder, or other applicable law, whenever Trust shall have a meeting of shareholders of any series or class of shares, the Company shall:
(a) | Solicit voting instructions from Variable Contract owners; |
(b) | Vote Trust shares held in each Separate Account at such shareholder meetings in accordance with instructions received from Variable Contract owners; |
(c) | Vote Trust shares held in each Separate Account for which it has not received timely instructions in the same proportion as it votes the applicable series or class of Trust shares for which it has received timely instructions; and |
(d) | Vote Trust shares held in its general account in the same proportion as it votes the applicable series or class of Trust shares held by the Separate Accounts for which it has received timely instructions. |
Except with respect to matters as to which the Company has the right under Rule 6e-2 or Rule 6e-3(T) under the 1940 Act to vote Trust shares without regard to voting instructions from Variable Contract owners, neither the Company nor any of its affiliates will recommend action in connection with, or oppose or interfere with, the actions of the Trust Board to hold shareholder meetings for the purpose of obtaining approval or disapproval from shareholders (and, indirectly, from Variable Contract owners) of matters put before the shareholders or a vote recommended by Trust Board. The Company shall be responsible for assuring that it calculates voting instructions and votes Trust shares at shareholder meetings in a manner consistent with other
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Participating Insurance Companies. The Trust shall notify the Company of any changes to the Order or conditions. Notwithstanding the foregoing, the Company reserves the right to vote Trust shares held in any segregated asset account in its own right, to the extent permitted by law.
6.2. If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules thereunder with respect to mixed and shared funding on terms and conditions materially different from any exemptions granted in the Order, then the Trust and/or the Company, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
6.3 Notwithstanding anything in Section 6.1 to the contrary, for any Separate Account not registered under the 1940 Act pursuant to Section 3(c)(1) or 3(c)(7) thereof and to the extent required by Section 12(d)(1)(E)(iii) of the 1940 Act, the Company shall (i) either seek instructions from Variable Contract owners with regard to the voting of all proxies with respect to Fund shares held by the Separate Account and vote such proxies only in accordance with such instructions, or vote the Fund shares held by the Separate Account in the same proportion as the vote of all other holders of such shares, and (ii) refrain from substituting Fund shares unless the SEC shall have approved such substitution in the manner provided in Section 26 of the 1940 Act.
Article VII. VARIABLE CONTRACT OWNER AND TRANSACTION INFORMATION.
7.1. Agreement to Provide Information. Subject to the provisions of this section, Company agrees to provide each Fund, upon written request (which may include electronic writings and facsimile transmissions, a Request), the taxpayer identification number (the TIN), the Individual/International Taxpayer Identification Number (ITIN) or other government-issued identifier (GII), if known, of any Variable Contract owners as to which Fund shares have been purchased, redeemed, transferred or exchanged through a Separate Account during the period covered by the Request and the amount, date, name or other identifier of any investment professionals associated with such Variable Account owners or Separate Accounts (if known), and the transaction type (purchase, redemption, transfer or exchange) of every purchase, redemption, transfer or exchange of Fund shares.
(a) | Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the Request for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the Request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its shares. |
(b) | Form and Timing of Response. Company agrees to transmit the requested information that is on Companys books and records to the Fund or its designee promptly, but in any event not later than 10 Business Days after receipt of a Request. |
(c) | Limitations on Use of Information. The Trust, Distributor and Adviser agree, on behalf of themselves and the Fund, not to use the information received for any |
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purpose, other than the purpose stated in Section 7.1(a), without Companys prior written consent. |
7.2. Agreement to Restrict Trading. Company agrees to execute a Request from the Fund to restrict or prohibit further purchases or exchanges of Fund shares with respect to a Variable Contract owner that has been identified by the Fund as having engaged in transactions in Fund shares (directly or indirectly through a Separate Account) that violate policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of its Shares.
(a) | Form of Instructions. Such Request 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 equivalent identifying number of the Variable Contract owner or other agreed upon information to which the instruction relates. |
(b) | Timing of Response. Company agrees to execute the Request as soon as reasonably practicable, but not later than five Business Days after Companys receipt of the instructions. |
(c) | Confirmation. Company agrees to provide written confirmation to the Fund as soon as reasonably practicable that the Request has been executed, but not later than 10 Business Days after the Request has been executed. |
7.3. Share Holdings Through Indirect Intermediaries. Company will use best efforts to determine, promptly upon the Request of the Fund, but not later than five Business Days after Companys receipt of the Request, whether any specific person or entity about whom the Fund has received information pursuant to Section 7.1 of this Agreement is an indirect intermediary as defined in Rule 22c-2 under the 1940 Act (Indirect Intermediary) and, upon further Request from the Fund, promptly (but not later than five Business Days after receipt of such Request) either:
(a) | provide (or arrange to have provided) the identification and transaction information set forth in Section 7.1 of this Agreement regarding such persons who hold Fund shares through the Indirect Intermediary; or |
(b) | restrict or prohibit the Indirect Intermediary from purchasing Fund shares on behalf of itself or other persons. Company agrees to inform the Fund whether Company plans to perform (i) or (ii) above. |
7.4. To the extent practicable, the format for any transaction information provided to the Fund should be consistent with the NSCC Standardized Data Report Format, or any other format acceptable to the Fund.
7.5 Notwithstanding the foregoing, the parties acknowledge that the Companys ability to execute Funds instructions may be limited by contractual obligations contained in the Variable Contracts, rights contained in the Contract prospectuses or other disclosure documents, applicable state insurance laws and regulations, or otherwise. If pursuant to any such limitation,
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the Company reasonably believes that it is prevented from complying with a request from the Fund to prohibit trading, the Company will notify the Fund within three days of receiving such request and will work cooperatively with Fund to determine whether other actions may be taken by the Company in order to protect Fund shareholders from dilution of the value of outstanding securities issued by the Fund, including restricting purchase and exchange activity by accepting purchase or exchange requests via US mail only.
Article VIII. ANTI-MONEY LAUNDERING
8.1. The Company shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Trust information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act. In particular, the Company agrees that:
(a) | as part of processing an application for a Variable Contract, it will verify the identity of applicants and, if an applicant is not a natural person, will verify the identity of prospective principal and beneficial owners submitting an application for a Variable Contract; |
(b) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify the identity of Variable Contract owners, including the identity of principal and beneficial owners of Variable Contracts held by non-natural persons; |
(c) | as part of processing an application for a Variable Contract, it will verify that no applicant, including prospective principal or beneficial owners of the Variable Contract, is a specially designated national or a person from an embargoed or blocked country as indicated by the Office of Foreign Asset Control (OFAC) list of such persons; |
(d) | as part of its ongoing compliance with the USA Patriot Act, it will, from time to time, reverify that no Variable Contract owner, including a principal or beneficial owner of the Variable Contract, is a specially designated national or a person from an embargoed or blocked country as indicated by the OFAC list of such persons; |
(e) | it will ensure that money tendered to the Trust as payment for Trust shares did not originate with a bank lacking a physical place of business (i.e., a shell bank) or from a country or territory named on the list of high-risk or non-cooperating countries or jurisdictions published by the Financial Action Task Force; and |
(f) | if any of the foregoing cease to be true, the Trust or its agents, in compliance with the USA Patriot Act or Bank Secrecy Act, may seek authority to block transactions in Fund shares pertaining to such principal or beneficial owners of Variable Accounts. |
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8.2. The Trust and the Distributor shall comply with all applicable laws and regulations designed to prevent money laundering, and if required by such laws or regulations, to share with the Company information about individuals, entities, organizations and countries suspected of possible terrorist or money laundering activities in accordance with Section 314(b) of the USA Patriot Act.
Article IX. INDEMNIFICATION
9.1. Indemnification by the Company. The Company agrees to indemnify and hold harmless the Trust, the Distributor and the Adviser and each of their Trustees, directors, officers, employees and agents and each person, if any, who controls the Trust, the Distributor or Adviser within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for purposes of Sections 9.1 to 9.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company, which consent shall not be unreasonably withheld) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus, or sales literature for the Variable Contracts or contained in the Variable 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 Trust for use in the registration statement, prospectus or sales literature for the Variable Contracts or in the Variable Contracts (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
(b) | Arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Trust not supplied by the Company, or persons under its control) or wrongful conduct of the Company or any of its directors, officers, employees or agents, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | 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 Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Trust for inclusion therein by or on behalf of the Company; |
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(d) | 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 |
(e) | 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. |
9.2. 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations or duties under this Agreement or to the Trust.
9.3. The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against an Indemnified Party, the Company shall be entitled to participate at its own expense in the defense of such action.
9.4. Indemnification by the Adviser and the Distributor. The Adviser and the Distributor, and each of them separately, agree to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 9.4 to 9.6) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser and the Distributor which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or sales literature of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to 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 Adviser, the Distributor or the Trust by or on behalf of the Company for use in the registration statement or prospectus for the Trust or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Variable Contracts or Fund shares; |
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(b) | 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 Variable Contracts not supplied by the Trust, the Distributor or the Adviser or persons under their control) or wrongful conduct of the Trust, the Distributor or the Adviser or persons under their control, with respect to the sale or distribution of the Variable Contracts or Fund shares; |
(c) | Arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus or sales literature covering the Variable 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 statements therein not misleading, 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 for inclusion therein by or on behalf of the Trust; |
(d) | Arise as a result of a failure by the Trust to provide the services and furnish the materials under the terms of this Agreement; or |
(e) | Arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust. |
9.5. The Adviser and the Distributor 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 Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.6. 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 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 Adviser and the Distributor of any such claim shall not relieve 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 Adviser and the Distributor shall be entitled to participate at their own expense in the defense thereof.
9.7. Indemnification by the Trust. The Trust agrees to indemnify and hold harmless the Company and each of its directors, officers, employees, and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the Indemnified Parties for the purposes of Sections 9.7 to 9.9) against any and all losses, claims,
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damages, liabilities (including amounts paid in settlement with the written consent of the Trust which consent shall not be unreasonably withheld) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements:
(a) | Arise as a result of a failure by the Trust to provide the services and furnish the materials under the terms of this Agreement; or |
(b) | Arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust. |
9.8. The Trust shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Partys willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Partys duties or by reason of such Indemnified Partys reckless disregard of obligations and duties under this Agreement or to the Company.
9.9. The Trust shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Trust in writing within a reasonable time after the summons or other first legal process giving information of the nature of the 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 Trust of any such claim shall not relieve the Trust from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Trust shall be entitled to participate at its own expense in the defense thereof.
9.10. The provisions of this Article IX shall survive the termination of this Agreement.
Article X. TERM; TERMINATION
10.1. This Agreement shall be effective as of the date hereof and shall continue in force until terminated in accordance with the provisions herein.
10.2. | This Agreement shall terminate in accordance with the following provisions: |
(a) | At the option of the Company or the Trust at any time from the date hereof upon 180 days notice, unless a shorter time is agreed to by the parties; |
(b) | At the option of the Company or the Trust, if Fund shares are not reasonably available to meet the requirements of the Variable Contracts. Prompt notice of election to terminate shall be furnished by the Company. The termination will be effective ten days after receipt of notice unless the Trust makes available a sufficient number of Fund shares to reasonably meet the requirements of the Variable Contracts within the ten-day period; |
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(c) | At the option of the Company, upon the institution of formal proceedings against the Trust, the Distributor or Adviser by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in the Companys reasonable judgment, materially impair the Trusts, the Distributors or the Advisers ability to meet and perform their respective obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by the Company with said termination to be effective upon receipt of notice; |
(d) | At the option of the Trust, the Distributor or the Adviser, upon the institution of formal proceedings against the Company by the SEC, FINRA, or any other regulatory body, the expected or anticipated ruling, judgment or outcome of which would, in Trusts reasonable judgment, materially impair the Companys ability to meet and perform its obligations and duties hereunder. Prompt notice of election to terminate shall be furnished by Trust with said termination to be effective upon receipt of notice; |
(e) | At the option of the Company, in the event the Trusts shares are not registered, issued or sold in accordance with applicable state or federal law, or such law precludes the use of such shares as the underlying investment medium of Variable Contracts issued or to be issued by the Company. Termination shall be effective immediately upon notice to the Trust; |
(f) | At the option of the Trust if the Variable Contracts cease to qualify as annuity contracts or life insurance contracts, as applicable, under the Code, or if the Trust reasonably believes that the Variable Contracts may fail to so qualify. Termination shall be effective upon receipt of notice by the Company; |
(g) | At the option of the Company, upon the Trusts breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Company within ten days after written notice of such breach is delivered to the Trust; |
(h) | At the option of the Trust, upon the Companys breach of any material provision of this Agreement, which breach has not been cured to the satisfaction of the Trust within ten days after written notice of such breach is delivered to the Company; |
(i) | At the option of the Trust, if the Variable Contracts are not registered (in the absence of an available exemption), issued or sold in accordance with applicable federal and/or state law. Termination shall be effective immediately upon such occurrence without notice to the Company; |
(j) | At the option of the Company in the event that any 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 any |
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Fund may fail to so qualify. Termination shall be effective immediately upon notice to the Trust; |
(k) | At the option of the Company in the event that any Fund fails to meet the diversification requirements specified in Article II hereof or if the Company reasonably believes that any Fund may fail to meet such diversification requirements. Termination shall be effective immediately upon notice to the Trust; and |
(l) | In the event this Agreement is assigned without the prior written consent of the Company, the Trust, the Distributor and the Adviser, termination shall be effective immediately upon such occurrence without notice. |
10.3. Notwithstanding any termination of this Agreement pursuant to Section 10.2 hereof, the Trust shall, at the option of the Company, continue to make available additional Fund shares, as provided below, for so long as the Company desires pursuant to the terms and conditions of this Agreement, for all Variable Contracts in effect on the effective date of termination of this Agreement (Existing Contracts). Specifically, without limitation, if the Company so elects to make additional Fund shares available, the owners of the Existing Contracts or the Company, whichever shall have legal authority to do so, shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the payment of additional premiums under the Existing Contracts. In the event of a termination of this Agreement, the Company, as promptly as is practicable under the circumstances, shall notify the Trust, the Distributor and the Adviser whether the Company elects to continue to make Fund shares available after such termination. If Fund shares continue to be made available after such termination, the provisions of this Agreement shall remain in effect.
Article XI. NOTICES
Any notice that is required to be given by one party to the other under the terms of this Agreement shall be given in writing and delivered to the other party at the applicable address below, which may be changed by the parties by written notice to the other party in accordance with this Article X.
If to the Trust: | Lincoln Variable Insurance Products Trust | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Distributor: | Lincoln Financial Distributors, Inc. | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Legal Department |
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If to the Adviser: | Lincoln Financial Investments Corporation | |
150 N. Radnor Chester Road | ||
Radnor, PA 19087 | ||
Attn: Chief Counsel Funds Management | ||
Email: Ronald.holinsky@lfg.com | ||
If to the Company: | Zurich American Life Insurance Company of | |
New York | ||
4 World Trade Center | ||
150 Greenwich Street | ||
New York, NY 10007 | ||
Attn: General Counsel | ||
Email: usz_zalico@zurichna.com |
Article XII. MISCELLANEOUS
12.1. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument.
12.2. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.
12.3. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof. It shall also be subject to the provisions of the federal securities laws and the rules and regulations thereunder and to any orders of the SEC granting exemptive relief therefrom and the conditions of such orders.
12.4. The parties agree that the assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund. No Fund shall be liable or shall be charged for any debt, obligation or liability of any other Fund. No Trustee, officer or agent shall be personally liable for such debt, obligation or liability of any Fund.
12.5. Each party 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.
12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws.
12.7. No provision of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by the Trust, the Distributor, the
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Adviser and the Company; provided, however, that the Adviser may from time to time update Exhibit A to this Agreement, with a copy to the Company in due course, to add a new Fund, delete an inactive or terminated Fund, or reflect the change of name of a Fund. The establishment by the Company of an account in any Fund, whether or not as yet reflected on an updated Exhibit A, shall constitute the agreement by the Company and the Trust, the Distributor and the Adviser to be bound by the provisions of this Agreement with respect to that Fund.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Fund Participation Agreement as of the date and year first above written.
LINCOLN VARIABLE INSURANCE PRODUCTS TRUST |
LINCOLN FINANCIAL INVESTMENTS CORPORATION | |||
By: /s/ William P. Flory Jr. | By: /s/ Benjamin Richer | |||
Name: William P. Flory Jr. | Name: Benjamin Richer | |||
Title: VP, Treasurer and CAO | Title: SVP, Head of Funds Management | |||
LINCOLN FINANCIAL DISTRIBUTORS, INC. | ZURICH AMERICAN LIFE INSURANCE COMPANY OF NEW YORK | |||
By: /s/ Thomas ONeill | By: /s/ Dave Dampman | |||
Name: Thomas ONeill | Name: Dave Dampman | |||
Title: SVP | Title: VP, Operations |
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Exhibit A
The currently available Funds of the Trust are:
1. | LVIP JPMorgan U.S. Equity Fund |
2. | LVIP JP Morgan Small Cap Core Fund |
3. | LVIP JPMorgan Mid Cap Value Fund |
4. | LVIP JPMorgan Core Bond Fund |
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Exhibit B
Separate Accounts
The following separate accounts are subject to this Agreement:
Name of Account and Subaccounts | Date Established by Board of Directors of the Company | Type of Product Supported by Account | ||
ZALICONY HNW PPVA SERIES ACCOUNT1 | 12/17/2013 | Private Placement Individual Flexible Premium Variable Annuity Contract | ||
- | - | - |
Classes of Contracts
Supported by Separate Accounts
Listed on the Schedule
Contract Marketing Name |
Contract Form Number | Annuity or Life | ||
ZALICONY | PPVA- 12-01 | Annuity | ||
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