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FORM N-6, ITEM 26(h)
PARTICIPATION AGREEMENTS
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FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 29th day of March, 1995, by and between
American United Life Insurance Company (R) (the "Company"), a life insurance
company domiciled in Indiana, on its behalf and on behalf of the segregated
asset accounts of the Company (the "Separate Accounts"); Acacia Capital
Corporation (the "Fund"), a Maryland corporation; Xxxxxxx Distributors, Inc.
("Distributor") and Xxxxxxx Asset Management Corporation ("Adviser"), a Maryland
corporation.
WITNESSETH
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and the Fund is authorized to issue
separate classes of shares of beneficial interests ("shares"), each representing
an interest in a separate portfolio of assets known as a "series" and each
series has its own investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series
to separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund offers its shares
in one or more series; and
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WHEREAS, the Fund has obtained an order from the SEC, granting
Participating Insurance Companies, separate accounts funding Variable Contracts
of Participating Insurance Companies, and the Fund exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and
paragraph (b)(15) of each of Rules 6e-2 and 6e-3(T) under the 1940 Act, to the
extent necessary to permit such persons to rely on the exemptive relief provided
under paragraph (b)(15) of Rules 6e-2 and 6e-3(T), even though shares of the
Fund may be offered to and held by separate accounts funding variable annuity
contracts or scheduled or flexible premium variable life insurance contracts of
both affiliated and unaffiliated life insurance companies (the "Shared Funding
Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, the Adviser is registered as an Investment Adviser with the SEC
under the Investment Advisers Act of 1940 and with all of the states where
registration is required; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company wishes to purchase shares of one or more of the Fund's
series on behalf of its Separate Accounts to serve as an investment medium for
Variable Contracts funded
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by the Separate Accounts, and the Distributor is authorized to sell shares of
the Fund's series;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1. Sale of Fund Shares
1.1. The Distributor agrees to sell to the Company those shares of the
series offered and made available by the Fund and identified on Exhibit A
("Series") that the Company orders on behalf of its Separate Accounts, and
agrees to execute such orders on each day on which the Fund calculates its net
asset value pursuant to rules of the SEC ("business day") at the net asset value
next computed after receipt and acceptance by the Fund or its designee of the
order for the shares of the Fund.
1.2. The Fund agrees to make available on each business day shares of the
Series for purchase at the applicable net asset value per share by the Company
on behalf of its Separate Accounts; provided, however, that the
Directors/Trustees of the Fund may refuse to sell shares of any Series to any
person, or suspend or terminate the offering of shares of any Series, if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Directors/Trustees, acting in good faith and
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in light of the Directors/Trustees' fiduciary duties under applicable law,
necessary in the best interests of the shareholders of any Series.
1.3. The Fund and the Distributor agree that shares of the Series of the
Fund will be sold only to Participating Insurance Companies, their separate
accounts, and other persons consistent with each Series being adequately
diversified pursuant to Section 817(h) of the Internal Revenue Code of 1986, as
amended ("Code") and the regulations thereunder. No shares of any Series will be
sold directly to the general public.
1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company or separate account unless an agreement containing provisions
substantially the same as this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from the
Company, the Fund agrees to redeem in cash any full or fractional shares of the
Series held by the Company, ordinarily executing such requests on each business
day at the net asset value next computed after receipt and acceptance by the
Fund or its designee of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder. Such redemptions shall be paid
in federal funds ordinarily on the next business day following receipt by the
Fund or its designee of the order for redemption; however the
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Fund reserves the right to postpone payment upon redemption consistent with
Section 22(e) of the Act and any Rules thereunder.
1.6. For purposes of Sections 1.1 and 1.5, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Separate Account, and receipt by such designee shall constitute receipt by the
Fund; provided that the Company receives the order by 4:00 p.m. New York City
time and the Fund receives notice of such order by 9:30 a.m. New York City time
on the next following business day.
1.7. The Company shall pay for shares of the Series on the business day
next following the day that the Company places an order to purchase shares of
the Series, except with respect to shares of any Series of the Fund ("Acquired
Series") ordered by the Company for a Separate Account or any subaccount thereof
in connection with an exchange or transfer from another Separate Account or
another subdivision of a Separate Account under the Variable Contracts, Company
shall pay for shares of the Acquired Series on the latter of (1) the next
business day after an order to purchase the shares is made in accordance with
Section 1.1 hereof, or (2) on the same business day that the Separate Account or
subdivision from which the exchange or transfer is being made receives payment
from the investment company portfolio in which it invests. Payment shall be in
federal funds transmitted by wire or by any other method mutually agreed upon by
the parties hereto.
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1.8. Issuance and transfer of shares of the Series will be by book entry
only unless otherwise agreed by the Fund. Stock certificates will not be issued
to the Company or the Separate Accounts unless otherwise agreed by the Fund.
Fund and Distributor agree that shares ordered from the Fund will be recorded
properly in an appropriate title for the Separate Accounts or the appropriate
subaccounts of the Separate Accounts.
1.9. The Fund shall promptly furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the shares of the Series. The Company
hereby elects to reinvest in the Series all such dividends and distributions as
are payable on a Series' shares and to receive such dividends and distributions
in additional shares of that Series. The Company reserves the right to revoke
this election in writing and to receive all such dividends and distributions in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.10. The Fund shall instruct its recordkeeping agent to advise the Company
on each business day of the net asset value per share for each Series as soon as
reasonably practical after the net asset value per share is calculated, which is
normally 6:30 p.m., New York City time, and shall use its best efforts to make
such net asset value per share available by 7:00 p.m. New York City time.
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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 Indiana law and that it is taxed as an
insurance company under Subchapter L of the Code.
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the Indiana Insurance Code, and that each of the Separate Accounts is a validly
existing segregated asset account under Indiana law.
2.3. The Company represents and warrants that the Variable Contracts issued
by the Company or interests in the Separate Accounts under such Variable
Contracts (1) are or, prior to issuance, will be registered as securities under
the Securities Act of 1933 ("1933 Act") or, alternatively (2) 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 0000 Xxx.
2.4. The Company represents and warrants that each of the Separate Accounts
(1) has been registered as a unit investment trust in accordance with the
provisions of the 1940 Act or, alternatively (2) has not been registered in
proper reliance upon an exclusion from registration under the 1940 Act.
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2.5. The Company represents that it believes, in good faith, that the
Variable Contracts issued by the Company are currently treated as annuity
contracts or life insurance policies (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the Code.
2.6. The Company represents and warrants that any of its Separate Accounts
that fund variable life insurance contracts and that are registered with the SEC
as investment companies, rely on the exemptions provided by Rule 6e-2 or Rule
6e-3(T), or any successor thereto, under the 0000 Xxx.
2.7. The Fund represents and warrants that it is duly organized as a
corporation under the laws of Maryland, and is in good standing under applicable
law.
2.8. The Fund represents and warrants that the shares of the Series are
duly authorized for issuance in accordance with applicable law and that the Fund
is registered as an open-end management investment company under the 0000 Xxx.
2.9. The Fund represents that it believes, in good faith, that the Series
currently comply with the diversification provisions of Section 817(h) of the
Code and the regulations issued thereunder relating to the diversification
requirements for variable life insurance policies and variable annuity
contracts, and that each Series has complied with such provisions since its
commencement of operations.
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2.10. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1. The Fund and Adviser shall take all such actions as are necessary to
permit the sale of the shares of each Series to the Separate Accounts, including
maintaining its registration as an investment company under the 1940 Act, and
registering the shares of the Series sold to the Separate Accounts under the
1933 Act for so long as required by applicable law. The Fund and Adviser shall
amend its Registration Statement filed with the SEC under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous
offering of the shares of the Series. The Fund and Adviser shall register and
qualify the shares of the Fund for sale in accordance with the laws of the
various states to the extent deemed necessary by the Fund or the Distributor.
The Fund and Distributor shall take all steps necessary to sell shares of the
Fund in compliance with all applicable federal and state securities laws.
3.2. The Fund and Adviser shall make every effort to maintain qualification
of each Series as a Regulated Investment Company under Subchapter M of the Code
(or any successor or similar provision) and shall notify the Company immediately
upon
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having a reasonable basis for believing that a Series has ceased to so qualify
or that it might not so qualify in the future.
3.3. The Fund and Adviser shall make every effort to enable each Series to
comply with the requirements of Section 817, including the diversification
provisions of Section 817(h) of the Code and the regulations issued thereunder
relating to the diversification requirements for variable life insurance
policies and variable annuity contracts, and any prospective amendments or other
modifications to Section 817 or regulations thereunder, and shall notify the
Company immediately upon having a reasonable basis for believing that any Series
has ceased or might cease to comply.
3.4. Fund and Adviser agree that each Series of the Fund shall be managed
consistent with its investment objective or objectives, investment policies, and
investment restrictions as described in the Fund's prospectus and registration
statement, as amended or modified from time to time.
3.5. The Company shall take all such actions as are necessary under
applicable federal and state law to permit the sale of the Variable Contracts
issued by the Company, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and registering
the Variable Contracts or interests in the Separate Accounts under the Variable
Contracts to the extent required under the
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1933 Act, and obtaining all necessary approvals to offer the Variable Contracts
from state insurance commissioners.
3.6. The Company shall make every reasonable effort to maintain the
treatment of the Variable Contracts issued by the Company as annuity contracts
or life insurance policies, whichever is appropriate, under applicable
provisions of the Code, and shall notify the Fund and the Distributor
immediately upon having a reasonable basis for believing that such Variable
Contracts have ceased to be so treated or that they might not be so treated in
the future.
3.7. The Company shall require that any persons who offer and sell the
Variable Contracts issued by the Company do so in accordance with applicable
provisions of the 1933 Act, the 1934 Act, the 1940 Act, the NASD Rules of Fair
Practice, and state law respecting the offering of variable life insurance
policies and variable annuity contracts.
3.8. The Distributor shall sell and distribute the shares of the Series of
the Fund in accordance with the applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Rules of Fair Practice, and state law.
3.9. A majority of the Board of Directors/Trustees of the Fund shall
consist of persons who are not "interested persons" of the Fund ("disinterested
Directors/Trustees"),
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as defined by Section 2(a)(19) of the 1940 Act, except that if this provision of
this Section 3.9 is not met by reason of the death, disqualification, or bona
fide resignation of any Director/Trustee or Directors/Trustees, then the
operation of this provision shall be suspended (a) for a period of 45 days if
the vacancy or vacancies may be filled by the Fund's Board; (b) for a period of
60 days if a vote of shareholders is required to fill the vacancy or vacancies;
or (c) for such longer period as the SEC may prescribe by order upon
application.
3.10. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
3.11. The Company shall, at least annually, submit to the Board of
Directors/Trustees of the Fund such reports, materials or data as the
Directors/Trustees may reasonably request so that the Directors/Trustees may
carry out the obligations imposed upon them by the Shared Funding Exemptive
Order, and said reports, materials and data shall be submitted more frequently
if deemed appropriate by the Board of Directors/Trustees.
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ARTICLE IV. Potential Conflicts
4.1. The Fund's Board of Directors/Trustees shall monitor the Fund for the
existence of any material irreconcilable conflict (1) between the interests of
owners of variable annuity contracts and variable life insurance policies, and
(2) between the interests of owners of Variable Contracts ("Variable Contract
Owners") issued by different Participating Insurance Companies that invest in
the Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretive letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of the Fund or any
Series are being managed; or (e) a decision by a Participating Insurance Company
to disregard the voting instructions of Variable Contract Owners.
4.2. The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Directors/Trustees. The
Company will be responsible for assisting the Board of Directors/Trustees of the
Fund in carrying out its responsibilities under this Agreement, by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever Variable
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Contract Owner voting instructions are disregarded. The Company shall carry out
its responsibility under this Section 4.2 with a view only to the interests
of the Variable Contract Owners.
4.3. The Company agrees that in the event that it is determined by a
majority of the Board of Directors/Trustees of the Fund or a majority of the
Fund's disinterested Directors/Trustees that a material irreconcilable conflict
exists, the Company shall, in cooperation with other Participating Insurance
Companies whose Variable Contract owners are affected, at its own expense and to
the extent reasonably practicable (as determined by a majority of the
disinterested Directors/Trustees of the Board of the Fund), take whatever steps
are necessary to eliminate the irreconcilable material conflict, including: (1)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Fund or any Series and reinvesting such assets in a different investment
medium, which may include another series of the Fund, or submitting the question
of 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., Contract Owners of Variable Contracts issued by one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected Variable Contract Owners the option of making such a
change; and (2) establishing a new registered management investment company or
managed separate account. If a material irreconcilable conflict arises because
of the Company's decision to disregard Variable Contract Owners' voting
instructions and that decision represents a minority
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position or would preclude a majority vote, the Company shall be required, at
the Fund's election, to withdraw the Separate Accounts' investment in the Fund,
and no charge or penalty will be imposed as a result of such withdrawal. The
Fund shall neither be required to bear the costs of remedial actions taken to
remedy a material irreconcilable conflict nor shall it be requested to pay a
higher investment advisory fee for the sole purpose of covering such costs. In
addition, no Variable Contract Owner shall be required directly or indirectly to
bear the direct or indirect costs of remedial actions taken to remedy a material
irreconcilable conflict. A majority of the disinterested members of the Board of
Directors/Trustees of the Fund shall determine whether any proposed action
adequately remedies any material irreconcilable conflict, but in no event will
the Fund be required to establish a new funding medium for any Variable
Contract. A new funding medium for any Variable Contract need not be established
by the Company pursuant to this Section 4.3, if an offer to do so has been
declined by vote of a majority of Variable Contract Owners who would be
materially and adversely affected by the irreconcilable material conflict. All
reports received by the Fund's Board of Directors/Trustees of potential or
existing conflicts, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies and the
Fund's investment adviser of a conflict, and determining whether any proposed
action adequately remedies a conflict, shall be properly recorded in the minutes
of the Board of Directors/Trustees of the Fund or other appropriate records, and
such minutes or other records shall be made available to the SEC upon request.
The Company and the Fund
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shall carry out their responsibilities under this Section 4.3 with a view only
to the interests of the Variable Contract Owners.
4.4. The Board of Directors/Trustees of the Fund shall promptly notify the
Company in writing of its determination of the existence of an irreconcilable
material conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements, Voting
5.1. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by the
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2. The Distributor shall provide the Company with as many copies of the
current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy as defined by the Fund) and other assistance as is
reasonably necessary in order for the Company to print together in one document
the current prospectus for the Variable Contracts issued by the Company and the
current prospectus for the Fund. The Fund or Adviser shall
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bear the expense of printing copies of its current prospectus that will be
distributed to existing Variable Contract Owners, and the Company shall bear the
expense of printing copies of the Fund's prospectus that are used in connection
with offering the Variable Contracts issued by the Company.
5.3. The Fund and the Distributor shall provide (1) at the Fund's expense,
one copy of the Fund's current Statement of Additional Information ("SAI") to
the Company and to any owner of a Variable Contract issued by the Company who
requests such SAI, (2) at the Company's expense, such additional copies of the
Fund's current SAI as the Company shall reasonably request.
5.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Company.
The Fund, at the Company's expense, shall provide the Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as the Company shall reasonably request for use in connection with
offering the Variable Contracts issued by the Company. If requested by the
Company in lieu thereof, the Fund shall provide such documentation (including a
final copy of the Fund's proxy materials, periodic reports to shareholders and
other communications to shareholders, as set in type or in camera-ready copy as
defined by the Fund) and other assistance as reasonably necessary
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in order for the Company to print such shareholder communications for
distribution to owners of Variable Contracts issued by the Company.
5.5. For so long as the SEC interprets the 1940 Act to require pass-through
voting by Participating Insurance Companies whose Separate Accounts are
registered as investment companies under the 1940 Act ("Registered Separate
Accounts"), the Company shall vote shares of each Series of the Fund held in
Registered Separate Accounts or subaccounts thereof, at regular and special
meetings of the Fund in accordance with instructions timely received by the
Company (or its designated agent) from owners of Variable Contracts funded by
such Registered Separate Accounts or subaccounts thereof having a voting
interest in the Series. The Company shall vote shares of a Series of the Fund
held in Registered Separate Accounts or subaccounts thereof that are
attributable to the Variable Contracts as to which no timely instructions are
received, as well as shares held in such Registered Separate Accounts or
subaccounts thereof that are not attributable to the Variable Contracts and
owned beneficially by the Company (resulting from charges against the Variable
Contracts or otherwise), in the same proportion as the votes cast by owners of
the Variable Contracts funded by that Separate Account or subaccount thereof
having a voting interest in the Series from whom instructions have been timely
received. The Company shall vote shares of each Series of the Fund held in its
general account or in any Separate Account that is not registered under the 1940
Act, if any, in its discretion or in the same proportion as the votes cast with
respect to shares of the Series held in all Registered Separate Accounts of the
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Company or subaccounts thereof, in the aggregate. In the event that the Shared
Funding Exemptive Order requires all Participating Insurance Companies to
calculate voting privileges in substantially the same manner, the Company agrees
to take steps so that each Registered Separate Account or subaccount thereof
investing in the Fund calculates voting privileges substantially in the manner
established by the Fund, provided that such manner is reasonable and
communicated to the Company by the Fund.
5.6. To the extent applicable, the Fund shall disclose in its prospectus,
in substance, that: (1) shares of the Series of the Fund are offered to
affiliated or unaffiliated insurance company separate accounts which fund both
annuity and life insurance contracts, (2) due to differences in tax treatment or
other considerations, the interests of various Variable Contract Owners
participating in the Fund or a Series might at some time be in irreconcilable
conflict, and (3) the Board of Directors/Trustees of the Fund will monitor for
any material irreconcilable conflicts and determine what action, if any, should
be taken.
ARTICLE VI. Sales Material and Information
6.1. The Company agrees that neither it nor any of its affiliates shall
give any information or make any representations or statements on behalf of the
Fund or concerning the Fund other than the information or representations
contained in the Registration Statement or prospectus for the Fund shares, as
such registration statement
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and prospectus may be amended or supplemented from time to time, or in reports
or proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee and/or by the Distributor or its
designee, except with the prior permission of the Fund or its designee and/or
the Distributor or its designee. The Parties agree that total return information
of the Fund and its Series derived from the prospectus or Registration Statement
of the Fund or from reports provided by the Fund or the Adviser, Distributor to
the Company may be used by the Company in connection with the sale of the
Variable Contracts without prior approval of the Fund or the Distributor, or
their designees, and the Company shall be responsible for using such information
in conformity with the information it is provided.
6.2. Neither the Fund nor the Distributor nor the designee of either shall
use any sales literature or other promotional material in which the Company or
its Separate Accounts are named without the prior approval of the Company or its
designee.
6.3. The Fund and the Distributor agree that each and the affiliates of
each 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 may be amended or supplemented
from time to time, or in reports for the Separate Accounts or prepared for
distribution to owners of such Variable Contracts, or
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in sales literature or other promotional material approved by the Company or its
designee, except with the prior permission of the Company.
6.4. The Fund will provide to the Company at least one complete copy of all
prospectuses, Statements of Additional Information, reports, proxy statements
and other voting solicitation materials, and all amendments and supplements to
any of the above, that relate to the Fund or its shares, promptly after the
filing of such document with the SEC or other regulatory authorities.
6.5. The Company will provide to the Fund at least one complete copy of all
prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the Company or interests therein are not registered under
the 1933 Act), Statements of Additional Information, reports, solicitations for
voting instructions, and all amendments or supplements to any of the above, that
relate to the Variable Contracts issued by the Company or the Separate Accounts
promptly after the filing of such document with the SEC or other regulatory
authority.
6.6. For purposes of this Article VI, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, computerized media, or other public
media), sales literature (i.e., any written
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communication distributed or made generally available to customers or the
public, including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article), educational or training materials or other
communications distributed or made generally available to some or all agents or
employees.
ARTICLE VII. Administration of Accounts
7.1 Services to Owners of Variable Contracts shall be the responsibility of
the Company and shall not be the responsibility of the Fund or the Distributor.
These services include, but are not limited to:
(a) providing information periodically to Contract Owners showing their
interests in the Separate Accounts or subaccounts thereof that invest
in the Fund or in any Series thereof;
(b) addressing inquiries from Contract Owners relating to investing,
exchanging or transferring, or redeeming interests under the Variable
Contracts and the Separate Accounts or subaccounts or any Series
thereof funding such Variable Contracts, which inquiries may relate to
the Fund or a Series thereof;
(c) providing explanations to Owners regarding Fund investment objectives
and policies and other information about the Fund and its Series,
including the performance of the Series;
(d) forwarding shareholder communications from the Fund, including but not
limited to shareholder reports containing annual and semi-annual
financial statements of the Fund to Contract Owners;
(e) delivering the Fund prospectus and supplements thereto to Owners
whenever necessary under the Securities Act of 1933;
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(f) delivering any notices of shareholder meetings and proxy statements
accompanying such notices in connection with general and special
meetings of shareholders of the Fund under which Contract Owners may
have voting rights, and helping tabulate the voting of Owners
tendering voting instructions to the Company.
7.2 The Fund and the Distributor recognize the Company as the sole
shareholder of Fund shares issued under this Agreement and further recognize
that Distributor, Adviser, and/or the Fund will derive a substantial savings in
administrative expense because the Company will provide the services described
above, thus allowing the Fund significant reductions in postage expense and
shareholder communications and recordkeeping, by virtue of having a sole
shareholder rather than multiple shareholders. In consideration of the
administrative savings resulting from such arrangement, the Company shall be
paid an amount equal to 0 basis points (0.00%) per annum of the average
aggregate amount invested by the Company under this Agreement until $5 million
has been invested, and then an amount equal to 7.5 basis points (0.075%) per
annum of the average aggregate amount invested by the Company under this
Agreement until $10 million has been invested, and then an amount equal to 10
basis points (0.10%) per annum of the average aggregate amount invested by the
Company under this Agreement.
7.3 For purposes of computing the payment to the Company contemplated by
this Section VII, the average aggregate amount invested by Company over a one
month period shall be computed by totaling the Company's aggregate investment
(share net asset value multiplied by total number of shares held by the Company)
on each business
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day during the month and dividing by the total number of business days during
such month.
7.4 The payment contemplated by this Section VII shall be calculated by the
Fund, or the Distributor at the end of each calendar quarter and will be paid by
the Distributor to the Company within ten (10) business days thereafter. Payment
will be accompanied by a statement showing the calculation of the monthly amount
payable by the Distributor and such other supporting data as may be reasonably
requested by the Company.
ARTICLE VIII. Indemnification
8. 1. Indemnification By the Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund, each of
its Directors/Trustees and officers, the Adviser, and the Distributor and each
of the Directors/Trustees of the Adviser and the Distributor (collectively, the
"Indemnified Parties" for purposes of this Section 8. 1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation expenses (including legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or litigation expenses:
25
(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 (which shall include an offering memorandum) for the
Variable Contracts issued by the Company or sales literature for such
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 Fund: (1) for use in the registration statement or prospectus
for the Variable Contracts issued by the Company or in sales
literature (or any amendment or supplement to any of the foregoing) or
otherwise, (2) was contained in sales literature or other promotional
material that has been approved by the Fund or its designee or by the
Distributor or its designee for use in connection with the sale of
such Variable Contracts or Fund shares, or (3) or otherwise in
connection with the sale of the Variable Contracts or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other
than statements or representations (1) contained in the registration
statement, prospectus or sales literature of the Fund not supplied by
the Company or persons under its control, (2) contained in the
registration statement, prospectus, SAI, or sales literature for the
Variable Contracts made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund or
the Distributor, or (3) in sales literature or other promotional
material that has been approved by the Fund or its designee or the
Distributor or its designee) or wrongful conduct of the Company or
persons under the control thereof with respect to the sale or
distribution of the Variable Contracts issued by the Company or the
Fund shares; or
(iii arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature of the Fund or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was
made in reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise out of or result from the material breach of any representation
and/or warranty made by the Company in this Agreement or
26
arise out of or result from any other material breach of this Agree-
ment by the Company;
except to the extent provided in Sections 8. 1 (b) and 8. 1 (c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations or
duties under this Agreement or to the Fund.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such 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
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. The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After notice
from the Company to such party of the Company's election to assume the defense
thereof, the
27
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.1(d). The Indemnified Parties shall promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares thereunder or the Variable Contracts
issued by the Company or the operation of the Fund.
8.2. Indemnification By the Adviser/Distributor
8.2(a). The Adviser and Distributor jointly and severally agree to
indemnify and hold harmless the Company and each of its directors and officers
and the Separate Accounts (collectively, the "Indemnified Parties" for purposes
of this Section 8.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Distributor) or litigation expenses (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
litigation expenses:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
28
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Distributor,
Adviser or the Fund or the designee of either by or on behalf of the
Company: (1) for use in the registration statement or prospectus for
the Fund or in sales literature (or any amendment or supplement to any
of the foregoing) or otherwise, (2) was contained in sales literature
or other promotional material that has been approved by the Company or
its designee for use in connection with the sale of the Variable
Contracts or Fund shares, or (3) or otherwise for use in connection
with the sale of the Variable Contracts issued by the Company or Fund
shares; or
(ii) arise out of or as a result of any statement or representation (other
than statements or representations (1) contained in the registration
statement, prospectus or sales literature for the Variable Contracts
not supplied by the Distributor, Adviser, or persons under the control
thereof, (2) contained in the registration statement, prospectus, SAI,
or sales literature for the Fund made in reliance upon and in
conformity with information furnished to the Fund by or on behalf of
the Company, or (3) in sales literature or other promotional material
that has been approved by the Company or its designee) or wrongful
conduct of the Fund, Adviser or Distributor or persons under their
control with respect to the sale or distribution of the Variable
Contracts or the Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature covering the Variable Contracts issued by the
Company, 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 the Distributor,
Adviser, or by or on behalf of the Fund; or
(iv) arise out of or result from the material breach of any representation
and/or warranty made by the Distributor, Adviser, or the Fund in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Distributor, Adviser, or the Fund, including but
not limited to, compliance with the diversification requirements of
Section 817(h) of the Code and qualification of each Series of the
Fund as a Regulated Investment Company under Subchapter M of the Code;
29
except to the extent provided in Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations and
duties under this Agreement or to the Company or the Separate Accounts.
8.2(c). The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such 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 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 an
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 satisfactory to the Indemnified Party named in
the action. After notice from the Distributor to such party of the Distributor's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by
30
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.
8.2(d). The Company shall promptly 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 Fund shares
hereunder or the Variable Contracts issued by the Company or the operation of
the Separate Accounts provided that such litigation or proceedings relate to or
affect the interests of the Fund or the Distributor.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Indiana.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
31
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon 90 days advance written notice to the
other parties, unless a shorter time is agreed to by the parties to
this Agreement; or
(b) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company, and
upon written notice by the Company to the other parties to this
Agreement; or,
(c) at the option of the Fund, Adviser, or the Distributor upon
institution of formal proceedings against the Company by the NASD, the
SEC, or any state securities or insurance department or any other
regulatory body if the Fund, Adviser, or the Distributor 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
(d) at the option of the Company upon institution of formal proceedings
against the Fund, Adviser, or the Distributor by the NASD, the SEC, or
any state securities or insurance department or any other regulatory
body if the Company shall determine, in its sole judgment exercised in
good faith, that the Fund, Adviser, or the Distributor has suffered a
material adverse change in its business, operations, financial
32
condition, or prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(e) upon requisite vote of the Variable Contract Owners having an interest
in the Separate Accounts (or any subaccounts thereof) to substitute
the shares of another investment company or series thereof for the
corresponding shares of the Fund or a Series in accordance with the
terms of the Variable Contracts for which those shares had been
selected to serve as the underlying investment media; or
(f) in the event any of the shares of a Series 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 Variable Contracts issued or to be issued by the Company;
or
(g) by any party to the Agreement upon a determination by a majority of
the Directors/Trustees of the Fund, or a majority of its disinterested
Directors/Trustees, that an irreconcilable material conflict exists;
or
(h) at the option of the Company if the Fund or a Series fails to meet the
diversification requirements specified in Section 3.2 or 3.3 hereof;
or
(i) at the option of the Fund or the Distributor if the Variable Contracts
issued by the Company cease to qualify as annuity contracts or life
insurance contracts, as applicable, under the Code or if the Variable
Contracts are not registered, issued or sold in accordance with
applicable state and/or federal law; or
(j) at the option of the Company upon any substitution of the shares of
another investment company or series thereof for shares of the Fund or
a Series of the
33
Fund in accordance with the terms of the Contracts, provided that the
Company has given at least 30 days prior written notice to the Fund or
Distributor of the date of the substitution.
(k) at the option of the Company upon a material breach of this Agreement
or of any representation or warranty herein by the Fund, Adviser, or
the Distributor, or at the option of the Fund. Adviser, or the
Distributor upon a material breach of this Agreement or of any
representation or warranty herein by the Company.
10.2.Each party to this Agreement shall promptly notify the other parties
to the Agreement of the institution against such party of any such formal
proceedings as described in Sections 10.1(c) and (d) hereof. The Company shall
give 30 days prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in Section
10.1(e) hereof.
10.3. Under the terms of the Variable Contracts, the Company reserves the
right, subject to compliance with the law as then in effect, to make
substitutions for the securities that are held by a Separate Account of Company
under certain circumstances. The parties acknowledge that Company has the right
to substitute other securities for the shares of the Fund or a Series thereof
already purchased or to be purchased in the future if the shares of the Fund or
any or all of the Series of the Fund should no longer be available for
investment, or if, in the judgment of Company management, further investment in
shares of the Fund or any or all of the Series thereof should become
34
inappropriate in view of the purposes of the Contracts. Company will provide 30
days written notice to the Fund or to the Distributor prior to effecting any
such substitution.
10.4. If this Agreement terminates, any provision of this Agreement
necessary to the orderly windup of business under it will remain in effect as to
that business, after termination.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Xxxxxxx Group
0000 Xxxxxxxxxx Xxx., Xxxxx 000XX
Xxxxxxxx, XX 00000
Attn: Legal Department
If to the Adviser:
Xxxxxxx Group
0000 Xxxxxxxxxx Xxx., Xxxxx XXXXX
Xxxxxxxx, XX 00000
Attn: Legal Department
35
If to the Distributor:
Xxxxxxx Group
0000 Xxxxxxxxxx Xxx., Xxxxx 000XX
Xxxxxxxx, XX 00000
Attn: Legal Department
If to the Company:
American United Life Insurance Company
Xxx Xxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx Associate General Counsel
ARTICLE XII. Miscellaneous
12.1. The Fund and the Company agree that if and to the extent Rule 6e-2 or
6e-3(T) under the 1940 Act is amended or if Rule 6e-3 is adopted in final form,
to the extent applicable, the Fund and the Company shall each take such steps as
may be necessary to comply with such Rule as amended or adopted in final form.
12.2. It is understood that the name "American United Life Insurance
Company," "AUL" or any derivative thereof or logo associated with that name is
the valuable property of the Distributor and its affiliates, and that the
Company has the right to use such name (or derivative or logo) only so long as
this Agreement is in effect. Upon
36
termination of this Agreement the Company shall forthwith cease to use such name
(or derivative or logo).
12.3. It is understood that the name "Xxxxxxx" or any derivative thereof or
logo associated with that name is the valuable property of the Distributor and
its affiliates, and that the Company has the right to use such name (or
derivative or logo) only so long as this Agreement is in effect. Upon
termination of this Agreement the Company shall forthwith cease to use such name
(or derivative or logo).
12.4. The parties agree that the names, addresses, and other information
relating to the owners of the Variable Contracts or prospects for the sale of
the Variable Contracts are the exclusive property of Company and may not be used
by the Fund, Adviser, or Distributor without the written consent of the Company.
12.5. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.6. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
37
12.7. 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.
12.8. This Agreement may not be assigned by any party to the Agreement
except with the written consent of the other parties to the Agreement. For
purposes of this provision, assignment shall be as defined in the Investment
Company Act of 1940 and the rules thereunder.
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
Acacia Capital Corporation
ATTEST:___________________________ By: _________________________
Name: Name: Xxxxxxx X. Xxxxxxxxx
Title: Title: General Counsel
Xxxxxxx Asset Management
Corporation
ATTEST: __________________________ By: _________________________
Name: Name: Xxxxxxx X. Xxxxxxxxx
Title: Title: General Counsel
Xxxxxxx Distributors Inc.
ATTEST:___________________________ By:__________________________
Name: Name: Xxxxxxx X. Xxxxxxxxx
Title: Title: General Counsel
American United Life Insurance
Company(R)
ATTEST:___________________________ By:__________________________
Name: Name: Xxxxx Xxxxxxx
Title: Title: V.P. Pension Marketing
39
EXHIBIT A
The following series of Acacia Capital Corporation are "Series" for purposes of
Section
1.1 of the Agreement:
Xxxxxxx Capital Accumulation Portfolio
