EXHIBIT 99.(8)(a)(2)
PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 25/th/ day of April 2000, by and among The
Xxxxx American Fund (the "Trust"), an open-end management investment company
organized as a Massachusetts business trust, United Investors Life Insurance
Company, a life insurance company organized as a corporation under the laws of
the State of Missouri, (the "Company"), on its own behalf and on behalf of each
segregated asset account of the Company set forth in Schedule A, as may be
amended from time to time (the "Accounts"), and Xxxx Xxxxx & Company,
Incorporated, a Delaware corporation, the Trust's distributor (the
"Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "Commission") as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and has an
effective registration statement relating to the offer and sale of the various
series of its shares under the Securities Act of 1933, as amended (the "1933
Act");
WHEREAS, the Trust and the Distributor desire that Trust shares be used as
an investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts to be offered by life
insurance companies which have entered into fund participation agreements with
the Trust (the "Participating Insurance Companies");
WHEREAS, shares of beneficial interest in the Trust are divided into the
following series which are available for purchase by the Company for the
Accounts: Xxxxx American Small Capitalization Portfolio, Xxxxx American Growth
Portfolio, Xxxxx American Income and Growth Portfolio, Xxxxx American Balanced
Portfolio, Xxxxx American MidCap Growth Portfolio, and Xxxxx American Leveraged
AllCap Portfolio;
WHEREAS, the Trust has received an order from the Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-
3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order");
WHEREAS, the Company has registered or will register under the 1933 Act
certain variable life insurance policies and variable annuity contracts to be
issued by the Company under which the Portfolios are to be made available as
investment vehicles (the "Contracts");
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless an exemption from registration under
the 1940 Act is available and the Trust has been so advised;
WHEREAS, the Company desires to use shares of the Portfolios indicated on
Schedule A as
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investment vehicles for the Accounts;
NOW THEREFORE, in consideration of their mutual promises, the parties agree
as follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
-------------------------------------------------
1.1. For purposes of this Article I, the Company shall be the Trust's agent for
the receipt from each Account of purchase orders and requests for
redemption pursuant to the Contracts relating to each Portfolio, provided
that the Company notifies the Trust of such purchase orders and requests
for redemption by 9:30 a.m. Eastern time on the next following Business
Day, as defined in Section 1.3.
1.2. The Trust shall make shares of the Portfolios available to the Accounts at
the net asset value next computed after receipt of a purchase order by the
Trust (or its agent), as established in accordance with the provisions of
the then current prospectus of the Trust describing Portfolio purchase
procedures. The Company will transmit orders from time to time to the Trust
for the purchase and redemption of shares of the Portfolios. The Trustees
of the Trust (the "Trustees") may refuse to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio
if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any
applicable state laws, such action is deemed in the best interests of the
shareholders of such Portfolio.
1.3. The Company shall pay for the purchase of shares of a Portfolio on behalf
of an Account with federal funds to be transmitted by wire to the Trust,
with the reasonable expectation of receipt by the Trust by 2:00 p.m.
Eastern time on the next Business Day after the Trust (or its agent)
receives the purchase order. Upon receipt by the Trust of the federal funds
so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Trust for this purpose.
"Business Day" shall mean any day on which the New York Stock Exchange is
open for trading and on which the Trust calculates its net asset value
pursuant to the rules of the Commission.
1.4. The Trust will redeem for cash any full or fractional shares of any
Portfolio, when requested by the Company on behalf of an Account, at the
net asset value next computed after receipt by the Trust (or its agent) of
the request for redemption, as established in accordance with the
provisions of the then current prospectus of the Trust describing Portfolio
redemption procedures. The Trust shall make payment for such shares in the
manner established from time to time by the Trust. Proceeds of redemption
with respect to a Portfolio will normally be paid to the Company for an
Account in federal funds transmitted by wire to the Company by order of the
Trust with the reasonable expectation of receipt by the Company by 2:00
p.m. Eastern time on the next Business Day after the receipt by the Trust
(or its agent) of the request for redemption. Such payment may be delayed
if, for example, the Portfolio's cash position so requires or if
extraordinary market conditions exist, but in no event shall payment
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be delayed for a greater period than is permitted by the 1940 Act. The
Trust reserves the right to suspend the right of redemption, consistent
with Section 22(e) of the 1940 Act and any rules thereunder.
1.5. Payments for the purchase of shares of the Trust's Portfolios by the
Company under Section 1.3 and payments for the redemption of shares of the
Trust's Portfolios under Section 1.4 on any Business Day may be netted
against one another for the purpose of determining the amount of any wire
transfer.
1.6. Issuance and transfer of the Trust's Portfolio shares will be by book
entry only. Stock certificates will not be issued to the Company or the
Accounts. Portfolio Shares purchased from the Trust will be recorded in
the appropriate title for each Account or the appropriate subaccount of
each Account.
1.7. 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 Portfolio of the Trust. The Company hereby elects to
receive all such income dividends and capital gain distributions as are
payable on a Portfolio's shares in additional shares of that Portfolio.
The Trust shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.8. The Trust shall calculate the net asset value of each Portfolio on each
Business Day, as defined in Section 1.3. The Trust shall make the net
asset value per share for each Portfolio available to the Company or its
designated agent on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts
to make such net asset value per share available to the Company by 6:30
p.m. Eastern time each Business Day.
1.9. The Trust agrees that its Portfolio shares will be sold only to
Participating Insurance Companies and their segregated asset accounts, to
the Fund Sponsor or its affiliates and to such other entities as may be
permitted by Section 817(h) of the Code, the regulations thereunder, or
judicial or administrative interpretations thereof. No shares of any
Portfolio will be sold directly to the general public. The Company agrees
that it will use Trust shares only for the purposes of funding the
Contracts through the Accounts listed in Schedule A, as amended from time
to time.
1.10. The Trust agrees that all Participating Insurance Companies shall have the
obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding materially to those contained in
Section 2.9 and Article IV of this Agreement.
1.11. In the event of a material error in the computation of a Portfolio's net
asset value per share ("NAV") or any dividend or capital gain distribution
(each), a "pricing error"), the Distributor or the Trust shall immediately
notify the Company as soon as possible after the discovery of the error.
Such notification may be verbal, but shall be confirmed promptly in
writing. A pricing error shall be corrected as follows: (a) if the pricing
error results in a difference between the erroneous NAV and the correct
NAV equal to or greater than $0.01
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per share, but less than 1/2 of 1% of the Portfolio's NAV at the time of
the error, then the Distributor shall either reimburse the Portfolio for
any loss, after taking into consideration any positive effect of such error
and no adjustments to Contract owner accounts need be made, or, in the
Distributor's discretion, the procedures described in item (b) shall be
followed; and (b) if the pricing error results in a difference between the
erroneous NAV and the correct NAV equal to or greater than 1/2 of 1% of the
Portfolio's NAV at the time of the error, then the Distributor shall
reimburse the Portfolio for any unrecovered excess redemption proceeds (as
defined below) and shall reimburse the Company for its reasonable costs of
adjustments made to correct Contract owner accounts. If an adjustment is
necessary to correct an error of category (b) above which has caused
Contract owner to receive less than the amount of shares or redemption
proceeds to which they are entitled, or is elected by the Distributor in
connection with a pricing error of category (a), the number of shares of
the applicable account of each such Contract owner will be adjusted and the
amount of any underpayments on redemption transactions not corrected by
such adjustment shall be credited by the Trust to the Company for crediting
of such amounts to the applicable Contract owners' accounts. In the event
that an NAV pricing error results in a Contract owner's receiving
redemption proceeds in an amount which is $500 or more in excess of the
amount that such Contract owner would have received with the correct NAV
(such amount being the "excess redemption proceeds"), then the effect of
such overpayment shall be corrected, to the extent possible, by an
adjustment to the number of shares in the Contract owner's account, and the
Company agrees that it will make a good faith attempt to collect such
excess redemption proceeds not accounted for by such adjustment, but the
Company shall not be obligated to pursue legal action against its Contract
owners. Any overpayments that have not yet been paid to Contract owners
will be remitted to the Trust by the Company upon notification by the
Distributor of such overpayment. In no event shall the Company be liable to
Contract owners for any such adjustment or underpayment amounts, other than
amounts paid by the Trust or the Distributor for crediting to the Company
as set forth above. No provision in this Section 1.11 shall require the
adjustment of a Contract owner's account if the adjustment required for
that account is less than $25. A pricing error within categories (a) or (b)
above shall be deemed to constitute a "material error" for purposes of this
Agreement.
The standards set forth in this Section 1.11 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 that 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.
ARTICLE II.
Obligations of the Parties
--------------------------
2.1. The Trust shall prepare and be responsible for filing with the Commission
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
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additional information of the Trust. The Trust shall bear the costs of
registration and qualification of shares of the Portfolios, preparation and
filing of the documents listed in this Section 2.1 and all taxes to which
an issuer is subject on the issuance and transfer of its shares.
2.2. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Trust to the Contract owners as required to be
distributed to such Contract owners under applicable federal or state law.
2.3. The Trust shall provide such documentation (including a final copy of the
Trust's prospectus as set in type or in camera-ready copy) and other
assistance as is reasonably necessary in order for the Company to print
together in one document the current prospectus for the Contracts issued by
the Company and the current prospectus for the Trust. The Trust shall bear
the expense of printing copies of its current prospectus that will be
distributed to existing Contract owners, and the Company shall bear the
expense of printing copies of the Trust's prospectus that are used in
connection with offering the Contracts issued by the Company.
2.4. The Trust and the Distributor shall provide (1) at the Trust's expense, one
copy of the Trust's current Statement of Additional Information ("SAI") to
the Company and to any Contract owner who requests such SAI, (2) at the
Company's expense, such additional copies of the Trust's current SAI as the
Company shall reasonably request and that the Company shall require in
accordance with applicable law in connection with offering the Contracts
issued by the Company.
2.5. The Trust, 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 Contract owners. The Trust, 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 Contracts issued by the Company. If requested by the Company
in lieu thereof, the Trust shall provide such documentation (including a
final copy of the Trust's proxy materials, periodic reports to shareholders
and other communications to shareholders, as set in type or in camera-ready
copy) and other assistance as reasonably necessary in order for the Company
to print such shareholder communications for distribution to Contract
owners.
2.6. The Company agrees and acknowledges that the Distributor is the sole owner
of the name and xxxx "Xxxxx" and that all use of any designation comprised
in whole or part of such name or xxxx under this Agreement shall inure to
the benefit of the Distributor. Except as provided in Section 2.5, the
Company shall not use any such name or xxxx on its own behalf or on behalf
of the Accounts or Contracts in any registration statement, advertisement,
sales literature or other materials relating to the Accounts or Contracts
without the prior written consent of the Distributor. Upon termination of
this Agreement for any reason, the Company shall cease all use of any such
name or xxxx as soon as reasonably practicable, except as is
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reasonably necessary for regulatory filings and communications with those
Clients remaining invested in the Trust.
2.7. The Company shall furnish, or cause to be furnished, to the Trust or its
designee a copy of each Contract prospectus and/or statement of additional
information describing the Contracts, each report to Contract owners,
proxy statement, application for exemption or request for no-action letter
in which the Trust or the Distributor is named contemporaneously with the
filing of such document with the Commission. 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 in which the Trust or the
Distributor is named, at least five Business Days prior to its use. No
such material shall be used if the Trust or its designee reasonably
objects to such use within three Business Days after receipt of such
material.
2.8. The Company shall not give any information or make any representations or
statements on behalf of the Trust or concerning the Trust or the
Distributor in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from
the registration statement or prospectus for the Trust shares (as such
registration statement and prospectus may be amended or supplemented from
time to time), annual and semi-annual reports of the Trust, Trust-
sponsored proxy statements, or in sales literature or other promotional
material approved by the Trust or its designee, except as required by
legal process or regulatory authorities or with the prior written
permission of the Trust, the Distributor or their respective designees.
The Trust and the Distributor agree to respond to any request for approval
on a prompt and timely basis. The Company shall adopt and implement
procedures reasonably designed to ensure that "broker only" materials
including information therein about the Trust or the Distributor are not
distributed to existing or prospective Contract owners.
2.9. The Trust shall use its best efforts to provide the Company, on a timely
basis, with such information about the Trust, the Portfolios and the
Distributor, in such form as the Company may reasonably require, as the
Company shall reasonably request in connection with the preparation of
registration statements, prospectuses and annual and semi-annual reports
pertaining to the Contracts.
2.10. The Trust and the Distributor shall not give, and agree that no affiliate
of either of them shall give, any information or make any representations
or statements on behalf of the Company or concerning the Company, the
Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and
prospectus may be amended or supplemented from time to time), or in
materials approved by the Company for distribution including sales
literature or other promotional materials, except as required by legal
process or regulatory authorities or with the prior written permission of
the Company. The Company agrees to respond to any request for approval on
a prompt and timely basis.
2.11. So long as, and to the extent that, the Commission interprets the 1940
Act to require pass-through voting privileges for Contract owners, the
Company will provide pass-through
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voting privileges to Contract owners whose cash values are invested,
through the registered Accounts, in shares of one or more Portfolios of
the Trust. The Trust shall require all Participating Insurance Companies
to calculate voting privileges in the same manner and the Company shall be
responsible for assuring that the Accounts calculate voting privileges in
the manner established by the Trust. With respect to each registered
Account, the Company will vote shares of each Portfolio of the Trust held
by a registered Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares for
which voting instructions are received. The Company reserves the right, to
the extent permitted by law, to vote shares held in any Account in its
sole discretion.
2.12. The Company and the Trust will each provide to the other information about
the results of any regulatory examination relating to the Contracts or the
Trust, including relevant portions of any "deficiency letter" and any
response thereto.
2.13. No compensation shall be paid by the Trust to the Company, or by the
Company to the Trust, under this Agreement (except for specified expense
reimbursements). However, nothing herein shall prevent the parties hereto
from otherwise agreeing to perform, and arranging for appropriate
compensation for, other services relating to the Trust, the Accounts or
both.
ARTICLE III.
Representations and Warranties
------------------------------
3.1. The Company represents and warrants that it is an insurance company duly
organized and in good standing under the laws of the State of Missouri and
that it has legally and validly established each Account as a segregated
asset account under such law as of the date set forth in Schedule A.
3.2. The Company represents and warrants that it has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act
and cause each Account to remain so registered to serve as a segregated
asset account for the Contracts, unless an exemption from registration is
available.
3.3. The Company represents and warrants that the Contracts will be registered
under the 1933 Act unless an exemption from registration is available
prior to any issuance or sale of the Contracts; the Contracts will be
issued and sold in compliance in all material respects with all applicable
federal and state laws; and the sale of the Contracts shall comply in all
material respects with state insurance law suitability requirements.
3.4. The Trust represents and warrants that it is duly organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act and the
rules and regulations thereunder.
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3.5. The Trust and the Distributor represent and warrant that the Portfolio
shares offered and sold pursuant to this Agreement will be registered
under the 1933 Act 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 from
time to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify its shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust.
3.6. The Trust represents and warrants that the investments of each Portfolio
will comply with the diversification requirements for variable annuity,
endowment or life insurance contracts set forth in Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations thereunder, including without limitation Treasury Regulation
1.817-5, and will notify the Company immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply or might not so
comply and will immediately take all reasonable steps to adequately
diversify the Portfolio to achieve compliance within the grace period
afforded by Regulation 1.817-5.
3.7. The Trust represents and warrants that it is currently qualified as a
"regulated investment company" under Subchapter M of the Code, that it
will maintain such qualification and will notify the Company immediately
upon having a reasonable basis for believing it has ceased to so qualify
or might not so qualify in the future.
3.8. The Trust represents and warrants that it, its directors, officers,
employees and others dealing with the money or securities, or both, of a
Portfolio shall at all times be covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than
the minimum coverage required by Rule 17g-1 or other applicable
regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3.9. The Distributor represents that it is duly organized and validly existing
under the laws of the State of Delaware and that it is registered, and
will remain registered, during the term of this Agreement, as a broker-
dealer under the Securities Exchange Act of 1934 and is a member in good
standing of the National Association of Securities Dealers, Inc.
ARTICLE IV.
Potential Conflicts
-------------------
4.1. The parties acknowledge that a Portfolio's shares may be made available
for investment to other Participating Insurance Companies. In such event,
the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of
all Participating Insurance Companies. A material irreconcilable conflict
may arise for a variety of reasons, including: (a) an action by any state
insurance regulatory
8
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 interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard
the voting instructions of contract owners. The Trust shall promptly
inform the Company of any determination by the Trustees that a material
irreconcilable conflict exists and of the implications thereof.
4.2. The Company agrees to report promptly any potential or existing conflicts
of which it is aware to the Trustees. The Company will assist the Trustees
in carrying out their responsibilities under the Shared Funding Exemptive
Order by providing the Trustees with all information reasonably necessary
for and requested by the Trustees to consider any issues raised including,
but not limited to, information as to a decision by the Company to
disregard Contract owner voting instructions. All communications from the
Company to the Trustees may be made in care of the Trust.
4.3. If it is determined by a majority of the Trustees, or a majority of the
disinterested Trustees, that a material irreconcilable conflict exists
that affects the interests of contract owners, the Company shall, in
cooperation with other Participating Insurance Companies whose contract
owners are also affected, at its own expense and to the extent reasonably
practicable (as determined by the Trustees) take whatever steps are
necessary to remedy or eliminate the material irreconcilable conflict,
which steps could include: (a) withdrawing the assets allocable to some or
all of the Accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including (but not limited to)
another Portfolio of the Trust, or submitting the question of whether or
not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected Contract owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
4.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the affected
Account's investment in the Trust and terminate this Agreement with
respect to such Account; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. Any such withdrawal and termination must take
place within six (6) months after the Trust gives written notice that this
provision is being implemented. Until the end of such six (6) month
period, the Trust shall continue to accept and implement orders by the
Company for the purchase and redemption of shares of the Trust.
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4.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement
with respect to such Account within six (6) months after the Trustees
inform the Company in writing that the Trust has determined that such
decision has created a material irreconcilable conflict; provided,
however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Until the end of
such six (6) month period, the Trust shall continue to accept and
implement orders by the Company for the purchase and redemption of shares
of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this Agreement, a majority of
the disinterested Trustees shall determine whether 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
Contract. The Company shall not be required to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of
a majority of Contract owners materially adversely affected by the
material irreconcilable conflict. In the event that the Trustees determine
that any proposed action does not adequately remedy any material
irreconcilable conflict, then the Company will withdraw the Account's
investment in the Trust and terminate this Agreement within six (6) months
after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the disinterested
Trustees.
4.7. The Company shall at least annually submit to the Trustees such reports,
materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Shared
Funding Exemptive Order, and said reports, materials and data shall be
submitted more frequently if reasonably deemed appropriate by the
Trustees.
4.8. If and to the extent that Rule 6e-3(T) is amended, or Rule 6e-3 is
adopted, to provide exemptive relief from any provision of the 1940 Act or
the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive
Order, then the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-3(T), as amended, or Rule 6e-3, as adopted, to the extent such rules
are applicable.
ARTICLE V.
Indemnification
---------------
5.1. Indemnification By the Company. The Company agrees to indemnify and hold
-------------------------------
harmless the
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Distributor, the Trust and each of its Trustees, officers, employees and
agents and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 5.1) 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
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal
counsel fees incurred in connection therewith) (collectively, "Losses"),
to which the Indemnified Parties may become subject under any statute or
regulation, or at common law or otherwise, insofar as such Losses are
related to the sale or acquisition of the Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a registration statement
or prospectus for the Contracts or in the Contracts themselves or in
sales literature generated or approved by the Company on behalf of the
Contracts or Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the purposes of this
Article V), 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 indemnity 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 was accurately
derived from written information furnished to the Company by or on
behalf of the Trust for use in Company Documents or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Trust Documents as defined in Section 5.2(a)) or wrongful conduct of
the Company or persons under its control, with respect to the sale or
acquisition of the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents as defined
in Section 5.2(a) 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 was
made in reliance upon and accurately derived from written information
furnished to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide the
services or furnish the materials required 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; or
(f) arise out of or result from the provision by the Company to the Trust
of insufficient
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or incorrect information regarding the purchase or sale of shares of
any Portfolio, or the failure of the Company to provide such
information on a timely basis.
5.2. Indemnification by the Distributor. The Distributor 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 this Section 5.2) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Distributor, which consent
shall not be unreasonably withheld) or expenses (including the reasonable
costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common
law or otherwise, insofar as such Losses are related to the sale or
acquisition of the Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto) (collectively, "Trust Documents" for the purposes of this
Article V), 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 indemnity 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 was accurately
derived from written information furnished to the Distributor or the
Trust by or on behalf of the Company for use in Trust Documents or
otherwise for use in connection with the sale of the Contracts or
Trust shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived form
Company Documents) or wrongful conduct of the Distributor or persons
under its control, with respect to the sale or acquisition of the
Contracts or Portfolio shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents 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 was made in reliance upon and
accurately derived from written information furnished to the Company
by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Distributor or the
Trust to provide the services or furnish the materials required 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 Distributor or the Trust in this Agreement
or arise out of or result from
12
any other material breach of this Agreement by the Distributor or the
Trust.
5.3. None of the Company, the Trust or the Distributor shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, as applicable, with
respect to any Losses incurred or assessed against an Indemnified Party
that arise from such Indemnified Party's willful misfeasance, bad faith or
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
5.4. None of the Company, the Trust or the Distributor shall be liable under
the indemnification provisions of Sections 5.1 or 5.2, as applicable, with
respect to any claim made against an Indemnified party unless such
Indemnified Party shall have notified the other party in writing within a
reasonable time after the summons, or other first written notification,
giving information of the nature of the claim shall have been served upon
or otherwise received by such Indemnified Party (or after such Indemnified
Party shall have received notice of service upon or other notification to
any designated agent), but failure to notify the party against whom
indemnification is sought of any such claim shall not relieve that party
from any liability which it may have to the Indemnified Party in the
absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against an Indemnified Party, the
indemnifying party shall be entitled to participate, at its own expense,
in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably
satisfactory to the party named in the action. After notice from the
indemnifying party to the Indemnified Party of an election to assume such
defense, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be
liable to the Indemnified 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.
ARTICLE VI.
Termination
-----------
6.1. This Agreement shall terminate:
(a) at the option of any party upon six (6) months advance written notice
to the other parties, unless a shorter time is agreed to by the
parties;
(b) at the option of the Trust or the Distributor if the Contracts issued
by the Company cease to qualify as annuity contracts or life insurance
contracts, as applicable, under the Code or if the Contracts are not
registered, issued or sold in accordance with applicable state and/or
federal law; or
13
(c) at the option of any party upon a determination by a majority of the
Trustees of the Trust, or a majority of its disinterested Trustees,
that a material irreconcilable conflict exists; or
(d) at the option of the Company upon institution of formal proceedings
against the Trust or the Distributor by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body
regarding the Trust's or the Distributor's duties under this Agreement
or related to the sale of Trust shares or the operation of the Trust;
or
(e) at the option of the Company if the Trust or a Portfolio fails to meet
the diversification requirements specified in Section 3.6 hereof; or
(f) 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 prompt notice by the Company to the other parties; or
(g) at the option of the Company in the event any of the shares of the
Portfolio 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
(h) at the option of the Company, if the Portfolio fails to qualify as a
Regulated Investment Company under Subchapter M of the Code; or
(i) at the option of the Distributor if it shall determine in its sole
judgment exercised in good faith, that the Company and/or its
affiliated companies 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.
6.2. Notwithstanding any termination of this Agreement, the Trust shall, at the
option of the Company, continue to make available additional shares of any
Portfolio and redeem shares of any Portfolio pursuant to the terms and
conditions of this Agreement for all Contracts in effect on the effective
date of termination of this Agreement.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.9 shall survive
the termination of this Agreement as long as shares of the Trust are held
on behalf of Contract owners in accordance with Section 6.2.
14
ARTICLE VII.
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 Trust or its Distributor:
Xxxx Xxxxx Management, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Exec. V.P.
If to the Company:
United Investors Life Insurance Company
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. XxXxxxxxx, President
ARTICLE VIII.
Miscellaneous
-------------
8.1. 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.
8.2. This Agreement may be executed in two or more counterparts, each of which
taken together shall constitute one and the same instrument.
8.3. 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.
8.4. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. 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 Commission
granting exemptive relief therefrom and the conditions of such orders.
Copies of any such orders shall be promptly forwarded by the Trust to the
Company.
8.5. All liabilities of the Trust arising, directly or indirectly, under this
Agreement, of any and
15
every nature whatsoever, shall be satisfied solely out of the assets of
the Trust and no Trustee, officer, agent or holder of shares of beneficial
interest of the Trust shall be personally liable for any such liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the Commission, the
National Association of Securities Dealers, Inc. 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.
8.7. 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.
8.8. This Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other
party.
8.10. No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by both
parties.
8.11. Each party hereto shall, except as required by law or otherwise permitted
by this Agreement, treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto, and shall not disclose
such confidential information without the written consent of the affected
party unless such information has become publicly available.
8.12. As used in this Agreement, the term "written information" shall include
information transmitted by fax, email or other electronic means.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
Xxxx Xxxxx & Company, Incorporated
By:________________________________
Name:
Title:
The Xxxxx American Fund
16
By:_______________________________________
Name:
Title:
United Investors Life Insurance Company
By:_______________________________________
Name:
Title:
SCHEDULE A
---------------
The Alger American Fund:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American Income and Growth Portfolio
Alger American Small Capitalization Portfolio
Xxxxx American Balanced Portfolio
Alger American MidCap Growth Portfolio
The Accounts: Date Established:
Titanium Universal Life Variable Account September 15, 1999
Titanium Annuity Variable Account September 15, 1999
17
SERVICE AGREEMENT
AGREEMENT dated as of April 25, 2000, between Xxxx Xxxxx Management, Inc.
("Xxxxx"), a New York Corporation with its principal offices at 0 Xxxxx Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, XX 00000, as Investment Adviser for The Xxxxx
American Fund (the "Fund"), and United Investors Life Insurance Company (the
"Company"), a Missouri corporation having its principal office and place of
business at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, XX 00000.
In consideration of the promises and mutual covenants set forth in this
Agreement, the Parties agree as follows:
1. Services Provided
-----------------
The Company agrees to provide services to the Fund including the following:
a) responding to inquiries from the Company Contract owners using one or
more Portfolios of the Fund as an investment vehicle regarding the
services performed by the Company as they relate to the Fund;
b) providing information to Xxxxx and to Contract owners with respect to
shares attributable to Contract owner accounts;
c) printing and mailing of shareholder communications from the Fund
consistent with the Participation Agreement dated April 25, 2000 (such
as proxies, share-holder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) as may be
required;
d) communication directly with Contract owners concerning the Fund's
operations;
e) providing such other similar services as Xxxxx may reasonably request
pursuant to the extent permitted or required under applicable
statutes, rules, and regulations.
2. Expense Allocation
------------------
Subject to Paragraph 3 hereof, the Company or its affiliates shall
initially bear the costs of the following:
a) printing and distributing the Fund's prospectus, statement of
additional information and any amendments or supplements thereto,
periodic reports to shareholders, Fund proxy material and other
shareholder communications (collectively, the "Fund Materials") to be
distributed to prospective Contract owners;
1
b) printing and distributing all sales literature or promotional material
developed by the Company or its affiliates and relating to the
contracts;
c) servicing Contract owners who have allocated Contract value to a
Portfolio, which servicing shall include, but is not limited to, the
items listed in Paragraph 1 of this Agreement.
3. Payment of Expenses
-------------------
a) Xxxxx will pay the Company a quarterly fee equal to a percentage of
the average daily net assets of the Portfolios attributable to
Contracts, at the annual rate set forth in the following schedule
("Portfolio Servicing Fee"), in connection with the expenses incurred
by the Company under Paragraph 2 hereof: 0.25% of all assets invested
in any Portfolio of the Fund.
b) From time to time, the Parties hereto shall review the Portfolio
Servicing Fee to determine whether it reasonably approximates the incurred
and anticipated costs, over time of the Company in connection with its
duties hereunder. The Parties agree to negotiate in good faith any change
to the Portfolio Servicing Fee proposed by a Party in good faith.
4. Term of Agreement
-----------------
This Agreement shall continue in effect for so long as Xxxxx or its
successor(s) in interest, or any affiliate thereof, continues to perform in
a similar capacity for the Fund, and for so long as any Contract value or
any monies attributable to the Company is allocated to a Portfolio,
provided, however, that either party may Terminate this Agreement upon a
material breach of this Agreement by the other party that remains uncured
for 60 days after written notice by the terminating party. However,
Portfolio Servicing Fees shall in no event be paid to the Company more than
one year after the termination of this Agreement.
5. Indemnification
---------------
a) The Company agrees to indemnify and hold harmless Xxxxx and its
officers, directors and affiliates from any and all loss, liability
and expense resulting from the gross negligence or willful wrongful
act of the Company under this Agreement, except to the extent such
loss, liability or expense is the result of the willful misfeasance,
bad faith or gross negligence of Xxxxx in the performance of its
duties, or by reason of the reckless disregard of its obligations and
duties under this Agreement.
b) Xxxxx agrees to indemnify and hold harmless the Company and its
officers, directors and affiliates from any and all loss, liability
and expense resulting from the gross negligence or willful wrongful
act of Xxxxx under this Agreement, except to the
2
extent such loss, liability or expense is the result of the willful
misfeasance, bad faith or gross negligence of the Company in the
performance of its duties, or by reason of the reckless disregard of
its obligations and duties under this Agreement.
6. Notice
------
Notices and communications required or permitted hereby will be given to
the following persons at the following addresses and facsimile numbers, or
such other persons, addresses or facsimile numbers as the Party receiving
such notices or communications may subsequently direct in writing:
Xxxx Xxxxx Management, Inc.
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Exec. V.P.
Fax: (000) 000-0000
United Investors Life Insurance Company
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. XxXxxxxxx, President
Fax: (000) 000-0000
7. Applicable Law
--------------
Except insofar as the Investment Company Act of 1940 or other federal laws
and regulations may be controlling, this Agreement will be construed and
the provisions hereof interpreted under and in accordance with New York
law, without regard for that state's principles of conflict of laws.
8. Severability
------------
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby.
9. Rights Cumulative
-----------------
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, that the Parties are entitled to under
federal and state laws.
3
10. Assignment
----------
Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written consent of the other
party thereto.
11. Amendment
---------
This Agreement may be amended or modified in whole or in part only by a
written agreement executed by both parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their duly authorized officers signing below.
XXXX XXXXX MANAGEMENT, INC.
By:___________________________
Xxxxxxx X. Xxxx
Executive Vice President
UNITED INVESTORS LIFE INSURANCE
COMPANY
By:___________________________
Name:
Title:
4
