PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into as of _September
25, 2001_ by and between AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY
(the "Company"), and AMERICAN CENTURY INVESTMENT SERVICES, INC.
("Distributor").
WHEREAS, the Company offers to the public certain individual variable
annuity contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options
under certain of the Contracts as listed in Exhibit A, designated series of
mutual fund shares as listed in Exhibit B (the "Funds") mutual funds
registered under the Investment Company Act of 1940 (the "1940 Act") and
issued by American Century Variable Portfolios, Inc. (the "Issuer"), and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options under the
Contracts.
NOW, THEREFORE, the Company and Distributor agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of
this Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts (defined in SECTION 8(a) below) through a single account per Fund at
the net asset value applicable to each order. The Funds' shares shall be
purchased and redeemed on a net basis in such quantity and at such time as
determined by the Company to satisfy the requirements of the Contracts for
which the Funds serve as underlying investment media. Dividends and capital
gains distributions will be automatically reinvested in full and fractional
shares of the Funds.
2. TIMING OF TRANSACTIONS. Distributor hereby appoints the Company as
agent for the Funds for the limited purpose of accepting purchase and
redemption orders for Fund shares from the Contract owners. On each day the
New York Stock Exchange (the "Exchange") and the Company are open for
business (each, a "Business Day"), the Company may receive instructions from
the Contract owners for the purchase or redemption of shares of the Funds
("Orders"). Orders received and accepted by the Company prior to the close of
regular trading on the Exchange (the "Close of Trading") on any given
Business Day (currently, 4:00 p.m. Eastern time) and transmitted to the
Funds' transfer agent by 9:30 a.m. Eastern time on the next Business Day will
be executed at the net asset value determined as of the Close of Trading on
that Business Day. Any Orders received by the Company on such day but after
the Close of Trading, and all Orders that are transmitted to the Funds'
transfer agent after 9:30 a.m. Eastern time on the next Business Day, will be
executed at the net asset value determined as of the Close of Trading on the
next Business Day following the day of receipt of such Order. The day as of
which an Order is executed by the Funds' transfer agent pursuant to the
provisions set forth above is referred to herein as the "Trade Date".
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All orders are subject to acceptance or rejection by Distributor or the Funds
in the sole discretion of either of them.
3. PROCESSING OF TRANSACTIONS
The transactions in Fund shares are to be settled directly
with the Funds' transfer agent and the following provisions shall apply:
(a) By 6:30 p.m. Eastern time on each Business Day, Distributor
(or one of its affiliates) will provide to the Company via facsimile or
other electronic transmission acceptable to the Company the Funds' net
asset value, dividend and capital gain information and, in the case of
income funds, the daily accrual for interest rate factor (mil rate),
determined at the Close of Trading.
(b) By 9:30 a.m. Eastern time on the Business Day next
following the Trade Date, the Company will provide to Distributor
via facsimile or other electronic transmission acceptable to
Distributor a report stating whether the instructions received by
the Company from Contract owners by the Close of Trading on such
Business Day resulted in the Accounts being a net purchaser or net
seller of shares of the Funds. As used in this Agreement, the
phrase "other electronic transmission acceptable to Distributor"
includes the use of remote computer terminals located at the
premises of the Company, its agents or affiliates, which terminals
may be linked electronically to the computer system of Distributor,
its agents or affiliates (hereinafter, "Remote Computer Terminals").
(c) Upon the timely receipt from the Company of the report
described in (2) above, the Funds' transfer agent will execute the
purchase or redemption transactions (as the case may be) at the net
asset value computed as of the Close of Trading on the Trade Date.
Payment for net purchase transactions shall be made by wire transfer to
the applicable Fund custodial account designated by the Funds on the
Business Day next following the Trade Date. Such wire transfers shall
be initiated by the Company's bank prior to 4:00 p.m. Eastern time and
received by the Funds prior to 6:00 p.m. Eastern time on the Business
Day next following the Trade Date ("T+1"). If payment for a purchase
Order is not timely received, such Order will be, at Distributor's
option, either (i) executed at the net asset value determined on the
Trade Date, and the Company shall be responsible for all costs to
Distributor or the Funds resulting from such delay, or (ii) executed at
the net asset value next computed following receipt of payment.
Payments for net redemption transactions shall be made by wire transfer
by the Issuer to the account(s) designated by the Company on T+1;
PROVIDED, HOWEVER, the Issuer reserves the right to settle redemption
transactions within a reasonably sufficient time after the date the
order is placed in order to enable the Company to pay redemption
proceeds within the time specified in Section 22(e) of the 1940 Act or
such shorter period of time as may be required by law. On any Business
Day when the Federal Reserve Wire Transfer System is closed, all
communication and processing rules will be suspended for the settlement
of Orders. Orders will be settled on the next
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Business Day on which the Federal Reserve Wire Transfer System is open
and the original Trade Date will apply.
4. PRICING ERRORS.
(a) In the event any adjustment is required to correct
any error in the computation of the net asset value of a Fund's
shares at the shareholder level as a result of a pricing error that
is deemed to be material under the pricing policy of the Fund's
Board of Directors or which Distributor otherwise deems necessary
to correct at the shareholder level, Distributor shall notify
Company as soon as reasonably practical after discovering the need
for such adjustment.
(b) Any such notice shall state for each day for which the error
occurred the incorrect price, the correct price and, to the extent communicated
to the Fund's shareholders, the reason for the price change. Company may send
this notice or a derivation thereof (so long as such derivation is approved in
advance by Distributor) to Participants whose accounts are affected by the price
change.
(c) If as a result of any such error the Account maintained by the
Fund receives an amount in excess of the amount to which it otherwise would
be entitled, Distributor and Company agree to evaluate the situation
together, on a case by case basis, with a goal toward pursuing an appropriate
course of action. In the event the Company makes any overpayments to Contract
owners attributable to the provision of materially incorrect share net asset
value information that is not subsequently corrected and communicated to the
Company in sufficient time to prevent overpayment, Distributor agrees to
reimburse the Company for the amount of overpayments. If an adjustment to the
Account is necessary, Distributor shall reimburse Company its reasonable
out-of-pocket expenses in correcting each Participant's records,
communicating with Participants regarding any adjustment to their accounts,
and mailing out corrected statements to Participants.
5. PROSPECTUS AND PROXY MATERIALS.
(a) Distributor shall provide the Company with copies of the Issuer's
proxy materials, periodic fund reports to shareholders and other materials that
are required by law to be sent to the Issuer's shareholders. In addition,
Distributor shall provide the Company with a sufficient quantity of prospectuses
of the Funds to be used in conjunction with the transactions contemplated by
this Agreement, together with such additional copies of the Issuer's
prospectuses and Statements of Additional Information as may be reasonably
requested by Company. If the Company provides for pass-through voting by the
Contract owners, or if the Company determines that pass-through voting is
required by law, Distributor will provide the Company with a sufficient quantity
of proxy materials for each, as directed by the Company.
(b) The cost of preparing, printing and shipping of the prospectuses,
periodic fund reports and other materials of the Issuer to the Company shall be
paid by Distributor or its agents or
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affiliates; PROVIDED, HOWEVER, that if at any time Distributor or its agent
in good faith reasonably deems the usage by the Company of such items to be
excessive, it may, prior to the delivery of any quantity of materials in
excess of what is deemed reasonable, request that the Company demonstrate the
reasonableness of such usage. If Distributor believes in good faith the
reasonableness of such usage has not been adequately demonstrated, it may
request that the party responsible for such excess usage pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, Distributor may
refuse to supply such additional materials and Distributor shall be deemed in
compliance with this SECTION 5 if it delivers to the Company at least the
number of prospectuses and other materials as may be required by the Issuer
under applicable law.
(c) If the Company so requests, Distributor shall provide the Issuer's
prospectuses, periodic fund reports and other materials of the Issuer to the
Company by electronic file instead of
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by paper copy. If the Company chooses to receive electronic files, the
Company shall be responsible for any costs of preparing, printing and
shipping such documents.
(d) The cost of any distribution of prospectuses, proxy materials,
periodic fund reports and other materials of the Issuer to the Contract owners
shall be paid by the Company and shall not be the responsibility of Distributor
or the Issuer.
6. RECORD OWNER. The Separate Accounts listed in Exhibit A shall
be the sole shareholder of Fund shares purchased for the Contract owners
pursuant to this Agreement (the "Record Owner"). The Record Owner shall
properly complete any applications or other forms required by Distributor or
the Issuer from time to time.
7. REPRESENTATIONS.
(a) The Company represents and warrants that (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
Separate Accounts listed in Schedule A hereto (the "Accounts"), each of which is
a duly authorized and established separate account under Iowa Insurance law, and
has registered each Account as a unit investment trust under the 1940 Act to
serve as an investment vehicle for the Contracts; (iii) each Contract provides
for the allocation of net amounts received by the Company to an Account for
investment in the shares of one or more specified investment companies available
through the Account to act as underlying investment media; (iv) selection of a
particular investment company is made by the Contract owner under a particular
Contract, who may change such selection from time to time in accordance with the
terms of the applicable Contract; and (v) the activities of the Company
contemplated by this Agreement comply in all material respects with all
provisions of federal and state securities laws applicable to such activities.
(b) Distributor represents that (i) this Agreement has
been duly authorized by all necessary corporate action and, when
executed and delivered, shall constitute the legal, valid and
binding obligation of Distributor, enforceable in accordance with
its terms; (ii) the prospectus of each Fund complies in all
material respects with federal and state securities laws; (iii)
shares of the Issuer are registered and authorized for sale in
accordance with all federal and state securities laws; (iv) each
Fund engages in business as an open-end, diversified management
investment company and was established for the purpose of serving
as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts
offered by insurance companies which have entered into agreements
substantially similar to this Agreement; (v) each Fund is currently
qualified as a Regulated Investment Company under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), they
will maintain such qualification (under Subchapter M or any
successor or similar provision and the Distributor will notify the
Company immediately upon having a reasonable basis for believing
that a Fund has ceased to qualify or that it might not so qualify
in the future); (vi) each Fund will at all times be adequately
diversified within the meaning of Section 817(h) of the Code and
Treasury Regulation 1.817-5 relating to the
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diversification requirements for variable annuity, endowment, or
life insurance contracts and any amendments or other modifications
to such Section or Regulations or successors thereto and
Distributor will notify the Company immediately upon having a
reasonable basis for believing that a Fund has ceased to qualify or
that it might not so qualify in the future; (vii) the Issuer is
lawfully organized and validly existing under the laws of the State
of Maryland and it does and will comply with applicable provisions
of the 1940 Act; (viii) the Funds and all of their directors,
officers, employees and other individuals/entities having access to
the funds and/or securities of the Funds are and continue to be at
all times covered by a blanket fidelity bond or similar coverage
issued by a reputable bonding company (including coverage for
larceny and embezzlement) for the benefit of each Fund in an amount
not less than the minimal coverage as required currently by Rule
17g-1 of the 1940 Act or related provisions as may be promulgated
from time to time; (ix) the Distributor is a member in good
standing of the NASD and is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
(x) the Distributor will sell and distribute the Funds' shares in
accordance with all applicable federal and state securities laws.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of
federal and state laws applicable to its respective activities
under this Agreement. All obligations of each party under this
Agreement are subject to compliance with applicable federal and
state laws.
(b) Each party shall promptly notify the other party in
writing in the event that it is, for any reason, unable to perform
any of its obligations under this Agreement.
(c) The Company covenants and agrees that all Orders
accepted and transmitted by it hereunder with respect to each
Account on any Business Day will be based upon instructions that it
received from the Contract owners, in proper form prior to the
Close of Trading of the Exchange on that Business Day. The Company
shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with SECTION 9(c)
hereof.
(d) The Company covenants and agrees that all Orders
transmitted to the Issuer, whether by telephone, telecopy, or other
electronic transmission acceptable to Distributor, shall be sent by
or under the authority and direction of a person designated by the
Company as being duly authorized to act on behalf of the Accounts.
Distributor shall be entitled to rely on the existence of such
authority and to assume that any person transmitting Orders for the
purchase, redemption or transfer of Fund shares on behalf of the
Company is properly authorized to act in such capacity. The Company
shall maintain the confidentiality of all passwords and security
procedures issued, installed or otherwise put in place with respect
to the use of Remote Computer Terminals and assumes full
responsibility for the security therefor. The Company further
agrees to be responsible for the accuracy, propriety and
consequences of all data transmitted to Distributor by the Company
by telephone, telecopy or other electronic transmission acceptable
to Distributor.
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(e) The Company agrees that, to the extent it is able to
do so, it will use its best efforts to give equal emphasis and
promotion to shares of the Funds as is given to other underlying
investments of the Accounts, subject to applicable Securities and
Exchange Commission rules. In addition, the Company shall not
impose any fee, condition, or requirement for the use of the Funds
as investment options for the Contracts that operates to the
specific prejudice of the Funds VIS-A-VIS the other investment
media made available for the Contracts by the Company.
9. COMPANY TO PROVIDE DOCUMENTS AND INFORMATION ABOUT ISSUER.
(a) The Company will provide to Distributor or its designated agent
at least one (1) complete copy of Account Prospectuses, reports, final voting
instruction solicitation material applications for exemptions, requests for
no-action letters and notices, orders or responses relating thereto, and all
amendments and supplements to any of the above, that relate to each Account
or the Contracts, within a reasonable time with the filing of such document
with the SEC or NASD.
(b) The Company will provide to Distributor or its
designated agent at least one (1) complete copy of each piece of
sales literature or other promotional material in which Issuer, any
Fund, Distributor or any of their affiliates are named, at least
fifteen (15) Business Days prior to its use or such shorter period
as the parties hereto may, from time to time, agree upon. No such
material shall be used if Distributor or its designated agent
objects to such use within ten (10) Business Days after receipt of
such material or such shorter period as the parties hereto may,
from time to time, agree upon. Distributor or its designee reserves
the right to reasonably object to the continued use of any such
sales literature or other promotional material in which Issuer, any
Fund, Distributor or any of their affiliates is named, and no such
material shall be used if Distributor or its designee so object.
(c) Neither the Company nor any of its affiliates, will
give any information or make any representations or statements on
behalf of or concerning Issuer, any Fund, Distributor or their
affiliates in connection with the sale of the Contracts other than
(i) the information or representations contained in the
registration statement, including the Fund Prospectus contained
therein, relating to shares, as such registration statement and
Fund Prospectus may be amended from time to time; or (ii) in
reports or proxy materials for Issuer or any Fund; or (iii) in
published reports for Issuer or any Fund that are in the public
domain; or (iv) in sales literature or other promotional material
approved by Distributor, except with the express written permission
of Distributor.
(d) For the purposes of Sections 10 and 11 of this
Agreement, 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,
telephone directories (other than routine listings), electronic
media, computerized media, or other public media (e.g., on-line
networks such as the Internet or other electronic messages), sales
literature (i.e., any written or electronic communication
distributed or made generally available to
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customers or the public, including, but not limited to, brochures, circulars,
research reports, market letters, performance reports or summaries, form
letters, telemarketing scripts, 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, registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials and any other material constituting sales literature or
advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
10. DISTRIBUTOR TO PROVIDE DOCUMENTS AND INFORMATION ABOUT
THE COMPANY.
(a) Distributor will provide to the Company at least one (1)
complete copy of Fund Prospectuses, reports and final proxy material and all
amendments and supplements to any of the above. Distributor will also provide
to the Company at least one (1) complete copy of applications for exemptions,
requests for no-action letters and notices, orders or responses relating
thereto, and all amendments and supplements to any of the above, that are
reasonably likely to affect the Company's business, within a reasonable time
of the filing of such document with the SEC or NASD.
(b) Distributor will provide to the Company or its designated agent
at least one (1) complete copy of each piece of sales literature or other
promotional material in which the Company, or any of its respective
affiliates is named, or that refers to the Accounts or the Contracts, at
least fifteen (15) Business Days prior to its use or such shorter period as
the parties hereto may, from time to time, agree upon. No such material shall
be used if the Company or its designated agent objects to such use within ten
(10) Business Days after receipt of such material or such shorter period as
the parties hereto may, from time to time, agree upon. The Company or its
designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Company or
any of its affiliates is named or that refers to the Accounts or the
Contracts, and no such material shall be used if the Company or its designee
so object.
(c) Neither Distributor, Issuer nor any of their affiliates will
give any information or make any representations or statements on behalf of
or concerning the Company, each Account, or the Contracts other than (i) the
information or representations contained in the registration statement,
including each Account Prospectus contained therein, relating to the
Contracts, as such registration statement and Account Prospectus may be
amended from time to time; or (ii) in published reports for the Account or
the Contracts that are in the public domain and approved by the Company for
distribution; or (iii) in sales literature or other promotional material
approved by the Company or its affiliates, except with the express written
permission of the Company.
(d) Distributor will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Fund, and of any
change in the Fund's registration statement or prospectus, particularly any
change resulting in a change to the registration statement or prospectus for
any Account. Distributor will work with the Company so as to enable the
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Company to solicit proxies from Contract owners, or to make changes to its
registration statement or prospectus, in an orderly manner.
11. USE OF NAMES. Except as otherwise expressly provided for in
this Agreement, neither Distributor nor any of its affiliates nor the Funds
shall use any trademark, trade name, service xxxx or logo of the Company, or
any variation of any such trademark, trade name, service xxxx or logo,
without the Company's prior written consent, the granting of which shall be
at the Company's sole option. Except as otherwise expressly provided for in
this Agreement, the Company shall not use any trademark, trade name, service
xxxx or logo of the Issuer, Distributor or any variation of any such
trademarks, trade names, service marks, or logos, without the prior written
consent of either the Issuer or Distributor, as appropriate, the granting of
which shall be at the sole option of Distributor and/or the Issuer.
12. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in SECTION 13(a) below) participating in any Fund calculate
voting privileges in a consistent manner.
(b) The Company will distribute to Contract owners proxy material
furnished by Distributor and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for which
no voting instructions are received in the same proportion as shares for which
such instructions have been received as long as required by applicable law. The
Company and its agents shall not oppose or interfere with the solicitation of
proxies for Fund shares held for such Contract owners.
13. INDEMNITY.
(a) Distributor agrees to indemnify and hold harmless the Company
and its officers, directors, employees, agents, affiliates and each person,
if any, who controls the Company within the meaning of the Securities Act of
1933 (collectively, the "Indemnified Parties" for purposes of this SECTION
13(a)) against any losses, claims, expenses, damages or liabilities
(including amounts paid in settlement thereof) or litigation expenses
(including legal and other expenses) (collectively, "Losses"), to which the
Indemnified Parties may become subject, insofar as such Losses
(i) arise out of or are based upon any untrue statement of
any material fact contained in the Issuer's 1933 Act registration
statement, Fund Prospectus or sales literature or advertising
of any Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, that this agreement to indemnify shall not apply as to
any Indemnified Party if such statement or
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omission or was made in reliance upon and in conformity with the
information furnished to Distributor or its affiliates by or on
behalf of the Company or its affiliates for use in Issuer's 1933
Act registration statement, Fund Prospectus, or in sales literature
or advertising or otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained
in any Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising for the Contracts, or
any amendment or supplement to any of the foregoing, not supplied
for use therein by or on behalf of Distributor, Issuer or other
affiliates and on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of Distributor, Issuer or
their affiliates or persons under their control in connection with
the sale or distribution of Fund Shares; or
(iii) arise out of or are based upon any untrue statement of
any material fact contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or supplement to any of
the foregoing, or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, if such statement or omission was in
reliance upon and in conformity with information furnished to the
Company or its affiliates by or on behalf of Distributor, Issuer or
its affiliates for use in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature or advertising
covering the Contracts, or any amendment or supplement to any of
the foregoing; or
(iv) arise as a result of any failure by Distributor to perform
the obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or any material
breach of any representation and/or warranty made by Distributor in
this Agreement or arise out of or result from any other material
breach of this Agreement by Distributor or the Issuer.
Distributor will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. Distributor shall not be liable for indemnification hereunder if such
Losses are attributable to the negligence or misconduct of the Company in
performing its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless Distributor and
the Issuer, and their respective officers, directors, employees, agents,
affiliates and each person, if any, who controls Issuer or Distributor within
the meaning of the Securities Act of 1933 (but not including any
participating insurance company) (collectively, the "Indemnified Parties" for
purposes of this SECTION 13(b)) against any Losses to which the Indemnified
Parties may become subject, insofar as such Losses
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(i) arise out of or are based upon any untrue statement of any
material fact contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts, or sales
literature or advertising for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission made
in reliance upon and in conformity with information furnished to the
Company by or on behalf of Distributor or Issuer for use in any
Account's 1933 Act registration statement, any Account Prospectus,
the Contracts, or sales literature or advertising or otherwise for
use in connection with the sale of Contracts or shares (or any
amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained
in the Issuer's 1933 Act registration statement, any Fund
Prospectus, sales literature or advertising of any Fund, or any
amendment or supplement to any of the foregoing, not supplied for
use therein by or on behalf of the Company or its respective
affiliates and on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of the Company or its
respective affiliates or persons under their control; or
(iii) arise out of or are based upon any untrue statement
of any material fact contained in the Issuer's 1933 Act
registration statement, Fund Prospectus, sales literature or
advertising of any Fund, or any amendment or supplement to any
of the foregoing, or the omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to Distributor, Issuer or their affiliates
by or on behalf of the Company, or its respective affiliates for
use in Issuer's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of any Fund, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Company to
perform the obligations, provide the services and furnish the
materials required of it under the terms of this Agreement, or the
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.
The Company will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. The Company shall not be liable for indemnification hereunder if such
Losses are attributable to the negligence or misconduct of Distributor or the
Issuer in performing their obligations under this Agreement.
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(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party will, if a claim
in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than under this Section
13. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish to, assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
SECTION 13 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation.
d) If the indemnifying party assumes the defense of any such
action, the indemnifying party shall not, without the prior written consent
of the indemnified parties in such action, settle or compromise the liability
of the indemnified parties in such action, or permit a default or consent to
the entry of any judgment in respect thereof, unless in connection with such
settlement, compromise or consent, each indemnified party receives from such
claimant an unconditional release from all liability in respect of such claim.
14. POTENTIAL CONFLICTS
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Issuer on December 21, 1987, with the SEC
and the order issued by the SEC in response thereto (the "Shared Funding
Exemptive Order"). The Company has reviewed the conditions to the requested
relief set forth in such application for exemptive relief. As set forth in
such application, the Board of Directors of the Issuer (the "Board") will
monitor the Issuer for the existence of any material irreconcilable conflict
between the interests of the contract owners of all separate accounts
("Participating Companies") investing in funds of the Issuer. An
irreconcilable material conflict may arise for a variety of reasons,
including: (i) an action by any state insurance regulatory authority; (ii) 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 actions by insurance, tax or securities
regulatory authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any
portfolio are being managed; (v) a difference in voting instructions given by
variable annuity contract owners and variable life insurance contract owners;
or (vi) a decision by an insurer to disregard the voting instructions of
contract owners. The Board shall promptly inform the Company if it determines
that an irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order by
providing the Board with all information reasonably necessary for the
12
Board to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the
Company is responsible for causing or creating said conflict, the Company
shall at its sole cost and expense, and to the extent reasonably practicable
(as determined by a majority of the disinterested Board members), take such
action as is necessary to remedy or eliminate the irreconcilable material
conflict. Such necessary action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from
the Fund and reinvesting such assets in a different investment
medium or submitting the question of whether such segregation should
be implemented to a vote of all affected contract owners and as
appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Companies) that votes
in favor of such segregation, or offering to the affected contract
owners the option of making such a change; and/or
(ii) establishing a new registered management investment company
or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions
and said decision represents a minority position or would preclude a majority
vote by all of its contract owners having an interest in the Issuer, the
Company at its sole cost, may be required, at the Board's election, to
withdraw an Account's investment in the Issuer and terminate this Agreement;
provided, however, that such withdrawal and termination shall be limited to
the extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
(e) For the purpose of this SECTION 14, a majority of the
disinterested Board members shall determine whether or not any proposed
action adequately remedies any irreconcilable material conflict, but in no
event will the Issuer be required to establish a new funding medium for any
Contract. The Company shall not be required by this SECTION 14 to establish a
new funding medium for any Contract if an offer to do so has been declined by
vote of a majority of the Contract owners materially adversely affected by
the irreconcilable material conflict.
15. TERMINATION; WITHDRAWAL OF OFFERING. This Agreement may be
terminated by either party upon 180 days' prior written notice to the other
party. Notwithstanding the above, the Issuer reserves the right, without
prior notice, to suspend sales of shares of any Fund, in whole or in part, or
to make a limited offering of shares of any of the Funds in the event that
(A) any regulatory body commences formal proceedings against the Company,
Distributor, affiliates of Distributor, or the Issuer, which proceedings
Distributor reasonably believes may have a material adverse impact
13
on the ability of Distributor, the Issuer or the Company to perform its
obligations under this Agreement or (B) in the judgment of Distributor,
declining to accept any additional instructions for the purchase or sale of
shares of any such Fund is warranted by market, economic or political
conditions.
The Company reserves the right to terminate the Agreement:
(a) if shares of the Funds are not reasonably available to meet the
requirements of the Contracts as determined by the Company;
(b) upon institution of formal proceedings against a Fund or
Distributor by the National Association of Securities Dealers, the Securities
and Exchange Commission, or any state securities or insurance department or
any other regulatory body, which would have a material adverse effect on the
Distributor's or a Fund's ability to perform its obligations under this
Agreement;
(c) upon a determination by a majority of the Board of Issuer, or a
majority of the disinterested Directors, that a material irreconcilable
conflict exists among the interests of (i) all contract owners of variable
insurance products of all separate accounts, or (ii) the interests of the
participating insurance companies investing in the Funds, as discussed in
Section 13 above;
(d) if the Fund ceases to qualify as a Regulated Investment Company
under Subchapter M of the Code, or under any successor or similar provision,
or if the Company reasonably believes that the Fund may fail to so qualify;
(e) if the Fund fails to meet the diversification requirements of
Section 817(h) of the Code or if the Company reasonably believes that the
Fund will fail to meet such requirements; or
(f) upon the "assignment" of the Agreement (as defined in the 0000
Xxx) unless made with the written consent of each party;
(g) if the Fund's adviser is acquired; or
(h) if the Company determines in its sole judgment exercised in
good faith, that either any Fund or the Distributor has suffered a material
adverse change in its business, operations, or financial condition or is the
subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of the Company or the
Contracts (including the sale thereof).
Notwithstanding the foregoing, this Agreement may be terminated
immediately (i) by any party as a result of any other breach of this
Agreement by another party, which breach is not cured within 30 days after
receipt of notice from the other party, or (ii) by any party upon a
determination
14
that continuing to perform under this Agreement would, in the reasonable
opinion of the terminating party's counsel, violate any applicable federal or
state law, rule, regulation or judicial order.
Notwithstanding any termination of this Agreement, Issuer and
Distributor will, at the option of the Company, continue to make available
additional shares of each Fund pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement (hereinafter referred to as "Existing Contracts"). Specifically,
without limitation, the owners of the Existing Contracts will be permitted to
reallocate investments in the Funds (as in effect on such date), redeem
investments in the Funds and/or invest in the Funds upon the making of
additional purchase payments under the Existing Contracts.
16. NON-EXCLUSIVITY. Both parties acknowledge and agree that this
Agreement and the arrangement described herein are intended to be
non-exclusive and that each party is free to enter into similar agreements
and arrangements with other entities.
17. SURVIVAL. The provisions of SECTION 11 (Use of Names) and
SECTION 13 (Indemnity) of this Agreement shall survive termination of this
Agreement.
18. AMENDMENT. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
19. NOTICES. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally, or sent by
telex, telecopier, express delivery or registered or certified mail, postage
prepaid, return receipt requested, to the party or parties to whom they are
directed at the following addresses, or at such other addresses as may be
designated by notice from such party to all other parties.
To the Company:
American Equity Investment Life Insurance Company
0000 Xxxxxxx Xxxxxxx; Xxxxx 000
Xxxx Xxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Chief Financial Officer
000-000-0000 (office number)
000-000-0000 (telecopy number)
and
Farm Bureau Life Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Vice President -
Investment Administrator
000-000-0000 (office number)
000-000-0000 (telecopy number)
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
15
Attention: Xxxxx X. Xxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 19 shall be deemed to have been delivered on receipt.
16
20. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
without the written consent of both parties to the Agreement at the time of
such assignment. This Agreement shall be binding upon and inure to the
benefit both parties hereto and their respective permitted successors and
assigns.
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
22. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
23. CONFIDENTIALITY. Subject to requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of Contract owners and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come
into the public domain without the express written consent of the affected
party.
24. CAPTIONS. 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.
25. RIGHTS AND REMEDIES. The rights, remedies and obligations
contained in this Agreement are cumulative and are in addition to any and all
rights, remedies an obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
26. ENTIRE AGREEMENT. This Agreement, including the attachments
hereto, constitutes the entire agreement between the parties with respect to
the matters dealt with herein, and supersedes all previous agreements,
written or oral, with respect to such matters.
17
If the foregoing correctly sets forth our understanding, please
indicate your agreement to and acceptance thereof by signing below, whereupon
this Agreement shall become a binding agreement between us as of the latest
date indicated.
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
We agree to and accept the terms of the foregoing Agreement.
AMERICAN EQUITY INVESTMENT LIFE
INSURANCE COMPANY
By: /S/ XXXXX X. XXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: CHIEF FINANCIAL OFFICER
-------------------------------
Date: SEPTEMBER 26, 2001
-----------------------------
18
EXHIBIT A
SEPARATE ACCOUNTS AND CONTRACTS
American Equity Life Annuity Account
Individual Flexible Premium Deferred Variable Annuity Contract
EXHIBIT B
FUNDS OF AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. (CLASS I)
OFFERED TO THE SEPARATE ACCOUNTS LISTED IN SCHEDULE A
VP Ultra Fund
VP Vista Fund
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of
September 26, 2001 by and between AMERICAN EQUITY INVESMENT LIFE INSURANCE
COMPANY (the "Company"), and AMERICAN CENTURY INVESTMENT SERVICES, INC.
("Distributor").
WHEREAS, pursuant to that certain Participation Agreement (the
"Participation Agreement") by and between the Company and Distributor of even
date herewith, Distributor is making shares of certain mutual funds listed in
Exhibit A hereto (the "Funds") available to the Company for use as investment
options under certain individual variable annuity and variable life insurance
contracts (the "Contracts"); and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to retain the Company to perform certain administrative services on
behalf of the Funds, and the Company is willing and able to furnish such
services;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. ADMINISTRATIVE SERVICES. The Company agrees to provide
administrative services for the Contract owners, including but not limited to
those services specified in Exhibit B (the "Administrative Services"). The
Company agrees that it will maintain and preserve all records as required by law
to be maintained and preserved in connection with providing the Administrative
Services, and will otherwise comply with all laws, rules and regulations
applicable to the marketing of the Contracts and the provision of the
Administrative Services. Upon request, the Company will provide Distributor or
its representatives reasonable information regarding the Administrative Services
being provided and its compliance with the terms of this Agreement.
2. COMPENSATION AND EXPENSES.
(a) Distributor acknowledges that it will derive a substantial
savings in administrative expenses, such as a reduction in expenses related to
postage, shareholder communications and recordkeeping, by virtue of having a
single shareholder account per Fund for the Separate Accounts listed on Exhibit
C hereto (the "Accounts") rather than having each Contract owner as a
shareholder. In consideration of the Administrative Services and performance of
all other obligations under this Agreement by the Company, Distributor will pay
the Company a fee (the "Administrative Services Fee") equal to 25 basis points
(0.25%) per annum of the average aggregate amount invested by the Company under
this Agreement.
(b) The payments received by the Company under this Agreement are
for administrative and shareholder services only and do not constitute payment
in any manner for investment advisory services or for costs of distribution.
1
(c) For the purposes of computing the payment to the Company
contemplated by this SECTION 2, the average aggregate amount invested by the
Company on behalf of the Accounts in the Funds 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 of the Funds held by the Company) on each
business day during the month and dividing by the total number of business days
during such month.
(d) Distributor will calculate the amount of the payment to be
made pursuant to this SECTION 2 at the end of each calendar quarter and will
make such payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by Distributor for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
American Equity Investment Life Insurance Company
c/o Farm Bureau Life Insurance Company
Attn: Xxxxx Xxxxxxxxx 0000
Xxxxxxxxxx Xxxxxx Xxxx Xxx Xxxxxx, XX 00000
000-000-0000 (office number)
000-000-0000 (telecopy number)
3. TERM AND TERMINATION. Any party may terminate this Agreement,
without penalty, on 60 days' written notice to the other party. Unless so
terminated, this Agreement shall continue in effect for so long as Distributor
(or its successors in interest), or any affiliate thereof, continues to perform
in a similar capacity for the Funds, and for so long as the Company provides the
services contemplated hereunder with respect to Contracts under which values or
monies are allocated to the Funds.
Termination of this Agreement shall not affect the obligations of the
parties to make payments for Orders received by the Company prior to such
termination and shall not affect the Issuer's obligation to maintain the
Accounts set forth by this Agreement. Distributor shall not have any
administrative services payment obligation to the Company (except for payment
obligations accrued but not yet paid as of termination. However, notwithstanding
any such termination, for a period of two years after the date of such
termination, Distributor will remain obligated to pay the Company the
Administrative Services Fee. The Agreement shall survive the termination to the
extent necessary for each party to perform its obligations with respect to
shares for which Administrative Services Fees continues to be due subsequent to
such termination.
4. NON-EXCLUSIVITY. Both parties acknowledge and agree that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each party is free to enter into similar agreements and arrangements
with other entities.
2
5. AMENDMENT. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
6. NOTICES. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
American Equity Investment Life Insurance Company
0000 Xxxxxxx Xxxxxxx, Xxxxx 000 Xxxx
Xxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Executive Vice President/Treasurer
000-000-0000 (office number)
000-000-0000 (facsimile)
and
Farm Bureau Life Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Maker, Vice President-Investment
Administration
000-000-0000 (office number)
000-000-0000 (facsimile)
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 9 shall be deemed to have been delivered on receipt.
7. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
without the written consent of both parties to the Agreement at the time of such
assignment. This Agreement shall be
3
binding upon and inure to the benefit both parties hereto and their respective
permitted successors and assigns.
8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
9. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
10. INTENDED BENEFICIARIES. Nothing in this Agreement shall be
construed to give any person or entity other than the parties, as well as any
Fund, any legal or equitable claim, right or remedy. Rather, this Agreement is
intended to be for the sole and exclusive benefit of the parties, as well as the
Funds.
11. APPLICABLE LAW. This Agreement shall be interpreted,
construed, and enforced in accordance with the laws of the State of Missouri
without reference to the conflict of law principles thereof.
12. ENTIRE AGREEMENT. This Agreement, including the attachments
hereto, constitutes the entire agreement between the parties with respect to the
matters dealt with herein, and supersedes all previous agreements, written or
oral, with respect to such matters.
4
If the foregoing correctly sets forth our understanding, please
indicate your agreement to and acceptance thereof by signing below, whereupon
this Agreement shall become a binding agreement between us as of the latest date
indicated.
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
Date:
--------------------------------------
We agree to and accept the terms of the foregoing Agreement.
AMERICAN EQUITY INVESTMENT LIFE
INSURANCE COMPANY
By:
----------------------------------------
Name: /s/ Xxxxx X. Xxxxxx
Title: Executive Vice President/Treasurer
Date: September 26, 2001
5
EXHIBIT A
FUNDS (CLASS I)
VP Ultra Fund
VP Vista Fund
A-1
EXHIBIT B
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain separate records for each Contract owner, which
records shall reflect the shares purchased and redeemed and share balances of
such Contract owners. The Company will maintain a single master account with
each Fund on behalf of the Contract owners and such account shall be in the name
of the Company (or its nominee) as the record owner of shares owned by the
Contract owners.
2. Disburse or credit to the Contract owners all proceeds of
redemptions of shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by
law or the Contracts, periodic statements showing the total number of shares
owned by the Contract owners as of the statement closing date, purchases and
redemptions of Fund shares by the Contract owners during the period covered by
the statement and the dividends and other distributions paid during the
statement period (reinvested in Fund shares), and such other information as may
be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf
of the Contract owners in accordance with the procedures set forth by the
Distributor.
5. Distribute to the Contract owners copies of the Funds'
prospectus, proxy materials, periodic fund reports to shareholders and other
materials that the Funds are required by law or otherwise to provide to their
shareholders or prospective shareholders.
6. Maintain and preserve all records as required by law to be
maintained and preserved in connection with providing the Administrative
Services for the Contracts.
7. Provide telephonic support for Contract owners with respect to
Fund inquiries (not including information about performance or related to sales)
and forward communications to Contract owners regarding Fund and subaccount
performance.
8. Provide other administrative support for the Funds as mutually
agreed between the Company and the Distributor.
B-1
EXHIBIT C
SEPARATE ACCOUNTS
American Equity Life Annuity Account
C-1
