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EXHIBIT 8(k)
PARTICIPATION AGREEMENT
THIS AGREEMENT is made by and between, Evergreen Equity Trust, a
Delaware trust, and such other funds or portfolios of series-type mutual funds
set forth on Schedule A attached hereto as amended from time to time, ("FUND")
and The Variable Annuity Life Insurance Company ("VALIC"), a life insurance
company organized under the laws of the State of Texas, on its own behalf and
on behalf of each segregated asset account set forth on Schedule B hereto as
amended from time to time (each such account hereinafter referred to
as "ACCOUNT").
WHEREAS, FUND is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act") as
an open-end, diversified, management investment company; and
WHEREAS, FUND shares are issued to the general public and to the
separate accounts of insurance companies ("Participating Insurance Companies")
to fund variable insurance products and certain qualified pension and
retirement plans; and
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WHEREAS, VALIC has established ACCOUNT to offer variable contracts (the
"Contracts") which VALIC has registered under the Securities Act of 1933, as
amended (the "1933 Act"), and is desirous of having FUND as one of the
underlying funding vehicles for the Contracts; and
WHEREAS, FUND knows of no reason why FUND shares may not be sold
to Participating Insurance Companies to fund variable insurance products
and qualified pension and retirement plans; and
WHEREAS, VALIC intends to purchase shares of other open-end,
management investment companies that offer shares to the general public to fund
the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, VALIC intends to purchase shares of FUND to fund the Contracts and
FUND is or will be authorized to sell such shares to VALIC at net asset value;
WHEREAS, VALIC and affiliates of VALIC will provide subcustodian,
record keeping, account maintenance and/or other administrative services for
Contract owners and participants, employee benefit plans and participants, and
other investors;
NOW, THEREFORE, in consideration of their mutual promises, VALIC and
FUND agree as follows:
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1. FUND agrees to make FUND shares available for purchase by VALIC and
ACCOUNT at the applicable net asset value per share on those days on which FUND
calculates its net asset value pursuant to SEC rules. FUND shall use reasonable
efforts to calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the FUND may refuse
to sell shares to any person, or suspend or terminate the offering of shares, if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the FUND acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of the FUND.
2. Issuance and transfer of FUND's shares will be by book entry only.
Stock certificates will not be issued to VALIC or ACCOUNT. Shares ordered from
FUND will be recorded in an appropriate title for ACCOUNT or the appropriate
subaccount of ACCOUNT.
3. FUND shall furnish same day notice (by wire, telecopier, or
telephone followed by written confirmation) to VALIC of any income, dividends
or capital gain distributions payable on FUND's shares. VALIC hereby elects to
receive all such income, dividends and capital gain distributions of a FUND in
the form of additional shares of that FUND. VALIC reserves the right to revoke
this election and to receive all such income, dividends and capital gain
distributions in cash. FUND shall notify VALIC of the number of shares so
issued as payment of such dividends and distributions.
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4. (a) FUND agrees to sell to VALIC shares of the FUND which VALIC
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by FUND or its designee in proper form of the order for
the shares of FUND. For purposes of this Section 4(a), VALIC shall be the
designee of FUND for receipt of such orders from VALIC and receipt by such
designee shall constitute receipt by FUND; provided that FUND receives notice
of such order by 9:00 a.m. Eastern time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which FUND calculates its net asset value pursuant to the
rules of the SEC. "Proper form" means that amounts to be invested or redeemed
are identified on VALIC's computer system by Participant, Contract and Fund in
accordance with VALIC's standard procedures for processing transactions. (which
comply with procedures and form in Fund's prospectus).
(b) FUND agrees to redeem for cash (or in kind to the limited extent
disclosed in the Fund's prospectus), on VALIC's request, any full or fractional
shares of FUND held by VALIC, executing such requests on a daily basis at the
net asset value next computed after receipt by FUND or its designee of the
request for redemption in proper form. Fund shall not bear any responsibility
whatsoever for the proper disbursement to Contract Participants or crediting
redemption proceeds to Contract Participants; VALIC alone shall be responsible
for such actions. For purposes of this Section 4(b), VALIC shall be the designee
of FUND for receipt of requests for redemption from VALIC and receipt by such
designee shall constitute receipt by FUND; provided that FUND receives notice of
such request for redemption by 9:00 a.m. Eastern time on the next following
Business Day.
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(c) FUND shall make the net asset value per share available to VALIC
on a daily basis as soon as reasonably practical after the net asset value per
share is calculated but shall use its best efforts to make such net asset value
available by 6:30 p.m. Eastern time. If FUND provides VALIC with the incorrect
share net asset value information through no fault of VALIC, VALIC on behalf of
the Separate Accounts, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct share net asset value. Any
error in the calculation of net asset value, dividend and capital gain
information greater than the materiality standard set by the SEC shall be
reported to VALIC immediately upon discovery.
(d) If VALIC requests the purchase of FUND shares, VALIC shall pay
for such purchase by wiring federal funds to FUND or its designated custodial
account on the day the order is transmitted by VALIC. If VALIC requests a net
redemption resulting in a payment of redemption proceeds to VALIC (VALIC shall
use its best efforts to pre-notify the Fund of any large trades), FUND shall
wire the redemption proceeds to VALIC on the day the order is transmitted by
VALIC, unless doing so would require FUND to dispose of portfolio securities or
otherwise incur additional costs, but in such event, proceeds shall be wired to
VALIC within three business days and FUND shall notify the person designated in
writing by VALIC as the recipient for such notice of such delay by 3:00 p.m.
Eastern time the same Business Day that VALIC transmits the redemption order to
FUND. If VALIC's order requests the application of redemption proceeds from the
redemption of shares of one FUND to the purchase of shares of another FUND, FUND
shall so apply such proceeds the same Business Day that VALIC transmits such
order to FUND.
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5. (a) FUND shall provide VALIC with as many copies of FUND's current
prospectus as VALIC may reasonably request. If requested by VALIC in lieu
thereof, FUND shall provide such documentation (including a copy of the new
prospectus in computer form) and other assistance as is reasonably necessary in
order for VALIC once each year (or more frequently if the prospectus for FUND is
amended) to have the prospectuses for the Contracts and for the FUND printed
together in one document. FUND shall provide VALIC with as many copies of any
prospectus supplement as VALIC may reasonably request.
(b) Unless otherwise provided herein, all parties to this Agreement
shall bear all expenses incident to the performance of their respective duties
under this Agreement. FUND will bear the printing costs (or duplicating costs
with respect to the statement of additional information) and mailing costs
associated with the delivery, to the extent legally required, of the following
FUND (or individual portfolio) documents, and any supplements thereto, to
existing variable contract owners of VALIC:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
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VALIC will submit any bills for printing, duplicating and/or mailing costs,
relating to FUND documents described above, to FUND for reimbursement by FUND.
VALIC shall monitor such costs and shall use its best efforts to control these
costs. VALIC will provide FUND on a semi-annual basis, or more frequently as
reasonably requested by FUND, with a current tabulation of the number of
existing variable contract owners of VALIC whose variable contract values are
invested in FUND. This tabulation will be sent to FUND in the form of a letter
signed by a duly authorized officer of VALIC attesting to the accuracy of the
information contained in the letter.
(c) At its expense FUND will provide VALIC with the following FUND
documents, and any supplements thereto, with respect to prospective variable
contract owners of VALIC:
(i) camera ready copy of the current prospectus for printing
by VALIC;
(ii) a copy of the statement of additional information
suitable for duplication;
(iii) camera ready copy of proxy material suitable for
printing; and
(iv) camera ready copy of the annual and semi-annual reports
for printing by VALIC.
(d) FUND shall not bear any costs of preparing, printing,
recording, taping or disseminating VALIC sales literature or other VALIC
promotional materials or the costs of mailing prospective Contract Participants
copies of FUND prospectus, statement of additional information, periodic
reports or other printed materials.
(e) FUND shall bear the costs of printing FUND prospectus,
statement of additional information, periodic reports or other printed
materials associated with the FUND.
(f) VALIC will bear the costs of registering and qualifying the
Accounts for sale, printing (or duplicating costs with respect to the statement
of additional information) mailing costs associated with the delivery of the
ACCOUNT's current prospectuses and statements of additional information, annual
and semi-annual reports, Contracts, Contract applications, sales literature or
other promotional material, ACCOUNT sponsored proxy materials and voting
solicitation instructions.
6. (a) VALIC will furnish, or will cause to be furnished, to FUND or
its designee, each piece of sales literature or other promotional material in
which FUND or the adviser of any of the Portfolios of the Fund is named at least
fifteen days prior to its intended use. No such material will be used if FUND or
its designee objects to its use in writing within ten days after receipt of such
material.
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(b) FUND or its designee will furnish, or will cause to be
furnished, to VALIC, each piece of sales literature or other promotional
material in which VALIC is named at least fifteen days prior to its intended
use. No such material will be used if VALIC objects to its use in writing
within ten days after receipt of such material.
(c) FUND and its affiliates and agents shall not give any
information or make any representations on behalf of VALIC or concerning VALIC,
ACCOUNT, or the Contracts issued by VALIC, other than the information or
representations contained in a registration statement or prospectus for such
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports for ACCOUNT or prepared for
distribution to owners of the Contracts, or in sales literature or other
promotional material approved by VALIC or its designee, except with the
permission of VALIC.
(d) VALIC and its affiliates and agents shall not give any
information or make any representations on behalf of FUND or its advisers or
concerning FUND or its advisers other than the information or representations
contained in a registration statement or prospectus for FUND, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in sales literature or other promotional material approved by FUND
or its designee, except with the permission of FUND.
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(e) For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, 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, computer
facility or service including the Internet, or other public media), sales
literature (such as any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or excerpts
or 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 National Association of Securities Dealers,
Inc. ("NASD") rules or the 1933 or 1940 Acts. Notwithstanding the foregoing,
the fifteen-day notice requirement of this Section 6 does not apply to FUND
registration statements, prospectuses, statements of additional information,
reports to shareholders, proxy materials, and any other document filed with the
SEC, provided that the reference to VALIC in those documents is limited to: (1)
disclosing that VALIC and ACCOUNT are shareholders of FUND; (2) information
about the amount of shares held by VALIC and ACCOUNT; (3) disclosing that VALIC
purchased seed money shares and information about those shares; and (4) basic
information about VALIC such as its address and state of organization.
(f) VALIC will bear the responsibility and correlative expense for
administration and support services for Contract Participants. FUND recognizes
VALIC as the sole shareholder of shares of FUND issued under this Agreement.
(g) VALIC agrees and acknowledges that one of FUND's advisors,
Evergreen Asset Management Corp., is the sole owner of the name and xxxx
"Evergreen" and that all use of any designation comprised in whole or in part
of Evergreen (an "Evergreen Xxxx") under this Agreement shall inure to the
benefit of Evergreen Asset Management Corp. VALIC shall not use any Evergreen
Xxxx on its own behalf or on behalf of the ACCOUNTS or Contracts without prior
written consent of Evergreen Asset Management Corp. Upon termination of this
Agreement for any reason, VALIC shall cease all use of any Evergreen Xxxx as
soon as practicable.
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7. Compensation and Expenses. In consideration of its providing the
administrative and record-keeping services below, VALIC shall be entitled to
receive from the FUND, the fees set forth in Exhibit C hereto. The obligation of
FUND to pay VALIC fees and expenses shall continue, notwithstanding the
termination of this Agreement, as long as the ACCOUNT holds shares of the FUNDS
on behalf of any Contract owner. The administrative and record-keeping services
include:
(a) responding to inquiries from Contract owners using one or more
of the FUNDs as an investment vehicle regarding the services performed by VALIC
as they relate to a FUND;
(b) providing information to FUND and to Contract owners with
respect to shares attributable to Contract owner accounts;
(c) developing and maintaining a means of identifying and analyzing
information relating to contract owners using one or more of the FUNDS as an
investment vehicle through computer databases or similar approaches;
(d) printing and mailing of shareholder communications from each
FUND as may be required;
(e) serving as the designee of the FUND for the receipt of orders
to purchase and redeem shares of the FUND pursuant to Section 4;
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(f) cooperating with the FUND, its service agents and governmental
authorities in connection with the regulation of the FUNDS and the sale of the
shares of the FUNDS;
(g) providing data and materials to the FUND needed to maintain the
compliance of the FUND with the securities laws; and
(h) communicating directly with Contract owners concerning FUND
operations. FUND shall pay all reasonable out-of-pocket expenses actually
incurred by VALIC in connection with the transfer of proxy statements and
reports to shareholders.
8. (a) Except as limited by and in accordance with the provisions of
Sections 8(b) and 8(c) hereof, VALIC agrees to indemnify and hold harmless FUND
and each trustee, officer, employee or agent of FUND and each person, if any,
who controls FUND and each of the directors and officers of ADVISER and each
person, if any, who controls ADVISER within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
8) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of VALIC) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements are related to the sale, acquisition or redemption of FUND's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the
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registration statement or prospectus or sales literature
for the Contracts or contained in the Contracts (or any
amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the
alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to VALIC by or on behalf of FUND
for use in the registration statement or prospectus for
the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or FUND shares;
or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or
sales literature of FUND not supplied by VALIC, or
persons under its control) or wrongful conduct of VALIC
or persons under its control, with respect to the sale or
distribution of the Contracts or FUND shares; or
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(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of FUND, or
any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make
the statements therein not misleading if such statement
or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to FUND by or on behalf of VALIC; or
(iv) arise as a result of (i) a failure by VALIC to
substantially provide the services and furnish the
materials under the terms of this Agreement; or (2) a
failure by VALIC to register the Contracts under the
1933 Act;
(v) arise out of or result from any material breach of any
representation, warranty or agreement made by VALIC in
this Agreement or arise out of or result from any other
material breach of this Agreement by VALIC; or
(vi) arise out of or result from the fact that the Contracts
are invested in shares of regulated investment companies
that are also available without limitation to investors
from the general public; or
(vii) arise out of or result from negligence or wrongful conduct
in VALIC's administration of the ACCOUNTS or the
Contracts.
(b) VALIC shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party is subject by reason of such Indemnified Party's willful
misfeasance, bad faith, or gross 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 or to FUND.
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(c) VALIC shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified VALIC in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify VALIC of any such claim shall not relieve VALIC
from any liability for indemnification which it may have to the Indemnified
Party against whom such action is brought other than that liability which may
have been incurred solely as a result of the failure to give notice. In case
any such action is brought against an Indemnified Party, VALIC shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from VALIC to such party of VALIC's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and VALIC will not be liable
to such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
9. (a) Except as limited by and in accordance with the provisions of
Sections 9(b) and 9(c), FUND agrees to indemnify and hold harmless VALIC and
each of its
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directors and officers and each person, if any, who controls VALIC within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 9) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
FUND) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of FUND's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the registration statement or prospectus or sales
literature of FUND (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading, provided
that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon
and in conformity with information furnished to FUND or
its adviser by or on behalf of VALIC for use in the
registration statement or prospectus for FUND or in sales
literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or
FUND shares; or
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(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus or
sales literature for the Contracts not supplied by FUND or
its adviser or persons under their control) or wrongful
conduct of FUND or persons under their control, with
respect to the sale or distribution of the Contracts or
FUND shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature covering the
Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity
with information furnished to VALIC by or on behalf of
FUND; or
(iv) arise as a result of (1) a failure by FUND to
substantially provide the services and furnish the
materials under the terms of this Agreement; (2) a
failure by FUND to qualify as a
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Regulated Investment Company under Subchapter M of the
Code; or (3) a failure by FUND to register its shares but
only if such registration is required in those states
where the FUND is subject to the state securities
commission.
(v) arise out of or result from any material breach of any
representation and/or warranty made by FUND in this
Agreement or arise out of or result from any other
material breach of this Agreement by FUND.
(vi) arise out of or result from negligence or wrongful
conduct in FUND's administration of FUND Shares.
(b) FUND shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party is subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
VALIC.
(c) FUND shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified FUND in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify FUND of any
such claim shall not relieve
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FUND from any liability for indemnification which it may have to the Indemnified
Party against whom such action is brought other than that liability which may
have been incurred solely as a result of the failure to give notice. In case any
such action is brought against the Indemnified Parties, FUND shall be entitled
to participate at its own expense in the defense thereof. FUND also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from FUND to such party of FUND's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and FUND will not be liable
to such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) VALIC agrees to notify FUND promptly of the commencement of
any litigation or proceedings that impact the FUND, against VALIC or any of its
officers or directors in connection with the issuance or sale of the Contracts,
the operation of the ACCOUNTS or the sale or acquisition of shares of the FUND.
10. FUND represents and warrants that FUND shares sold pursuant to this
Agreement shall be registered under the 1933 Act and duly authorized for
issuance, and shall be issued, in compliance in all material respects with
applicable law, and that FUND is and shall remain registered under the 1940 Act
for so long as required thereunder. FUND further represents and warrants that
FUND qualifies as a Regulated Investment Company under Subchapter M of the Code,
and will make every effort to maintain such qualification (under Subchapter M or
any successor or similar provisions), and that FUND will notify VALIC
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future. FUND will register and
qualify its shares for sale in accordance with the laws of the various states as
may be required by law in those states where this FUND is subject to the
jurisdiction of the state securities commission. FUND makes no representations
or warranties as to whether any aspect of its operations (including, but not
limited to, fees, expenses and investment policies) complies or will comply with
the insurance laws or insurance regulations of the various states. FUND further
represents and warrants that all of its directors, officers, employees,
investment advisers, and other individuals/entities dealing with the money or
securities of the FUND are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the FUND in an
amount not less than the minimal coverage as required by Rule 17g-1 under the
1940 Act or related provisions as may be promulgated from time to time. The
aforesaid Bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
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11. VALIC represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally and
validly established ACCOUNT as a segregated asset account under Texas law and
has registered ACCOUNT as a unit investment trust under the 1940 Act. VALIC
represents and warrants that the Contracts are or will be registered under the
1933 Act and that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws and that the sale
of the Contracts shall apply in all material aspects with state insurance
suitability requirements were applicable. VALIC will notify FUND immediately
upon having a reasonable basis for believing that the ACCOUNT or Contracts have
ceased to qualify as segregated accounts or variable annuity contracts for
relevant diversification purposes. VALIC represents and warrants that all of its
officers, employees, investment advisers, and other individuals or entities
described in Rule 17g-1 under the 1940 Act, that deal with the money and/or
securities of the FUND, are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of FUND, in the amount
not less than the Rule requires. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
12. FUND will provide VALIC with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications which disclose the
relationship of the FUND and VALIC or which may have an effect upon the FUND's
relationship with VALIC, and all amendments or supplements to any of the above
that relate to the FUND promptly after the filing of each such document with the
SEC or other regulatory authority. VALIC will provide FUND or its designee with
at least one complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, solicitation for voting
instructions, proxy statements, prices of sales literature and other promotional
material, exemptive applications, requests for no-action relief, and all
amendments or supplements to any of the above in which Fund or its advisers are
named, that relate to ACCOUNT or Contracts, contemporaneously with the filing of
each document with the SEC, NASD or other regulatory authority.
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13. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
14. VALIC will provide pass-through voting privileges to all Contract
owners so long as the Commission continues to interpret the 1940 Act as
requiring pass-through voting privileges for variable contract owners.
Accordingly, VALIC will solicit voting instructions from Contract Participants
and vote shares of FUND held in ACCOUNT in a manner consistent with voting
instructions timely-received from Contract owners. VALIC will vote shares of
FUND held in ACCOUNT for which no voting instructions from Contract owners are
timely-received, as well as shares of FUND which VALIC itself owns, in the same
proportion as those shares of FUND for which voting instructions from Contract
owners are timely-received. Participating Insurance Companies will be
responsible for assuring that each of their separate accounts participating in
FUND calculates voting privileges in a manner consistent with other
Participating Insurance Companies.
15. FUND agrees to comply with any applicable state insurance laws or
regulations, including cooperating with VALIC in any filings of sales literature
for the Contracts, to the extent notified thereof in writing by VALIC, unless
such compliance is deemed by FUND to be unduly burdensome, in which event any
Party may exercise its option to terminate this Agreement under Section 16
hereof, except that such termination shall be effective immediately.
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16. (a) This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
(b) This Agreement shall terminate automatically in the event of
its assignment unless such assignment is made with the written consent of VALIC
and FUND.
(c) This Agreement shall terminate without penalty at the option of
the terminating party in accordance with the following provisions:
(i) At the option of VALIC or FUND at any time from the date
hereof upon 90 days' advance written notice, unless a
shorter time is agreed to by the parties;
(ii) At the option of VALIC if FUND shares are not reasonably
available to meet the requirements of the Contracts,
provided however, that such a termination shall apply only
to the series of FUND not reasonably available and FUND
shall have thirty (30) days from initial notification by
VALIC of the deficiency to correct such deficiency.
Thereafter, prompt written notice of the election to
terminate shall be furnished by VALIC and termination
shall be effective ten days after FUND's receipt of said
notice;
-21-
22
(iii) At the option of VALIC, upon the institution of formal
proceedings against FUND by the SEC, the NASD, or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in VALIC'S reasonable
judgment exercised in good faith, materially impair FUND'S
ability to meet and perform FUND'S obligations and duties
hereunder. Prompt notice of election to terminate under
this paragraph shall be furnished by VALIC with said
termination to be effective upon receipt of notice;
(iv) At the option of FUND, upon the institution of formal
proceedings against VALIC by the SEC, the NASD, or any
other regulatory body, the expected or anticipated
ruling, judgement or outcome which would, in FUND'S
reasonable judgment, materially impair VALIC'S ability to
meet and perform its obligations and duties hereunder.
Prompt notice of election to terminate under this
paragraph shall be furnished by FUND with said
termination to be effective upon receipt of notice;
-22-
23
(v) At the option of FUND, if (1) FUND shall determine in its
sole judgment reasonably exercised in good faith, that
VALIC has suffered a material adverse change in its
business or financial condition or is the subject of
material adverse publicity and such material adverse
change or material adverse publicity is likely to have a
material adverse impact upon the operation or business
reputation of FUND, (2) FUND shall have notified VALIC in
writing of such determination and its intent to terminate
this Agreement, and, (3) after consideration of the
actions taken by VALIC and any other changes in
circumstances since the giving of such notice, the
determination of FUND shall continue to apply on the
sixtieth (60th) day since giving of such notice, then such
sixtieth day shall be the effective date of termination;
(vi) At the option of VALIC after having been notified by FUND
of a termination or proposed termination of the Investment
Advisory Agreement between FUND or its successors, which
notice FUND shall provide promptly to VALIC, the effective
date of termination of the Agreement to be as determined
by VALIC;
-23-
24
(vii) In the event FUND's shares are not registered, issued or
sold in accordance with applicable federal law, or such
law precludes the use of such shares of the FUND as the
underlying investment medium of the Contracts issued or
to be issued by VALIC. Prompt notice of election to
terminate under this paragraph shall be furnished by
VALIC with said termination to be effective upon receipt
of notice;
(viii) At the option of FUND upon a reasonable determination by
the Board in good faith that it is no longer advisable
and in the best interests of shareholders for FUND to
continue to operate pursuant to this Agreement. Prompt
notice of election to terminate under this paragraph
shall be furnished by FUND with said termination to be
effective upon receipt of notice;
(ix) At the option of FUND if the Contracts cease to qualify
as annuity contracts or life insurance contracts, as
applicable, under the Code, or if FUND reasonably
believes that the Contracts may fail to so qualify.
Prompt notice of election to terminate under this
paragraph shall be furnished by FUND with said
termination to be effective upon receipt of notice;
-24-
25
(x) At the option of VALIC, upon FUND'S breach of any
material provision of this Agreement, which breach has
not been cured to the satisfaction of VALIC within ten
days after written notice of such breach is delivered to
FUND;
(xi) At the option of FUND, upon VALIC's breach of any
material provision of this Agreement, which breach has
not been cured to the satisfaction of FUND within ten
days after written notice of such breach is delivered to
VALIC;
(xii) At the option of FUND, if the variable contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Prompt notice of election to
terminate under this paragraph shall be furnished by FUND
with said termination to be effective upon receipt of
notice;
-25-
26
(xiii) At the option of VALIC, if (1) VALIC shall determine, in
its sole judgment reasonably exercised in good faith,
that FUND is the subject of material adverse publicity
and such material adverse publicity is likely to have a
material adverse impact on the sale of the Contracts
and/or the operations or business reputation of VALIC,
(2) VALIC shall have notified FUND in writing of such
determination and its intent to terminate this Agreement,
and, (3) after consideration of the actions taken by FUND
and any other changes in circumstances since the giving
of such notice, the determination of VALIC shall continue
to apply on the sixtieth (60th) day since giving of such
notice, then such sixtieth day shall be the effective
date of termination;
(xiv) At the option of VALIC, if VALIC shall determine that it
is no longer advisable and in the best interests of
Contract owners to utilize the FUND as underlying
investment vehicle and VALIC determines to substitute the
shares of another investment company for the
corresponding shares of FUND in accordance with the terms
of the Contracts for which those shares had been selected
to serve as the underlying investment media.
(d) No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice shall
set forth the basis for such termination.
-26-
27
(e) Notwithstanding any termination of this Agreement pursuant to
Section 16(c) hereof, at the election of VALIC, FUND shall continue to make
available additional FUND shares, as provided below, 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, if VALIC elects to have FUND
make additional shares available, the owners of the Existing Contracts or
VALIC, whichever shall have legal authority to do so, shall be permitted to
reallocate investments in FUND, redeem investments in FUND and/or invest in
FUND upon the payment of additional premiums under the Existing Contracts. In
the event of a termination of this Agreement pursuant to Section 16(c) hereof,
VALIC, as promptly as is practicable under the circumstances, shall notify FUND
whether VALIC shall elect to continue to have FUND shares made available after
such termination. If FUND shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either FUND or VALIC may terminate the Agreement, as so continued
pursuant to this Section 16(e), upon prior written notice to the other party
such notice to be for a period that is reasonable under the circumstances. In
determining whether to elect to continue to have additional FUND shares made
available, VALIC shall act in good faith, giving due consideration to the
interests of existing shareholders, including holders of Existing Contracts.
Notwithstanding the foregoing, FUND shall not be required to make available
additional FUND shares if doing so would be prohibited by law. VALIC and FUND
agree that this Section 16(e) shall not apply to any termination under Sections
8 or 9.
(f) VALIC shall not redeem FUND shares attributable to Contract
except (i) as necessary to implement Contract Participant initiated
transactions, or (ii) as required by state and/or federal laws or regulations
or judicial or other legal precedent of general application. Upon request,
VALIC will promptly furnish to FUND the opinion of counsel for VALIC to the
effect that any redemption pursuant to clause (ii) above is a legally required
redemption. Furthermore, VALIC shall not prevent new Contract Participants from
allocating payments to FUND that formerly was available under the Contracts
without first giving FUND ninety (90) days notice of its intention to do so.
17. Potential Conflicts.
(a) The parties acknowledge that the Trust'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 or other 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
instruction 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 Trustees shall promptly inform the VALIC
if they determine that a material irreconcilable conflict exists and the
implications thereof. The Trustees shall have sole authority to determine
whether a material irreconcilable conflict exists and their determination shall
be binding upon the VALIC.
(b) VALIC agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. VALIC will assist the Trustees
in carrying out their responsibilities under the Shared Trust Exemptive Order
and this Section 17 by providing the Trustees with all information reasonably
necessary for them to consider any issues raised including, but not limited to,
information as to a decision by the VALIC to disregard Contract Participant
voting instructions.
(c) 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 interest of Contract Participants, VALIC shall, in
cooperation with other Participating Insurance Companies whose contract owners
are also affected, at its 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 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 Participants and, as appropriate, segregating the
assets of any appropriate group (i.e. annuity contract owners, life insurance
contract owners, variable annuity contract owners, or variable life insurance
contract owners of one or more Participating Insurance Companies) that votes in
favor of such segregation, or offering to the affected Contact Participants the
option of making such change; and (b) establishing a new registered management
investment company or managed separate account and obtaining any necessary
approvals or orders of the Commission in connection therewith.
(d) If any material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to VALIC conflicts
with the majority of other state regulators, then VALIC will withdraw the
affected ACCOUNT investment in the Trust and terminate this Agreement with
respect to such ACCOUNT within six (6) months after the Trust gives written
notice that it 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 VALIC for the purchase and redemption of
shares of the Trust.
(e) For purposes of (c) and (d) of this Section 17 of this
Agreement, a majority of the disinterested Trustees shall determine whether any
proposed action adequately remedies any material irreconcilable conflict. VALIC
shall not be required by (c) of this Section 17 to establish a new funding
medium for the Contracts if any offer to do so has been declined by a vote of a
majority of Contract Participants 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 VALIC will withdraw the ACCOUNT's investment in the Trust and
terminate this Agreement within six (6) months after the Trust gives written
notice 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.
(f) VALIC shall at least annually submit to the 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 Trust Exemptive Order and this Section 17. Said reports, materials and
data shall be submitted more frequently if deemed appropriate by the Trustees.
(g) If and to the extent that Rule 6e-2 and Rule 6e-(T) are
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 and/or
shared funding (as defined in the Shared Trust Exemptive Order) on terms and
conditions materially different from those contained in the Shared Trust
Exemptive Order, then the Trust and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
(h) If a material irreconcilable conflict arises because of a
decision by VALIC to disregard Contract Participant voting instructions as set
forth in Section 14 of this Agreement, and that decision represents a minority
position or would preclude a majority vote, VALIC 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 VALIC for the purchase and
redemption of share of the Trust.
18. Any notice shall be sufficiently given when sent by registered or
certified mail (return receipt requested) 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.
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28
If to FUND: Evergreen Funds
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Legal Department
If to VALIC: The Variable Annuity life Insurance Company
0000 Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
19. Confidentiality. Each party agrees that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall be kept confidential and shall not be voluntarily disclosed to
any other person, except as may be required by law. This provision shall
survive the termination of this Agreement.
20. This Agreement shall be subject to the provisions of the 1933 Act,
1934 Act and 1940 Act and the rules and regulations thereunder, including any
exemptive relief therefrom and the orders of the SEC setting forth such relief.
21. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
22. If any provisions 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.
23. 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 under
state and federal law.
24. The Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns; provided that no party may
assign this Agreement without prior written consent of the others.
25. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one instrument.
Executed this 4th day of January, 1999.
Evergreen Equity Trust
Attest: /s/ XXXX XXXXXX By: /s/ XXXXXXX (ILLEGIBLE)
-------------------------- -------------------------------------
Xxxx Xxxxxx Xxxxxxx (Illegible)
The Variable Annuity Life
Insurance Company
Attest: /s/ XXXXXXX X. XXXXX By: /s XXXXXX X. XXXX, XX.
-------------------------- -------------------------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxx, Xx.
-00-
00
XXXXXXXX A
Funds
-----
Evergreen Small Cap Equity Income Fund - Class A
Evergreen Value Fund - Class A
Evergreen Growth & Income Fund - Class A
-29-
30
SCHEDULE B
Accounts Date Established
-------- ----------------
The Variable Annuity Life Insurance Company April 18, 1979
Separate Account A
Contracts
---------
Standard Form Number Name
-------------------- ----
UITG-194 Group Fixed and
Variable Deferred
Annuity Contract
UIT-194 Individual Fixed and
Variable Deferred
Annuity Contract
UITN-194 Individual Fixed and Variable
Nonqualified Deferred
Annuity Contract
UIT-XXX-194 Individual Fixed and Variable
Deferred Retirement
Annuity Contract
XXX-SEP-194 Individual Fixed and Variable
Simplified Employee Pension
Annuity Contract
UIT-SIMPLE-897 Individual Fixed and Variable
Deferred Simplified Retirement
Annuity Contract
31
EXHIBIT C
FUND will pay VALIC the following asset-based Services fee computed daily and
payable quarterly on the aggregate net asset value of the shares of each FUND
maintained in accounts established with the FUND by VALIC:
12b-1 Fee
Fund Per Annum
---- ---------
Evergreen Small Cap Equity Income Fund - Class A 0.25%
Evergreen Value Fund - Class A 0.25%
Evergreen Growth and Income Fund - Class A 0.25%
