Exhibit (8)(xi)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of the 28th day of March, 2003, between UBS
SERIES TRUST ("Fund"), an open-end management investment company organized as a
Massachusetts business trust, and AIG LIFE INSURANCE COMPANY, a life insurance
company organized under the laws of the State of Delaware, and AMERICAN
INTERNATIONAL LIFE INSURANCE COMPANY, a life insurance company organized under
the laws of the State of New York (collectively, the "Companies"), each on its
own behalf and on behalf of each segregated asset account of the Companies set
forth in Schedule A as attached hereto, as such Schedule A may be amended from
time to time ("Accounts").
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company; and
WHEREAS, the Fund is organized as a series fund and may establish a number
of distinct series of shares of beneficial interest ("Series"), which correspond
to distinct portfolios of investments; and
WHEREAS, the Fund acts as an investment vehicle for separate accounts
established for variable life insurance policies and variable annuity contracts
to be offered by insurance companies that have entered into participation
agreements with the Fund ("Participating Insurance Companies"); and
WHEREAS, UBS Global Asset Management (US) Inc. ("UBS Global AM") is
registered as an investment advisor under the Investment Advisors Act of 1940,
as amended, a broker-dealer under the Securities Exchange Act of 1934, as
amended ("1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. ("NASD") and serves as investment
advisor and administrator to all Series of the Fund; and
WHEREAS, the Series of the Fund offered by the Fund to the Companies and
the Accounts are set forth on Schedule B attached hereto, as such Schedule B
may be amended from time to time; and
WHEREAS, the Fund received an order ("Exemptive Order") from the
Securities and Exchange Commission ("SEC") granting Participating Insurance
Companies and their separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a) and 15(b) of the 1940 Act
and rules 6e-2(b)(15) and 6e~3(T)(b)(15) thereunder to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies and certain qualified pension and retirement plans
("Qualified Plans"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Companies intend to purchase Class H shares ("Shares") of one
or more of the Series on behalf of the Accounts to fund the Contracts, and the
Fund intends to sell such Shares to the relevant Accounts at such Shares' net
asset value;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, it is agreed between the parties as follows:
1. Sale of Shares. The Fund agrees to make Shares available for purchase
by the Accounts or the Companies or their affiliates on behalf of the Accounts
at the Shares' net asset value as computed in accordance with the Fund's
registration statement under the Securities Act of 1933, as amended ("1933 Act")
and the 1940 Act, including the Fund's current prospectus and statement of
additional information, as amended or supplemented from time to time ("Fund
Registration Statement"). Purchases of Shares will be made in accordance with
the provisions of the Fund Registration Statement and the operational procedures
mutually agreed to by UBS Global AM and the Companies from time to time. The
Fund may refuse to sell Shares of any Series to any person or may suspend or
terminate the offering of Shares of any Series if such action is required by law
or by regulatory authorities having jurisdiction or is, in the sole discretion
of the trustees of the Fund, necessary in the best interests of the shareholders
of any Series.
2. Redemption of Shares. The Fund will redeem Shares when requested by an
Account or the Companies or their affiliates on behalf of the Account at the
Shares' net asset value (as computed in accordance with the Fund Registration
Statement) in accordance with the provisions of the Fund Registration Statement
and the operational procedures mutually agreed to by UBS Global AM and the
Companies from time to time.
3. Acceptance of Orders. The Fund shall accept purchase and redemption
orders resulting from investments in and payments under the Contracts on each
Business Day, provided that such orders are received by UBS Global AM or the
Fund prior to 9:00 a.m., Eastern time, on such Business Day and reflect
instructions received by the Companies from Contract holders in good order prior
to the time the net asset value of the Series is calculated in accordance with
the Fund Registration Statement on the prior Business Day. Notwithstanding the
foregoing, the Companies shall use their best efforts to provide UBS Global AM
or the Fund with such orders by 7:30 a.m. on the Business Day following the
Business Day on which instructions are so received by the Companies. Orders
reflecting instructions received by the Companies in good order after the time
the net asset value of the Series is calculated will not be deemed received
until the next succeeding Business Day. The Companies act as the agent of the
Fund and UBS Global AM for the limited purpose of accepting purchase and
redemption instructions from Contract holders. UBS Global AM and the Fund may
reject purchase and redemption orders that are not in proper form as mutually
agreed to by UBS Global AM and the Companies from time to time.
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4. Payment for Purchases and Redemptions. Purchase orders shall be paid
for in federal funds transmitted by wire no later than the Business Day that the
Fund receives notice of the order. The Fund shall use its best efforts to send
redemption proceeds in federal funds transmitted by wire no later than the next
Business Day after the Fund received notice of the order, unless doing so would
cause the Fund to dispose of portfolio securities or otherwise incur additional
costs. In any event, the Fund will wire proceeds of redemption orders to the
Companies within the period required under the 1940 Act or the rules, orders or
regulations thereunder.
5. Limitation on Sales of Shares. The Fund agrees that its Shares will be
sold only to Participating Insurance Companies and their separate accounts
and/or to Qualified Plans, all in accordance with Section 817(h) of the Internal
Revenue Code and applicable Treasury Regulations. No shares of any Series will
be sold directly to the general public. The Companies agree that Shares will be
used only for the purposes of funding the Contracts and Accounts listed in
Schedule A, as amended from time to time.
6. Book Entry. Issuance and transfer of Shares will be by book entry
only. Share certificates will not be issued to the Companies or any Account.
Shares ordered from the Fund will be recorded in the appropriate title for each
Account.
7. Notice of Dividends and Distributions; Net Asset Value. The Fund will
furnish prompt notice to the Companies of any income, dividends or capital gain
distribution payable on Shares. The Companies hereby elect to receive all such
income dividends and capital gain distributions payable on Shares in additional
Shares of the same Series. The Fund shall notify the Companies of the number of
Shares so issued as payment of such dividends and distributions. The Fund shall
make the net asset value per share of each Portfolio available to the Companies
on a daily basis as soon as reasonably practical after the net asset value per
share is calculated.
8. Company Reports. The Companies agree to provide the Fund or its
designee on a daily basis with the amount of shares of each Portfolio purchased
and sold by each owner of the Contracts (and information identifying each
Contract owner's UBS PaineWebber Investment Executive) and such other
information concerning transactions in shares of the Fund by the Contract owners
as the Fund shall reasonably request.
9. Uniform Application of Pass-Through Voting and Conflicts of Interest.
The Fund agrees that all Participating Insurance Companies shall have the same
obligations and responsibilities regarding pass-through voting and conflicts of
interest as the Companies have under this Agreement.
10. Pass-Through Voting. With respect to Contracts and Accounts that are
subject to the 1940 Act, so long as and to the extent that the SEC interprets
the 1940 Act to require pass-through voting privileges to Contract owners
(including, for purposes of this section, policy owners whose cash values are
invested in Shares through the Accounts), the Companies will provide
pass-through voting privileges to Contract owners. The Companies will cooperate
with the Fund's proxy mailing and tabulating service and will provide Contract
owner information in order to facilitate the proxy mailings and voting. Unless
the proxy process is initiated by the Companies, all proxy printing, mailing,
tabulating and/or soliciting charges will be at the Fund's
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(or UBS Global AM's) expense. The Fund shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Companies
will be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Fund. With respect to each Account, the
Companies will vote Shares held by the Account and for which no timely voting
instructions are received from the Contract owners, as well as Shares held by
the Account that are owned by the Companies for their respective general
accounts, in the same proportion as the Companies votes Shares held by the
Account for which timely voting instructions are received from Contract owners.
The Companies and their agents will in no way recommend or oppose or interfere
with the solicitation of proxies for Shares held by Contract owners without the
prior written consent of the Fund, which may be withheld in the Fund's sole
discretion.
11. Representations. (a) The Companies represent and warrant that each
is an insurance company duly organized and in good standing under the laws of
its state of incorporation and that it has legally and validly established each
Contract and Account.
(b) The Companies represent and warrant that each has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust ("UIT") in accordance with the provisions of the 1940 Act
and cause each Account to remain so registered to serve as a segregated asset
account for the Contracts unless an exemption from registration is available.
(c) The Companies represent and warrant that the Contracts will be
registered under the 1933 Act unless an exemption from registration is available
prior to any issuance or sale of the Contracts and that the Contracts will be
issued and sold in compliance in all material respects with applicable federal
and state laws and further that the sale of the Contracts shall comply in all
material respects with state insurance law suitability requirements.
(d) The Companies represent and warrant that the Contracts are currently
and at the time of issuance will be treated as life insurance, endowment or
annuity contracts under applicable provisions of the Internal Revenue Code, that
it will maintain such treatment and that it will notify the Fund immediately
upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
(e) The Fund represents and warrants that the Shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act to the extent
required by that Act and sold in accordance with all applicable federal and
state laws, and that the Fund shall be registered under the 1940 Act to the
extent required by that Act, prior to and at the time of any issuance or sale of
such Shares. The Fund shall qualify its Shares for sale in accordance with the
laws of the various states only if and to the extent deemed advisable by the
Fund.
(f) The Fund represents and warrants that each Series will comply with
the diversification requirements set forth in Section 8l7(h) of the Internal
Revenue Service and applicable regulations thereunder and will notify the
Companies immediately upon having a reasonable basis for believing any Series
has ceased to comply or might not so comply and will immediately take all
reasonable steps to adequately diversify the Series to achieve compliance.
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(g) The Fund represents and warrants that each Series in which the
Accounts invest is currently qualified as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and will maintain such qualification.
The Fund will notify the Companies immediately upon having a reasonable basis
for believing any Series has ceased to comply or might not so comply in the
future.
12. Indemnification. (a) The Fund agrees to indemnify, defend and hold
the Companies, their officers, directors, employees and agents and any person
who controls the Companies within the meaning of Section 15 of the 1933 Act
(referred to in this Section 1l(a) collectively as "Indemnified Parties"), free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands
or liabilities, amounts paid in settlement with the consent of the Fund and any
counsel fees incurred in connection therewith) which the Indemnified Parties
may incur under the 1933 Act, or under common law or otherwise, (i) arising out
of or based upon any alleged untrue statement of a material fact contained in
the Fund Registration Statement or arising out of or based upon any alleged
omission to state a material fact required to be stated in the Fund
Registration Statement or necessary to make the statements therein not
misleading, except insofar as such claims, demands, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing by or on behalf of the Companies to the Fund
for use in the Fund Registration Statement or otherwise for use in connection
with the sale of Contracts or Shares; (ii) arising out of or based upon
statements or representations (other than statements or representations made in
reliance upon and in conformity with information furnished in writing by or on
behalf of the Companies) or wrongful conduct of the Fund or persons under its
control concerning the sale or distribution of the Contracts or Shares; (iii)
arising out of or based upon any alleged omission to state a material fact
required to be stated in the registration statement for the Contracts (including
any amendment or supplement to the prospectus or statement of additional
information) ("Contract Registration Statement") or necessary to make the
statements therein not misleading, if such claims, demands, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information furnished in writing by or on behalf of the Fund to the
Companies for use in the Contract Registration Statement; or (iv) arise out of
or result from any material breach of the representations and/or warranties made
by the Fund in this Agreement or any other material breach of this Agreement by
the Fund. In no event shall anything contained herein be so construed as to
protect the Companies against any liability to the Fund or to the shareholders
of any Series to which the Companies would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of their
duties or by reason of their reckless disregard of their obligations under this
Agreement.
(b) The Fund shall not be liable to the Companies under this indemnity
agreement with respect to any claim made against the Companies or any other
Indemnified Party unless the Companies or other such person shall have notified
the Fund in writing of the claim within a reasonable time after the summons or
other first written notification giving information of the nature of the claim
shall have been served upon the Indemnified Party (or after the Indemnified
Party shall have received notice of service on any designated agent). However,
failure to notify
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the Fund of any claim shall not relieve the Fund from any liability which it may
have to an Indemnified Party otherwise than on account of this indemnity
agreement. The Fund shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity agreement. If the Fund elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Fund and satisfactory to the Indemnified Parties in the suit whose
approval shall not be unreasonably withheld. In the event that the Fund elects
to assume the defense of any suit and retain counsel, the Indemnified Parties
shall bear the fees and expenses of any additional counsel retained by them. If
the Fund does not elect to assume the defense of a suit, it will reimburse the
Indemnified Parties for the reasonable fees and expenses of any counsel retained
by them.
(c) The Companies agree to indemnify, defend, and hold the Fund, its
officers, trustees, employees and agents and any person who controls the Fund
within the meaning of Section 15 of the 1933 Act (in this Section 11(b),
referred to collectively as "Indemnified Parties"), free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending against such claims, demands or liabilities,
amounts paid in settlement with the consent of the Companies and any counsel
fees incurred in connection therewith) which the Indemnified Parties may incur
under the 1933 Act or under common law or otherwise (i) arising out of or based
upon any alleged untrue statement of a material fact contained in the Contract
Registration Statement or in the Contracts themselves or in any sales literature
generated or approved by the Companies on behalf of the Contracts or Accounts or
arising out of or based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Contract
Registration Statement, Contracts or such sales literature necessary to make the
statements therein not misleading, except insofar as such claims, demands,
liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with information furnished in writing by or on behalf of
the Fund to the Companies for use in the Contract Registration Statement, the
Contracts or such sales literature or otherwise for use in connection with the
sale of Contracts or Shares; (ii) arising out of or based upon statements or
representations (other than statements made in reliance upon and in conformity
with information furnished in writing by or on behalf of the Fund) or wrongful
conduct of the Companies or persons under their control concerning the sale or
distribution of the Contracts or Shares; (iii) arising out of or based upon any
alleged omission to state a material fact required to be stated in the Fund
Registration Statement or necessary to make the statements therein not
misleading, if such claims, demands, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information furnished in
writing by or on behalf of the Companies to the Fund for use in the Fund
Registration Statement; or (iv) arise out of or result from any material breach
of the representations and/or warranties made by the Companies in this Agreement
or any other material breach of this Agreement by the Companies.
(d) The Companies shall not be liable to the Fund under this indemnity
agreement with respect to any claim made against the Fund or any other
Indemnified Party unless the Fund or other such person shall have notified the
Companies in writing of the claim within a reasonable time after the summons or
other first written notification giving information of the nature of the claim
shall have been served upon the Indemnified Party (or after the Indemnified
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Party shall have received notice of service on any designated agent). However,
failure to notify the Companies of any claim shall not relieve the Companies
from any liability which they may have to an Indemnified Party otherwise than on
account of this indemnity agreement. The Companies shall be entitled to
participate, at their own expense, in the defense or, if so elected, to assume
the defense of any suit brought to enforce any claims subject to this indemnity
agreement. If the Companies elect to assume the defense of any such claim, the
defense shall be conducted by counsel chosen by the Companies and satisfactory
to the Indemnified Parties in the suit whose approval shall not be unreasonably
withheld. In the event that the Companies elect to assume the defense of a suit
and retain counsel, the Indemnified Parties shall bear the fees and expenses of
any additional counsel retained by them. If the Companies do not elect to assume
the defense of any suit, they will reimburse the Indemnified Parties for the
reasonable fees and expenses of any counsel retained by the Indemnified Parties.
(e) These indemnification provisions shall survive termination of this
Agreement.
13. Limitation of Liability of the Trustees and Shareholders of the
Fund. The trustees of the Fund and the shareholders of its Series shall not be
liable for any obligations of the Fund or any Series under this Contract, and
the Companies agree that, in asserting any rights or claims under this Contract,
they shall look only to the assets and property of the Fund or the particular
Series in settlement of such right or claims, and not to such trustees or
shareholders.
14. Potential Conflicts. (a) The trustees of the Fund will monitor the
operations of the Fund for the existence of any material irreconcilable conflict
among the interests of all Contract owners of all separate accounts investing in
each Series of the Fund. An irreconcilable conflict may arise, among other
things, from (a) an action by any sate insurance regulatory authority; (b) a
change in applicable insurance laws or regulations; (c) a tax ruling or
provision of the Internal Revenue Code or the regulations thereunder; (d) any
other development relating to the tax treatment of insurers, contract holders or
policy owners or beneficiaries of variable annuity or variable life insurance
products; (e) the manner in which the investments of any Series are managed; (f)
a difference in voting instructions given by variable annuity contract owners,
on the one hand, and variable life insurance policy owners on the other hand, or
by the contract holders or policy owners of different Participating Insurance
Companies; or (g) a decision by an insurer to override the voting instructions
of participating contract owners.
(b) The Companies are responsible for reporting any potential or
existing conflicts to the trustees of the Fund. The Companies will be
responsible for assisting the trustees in carrying out their responsibilities
under this Section 14(b) and Section 14(a), by providing the trustees with all
information reasonably necessary for them to consider the issues raised. The
Fund will also request its investment advisor to report to the trustees any such
conflict which comes to the attention of the advisor.
(c) If a majority of the trustees of the Fund or a majority of its
disinterested trustees determine that a material irreconcilable conflict exists
involving the Companies, the Companies shall, at their expense and to the extent
reasonably practicable (as determined by a majority of the disinterested
trustees), take whatever steps are necessary to eliminate the irreconcilable
material conflict, including withdrawing the assets allocable to some or all of
the separate accounts from the Fund or any Series and reinvesting such assets in
a different investment
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medium, including another Series of the Fund, offering to the affected Contract
owners the option of making such a change or establishing a new funding medium,
including a registered investment company.
For purposes of this Section 14(c), the trustees or the disinterested
trustees shall determine whether any proposed action adequately remedies any
irreconcilable material conflict. In the event of a determination of the
existence of an irreconcilable material conflict, the trustees shall cause the
Fund to take such action, such as the establishment of one or more additional
Series, as they in their sole discretion determine to be in the interest of all
shareholders and Contract owners in view of all applicable factors, such as the
cost, feasibility, tax, regulatory and other considerations. In no event will
the Fund be required by this Section 14(c) to establish a new funding medium for
any Contract.
The Companies shall not be required by this Section 14(c) to establish a
new funding medium for any Contract if an offer to do so has been declined by a
vote of a majority of the Contract owners materially adversely affected by the
material irreconcilable conflict. The Companies will recommend to its Contract
owners that they decline an offer to establish a new funding medium only if the
Companies believes it is in the best interests of the Contract owners.
15. Duration and Termination. This Agreement shall become effective as
of the date hereof and shall continue in force until terminated as set forth
below:
(a) At the option of either party, upon 90 days' notice, unless a
shorter time is agreed to by the parties;
(b) At the option of either party, upon the institution of formal
proceedings against the other party by the SEC, the NASD or any other regulatory
body, the expected or anticipated outcome of which would, in the judgment of the
terminating party, materially impair the other party's ability to meet and
perform its obligations under this Agreement. Prompt notice of an election to
terminate under this provision shall be furnished by the terminating party and
shall be effective upon receipt.
(c) In the event the Fund's Shares are not registered, issued or sold in
accordance with applicable federal or state law or such law precludes the use of
Shares as the underlying investment medium of the Contracts, the Companies may
terminate this Agreement effective upon giving notice to the Fund.
(d) In the event the Contracts cease to qualify as annuity contracts or
life insurance contracts, as applicable under the Code or if the Fund reasonably
believes that the Contracts may fail to so qualify, the Fund may terminate this
Agreement effective upon giving notice to the Companies.
(e) At the option of the Fund, upon the Companies' breach of any
material provision of this Agreement, which breach has not been cured to the
satisfaction of the Fund within 10 days after written notice of such breach is
delivered to the Companies.
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(f) At the option of the Companies, upon the Fund's breach of any
material provision of this Agreement, which breach has not been cured to the
satisfaction of the Companies within 10 days after written notice of such breach
is delivered to the Fund.
(g) At the option of the Fund, if the Contracts are not registered,
issued or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately without notice.
(h) If this Agreement is assigned without the prior written consent of
the other party, termination shall be effective immediately without notice.
16. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
17. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the 1940 Act, except that Section 13 shall
be construed in accordance with the laws of the Commonwealth of Massachusetts.
To the extent that the applicable laws of the State of Delaware or the
Commonwealth of Massachusetts conflict with the applicable provisions of the
1940 Act, the latter shall control.
18. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "assignment" shall have the same meaning as such terms have
in the 1940 Act.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: UBS SERIES TRUST
/s/ Xxxxxxxx Xxxxxxxx By: /s/ X. Xxxxxxx Barneby
--------------------- ----------------------
Xxxxxxxx Xxxxxxxx X. Xxxxxxx Barneby
Assistant Secretary Vice President
ATTEST: AIG LIFE INSURANCE COMPANY
/s/ Xxxxxxxxx Xxxxx By: /s/ Xx Xxxxx
----------------------
Xx Xxxxx
Vice President
ATTEST: AMERICAN INTERNATIONAL LIFE
INSURANCE COMPANY
/s/ Xxxxxxxxx Xxxxx By: /s/ Xx Xxxxx
----------------------
Xx Xxxxx
Vice President
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SCHEDULE A
Accounts of Companies Participating in Series of UBS Series Trust:
Name of Separate Account Date Established
AIG Life Variable Account I (Non-NY) 1986
American International Life Variable Account A (NY) 1986
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SCHEDULE B
Series of UBS Series Trust offered to Accounts of Companies:
Tactical Allocation Portfolio
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