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EXHIBIT 8.7
FORM OF PARTICIPATION AGREEMENT WITH PBHG FUNDS, INC.
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FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 3rd day of April, 1995, by and between American
United Life Insurance Company(R) (the "Company"), a life insurance company
domiciled in Indiana, on its behalf and on behalf of the segregated asset
accounts of the Company (the "Separate Accounts"); The PBHG Funds, Inc. (the
"Fund"), a Maryland corporation; SEI Financial Services Company ("Distributor"),
a Delaware corporation; and Pilgrim Xxxxxx & Associates, Ltd. ("Adviser"), a
Limited Partnership.
WITNESSETH
WHEREAS, the Fund is registered with the Securities and Exchange Commission
("SEC") as an open-end management investment company under the Investment
Company Act of 1940, as amended ("1940 Act") and the Fund is authorized to issue
separate classes of shares of beneficial interests ("shares"), each representing
an interest in a separate portfolio of assets known as a "series" and each
series has its own investment objective, policies, and limitations; and
WHEREAS, Distributor is registered as a broker-dealer with the SEC under
the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. ("NASD");
and
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WHEREAS, Adviser is registered as an Investment Adviser with the SEC under
the Investment Advisers Act of 1940 and with all of the states where such
registration is required; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company wishes to purchase shares of one or more of the Fund's
series on behalf of its Separate Accounts to serve as an investment medium for
Variable Contracts funded by the Separate Accounts, and Distributor is
authorized to sell shares of the Fund's series;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE 1. Sale of Fund Shares
1.1. Distributor agrees to sell to the Company those shares of the series
offered and made available by the Fund and identified on Exhibit B ("Series")
that the Company orders on behalf of its Separate Accounts, and agrees to
execute such orders on each day on which the Fund calculates its net asset value
pursuant to rules of the SEC ("business day") at the net asset value next
computed after receipt and acceptance by the Fund or its designee of the order
for the shares of the Fund.
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1.2. The Fund agrees to make available on each business day shares of the
Series for purchase at the applicable net asset value per share by the Company
on behalf of its Separate Accounts; provided, however, that the
Directors/Trustees of the Fund may refuse to sell shares of any Series to any
person, or suspend or terminate the offering of shares of any Series, if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Directors/Trustees, acting in good faith and
in light of the Directors/Trustees' fiduciary duties under applicable law,
necessary in the best interests of the shareholders of any Series.
1.3. Upon receipt of a request for redemption in proper form from the
Company, the Fund agrees to redeem in cash any full or fractional shares of the
Series held by the Company, ordinarily executing such requests on each business
day at the net asset value next computed after receipt and acceptance by the
Fund or its designee of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder. Such redemptions shall be paid
in federal funds ordinarily on the next business day following receipt by the
Fund or its designee of the order for redemption; however the Fund reserves the
right to postpone payment upon redemption consistent with Section 22(e) of the
Act and any Rules thereunder.
1.4. For purposes of Sections 1.1 and 1.3, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Separate Account, and
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receipt by such designee shall constitute receipt by the Fund; provided that the
Company receives the order by 4:00 p.m. New York City time and the Fund receives
notice of such order by 8:30 a.m. New York City time on the next following
business day.
1.5. The Company shall pay for shares of the Series on the business day
next following the day that the Company places an order to purchase shares of
the Series, except with respect to shares of any Series of the Fund ("Acquired
Series") ordered by the Company for a Separate Account or any subaccount thereof
in connection with an exchange or transfer from another Separate Account or
another subdivision of a Separate Account under the Variable Contracts, Company
shall pay for shares of the Acquired Series on the latter of (1) the next
business day after an order to purchase the shares is made in accordance with
Section 1.1 hereof, or (2) on the same business day that the Separate Account or
subdivision from which the exchange or transfer is being made receives payment
from the investment company portfolio in which it invests. Payment shall be in
federal funds transmitted by wire or by any other method mutually agreed upon by
the parties hereto.
1.6. Issuance and transfer of shares of the Series will be by book entry
only unless otherwise agreed by the Fund. Stock certificates will not be issued
to the Company or the Separate Accounts unless otherwise agreed by the Fund.
Fund and Distributor agree that shares ordered from the Fund will be recorded
properly in an
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appropriate title for the Separate Accounts or the appropriate subaccounts of
the Separate Accounts.
1.7. The Fund shall promptly furnish same-day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the shares of the Series. The Company
hereby elects to reinvest in the Series all such dividends and distributions as
are payable on a Series' shares and to receive such dividends and distributions
in additional shares of that Series. The Company reserves the right to revoke
this election in writing and to receive all such dividends and distributions in
cash. The Fund shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.8. The Fund shall instruct its recordkeeping agent to advise the Company
on each business day of the net asset value per share for each Series as soon as
reasonably practical after the net asset value per share is calculated, which is
normally 6:30 p.m. New York City time, and shall use its best efforts to make
such net asset value per share available by 7:00 p.m. New York City time.
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ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under Indiana law and that it is taxed as an
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended ("Code").
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the Indiana Insurance Code, and that each of the Separate Accounts is a validly
existing segregated asset account under Indiana law.
2.3. The Company represents and warrants that the Variable Contracts issued
by the Company or interests in the Separate Accounts under such Variable
Contracts (1) are or, prior to issuance, will be registered as securities under
the Securities Act of 1933 ("1933 Act") or, alternatively (2) are not registered
because they are properly exempt from registration under the 1933 Act or will be
offered exclusively in transactions that are properly exempt from registration
under the 0000 Xxx.
2.4. The Company represents and warrants that each of the Separate
Accounts:
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(1) has been registered as a unit investment trust in accordance with the
provisions of the 1940 Act or, alternatively (2) has not been registered in
proper reliance upon an exclusion from registration under the 0000 Xxx.
2.5. The Company represents that it believes, in good faith, that the
Variable Contracts issued by the Company are currently treated as annuity
contracts or life insurance policies (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the Code.
2.6. The Fund represents and warrants that it is duly organized as a
corporation under the laws of the State of Maryland, and is in good standing
under applicable law.
2.7. The Fund represents and warrants that the shares of the Series are
duly authorized for issuance in accordance with applicable law and that the Fund
is registered as an open-end management investment company under the 0000 Xxx.
2.8. Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
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ARTICLE Ill. General Duties
3.1. The Fund and Distributor shall take all such actions as are necessary
to permit the sale of the shares of each Series to the Separate Accounts,
including maintaining the Fund's registration as an investment company under the
1940 Act, and registering the shares of the Series sold to the Separate Accounts
under the 1933 Act for so long as required by applicable law. The Fund and
Distributor shall amend the Fund's registration statement filed with the SEC
under the 1933 Act and the 1940 Act from time to time as required in order to
effect the continuous offering of the shares of the Series. The Fund and
Distributor shall register and qualify the shares of the Fund for sale in
accordance with the laws of the various states to the extent deemed necessary by
the Fund or Distributor. The Fund and Distributor shall take all steps necessary
to sell shares of the Fund in compliance with all applicable federal and state
securities laws.
3.2. The Fund and Adviser shall make every effort to maintain qualification
of each Series as a Regulated Investment Company under Subchapter M of the Code
(or any successor or similar provision) and shall notify the Company immediately
upon having a reasonable basis for believing that a Series has ceased to so
qualify or that it might not so qualify in the future.
3.3. The Fund and Adviser agree that each Series of the Fund shall be
managed consistent with its investment objective or objectives, investment
policies, and
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investment restrictions as described in the Fund's prospectus and registration
statement, as amended or modified from time to time.
3.4. The Company shall take all such actions as are necessary under
applicable federal and state law to permit the sale of the Variable Contracts
issued by the Company, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and registering
the Variable Contracts or interests in the Separate Accounts under the Variable
Contracts to the extent required under the 1933 Act, and obtaining all necessary
approvals to offer the Variable Contracts from state insurance commissioners.
3.5. The Company shall require that any persons who offer and sell the
Variable Contracts issued by the Company do so in accordance with applicable
provisions of the 1933 Act, the 1934 Act, the 1940 Act, the NASD Rules of Fair
Practice, and state law respecting the offering of variable life insurance
policies and variable annuity contracts.
3.6. Distributor shall sell and distribute the shares of the Series of the
Fund in accordance with the applicable provisions of the 1933 Act, the 1934 Act,
the 1940 Act, the NASD Rules of Fair Practice, and state law.
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3.7. 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.
ARTICLE IV. Prospectuses and Proxy Statements, Voting
4.1. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by the
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
4.2. Distributor shall provide the Company with as many copies of the
current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy) and other assistance as is reasonably necessary in order
for the Company to print together in one document the current prospectus for the
Variable Contracts issued by the Company and the current prospectus for the
Fund. The Fund shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Variable Contract Owners,
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and the Company shall bear the expense of printing copies of the Fund's
prospectus that are used in connection with offering the Variable Contracts
issued by the Company.
4.3. The Fund and Distributor shall provide (1) at the Fund's expense, one
copy of the Fund's current Statement of Additional Information ("SAI") to the
Company and to any owner of a Variable Contract issued by the Company who
requests such SAI, (2) at the Company's expense, such additional copies of the
Fund's current SAI as the Company shall reasonably request and that the Company
shall require in accordance with applicable law in connection with offering the
Variable Contracts issued by the Company.
4.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Company.
The Fund, at the Company's expense, shall provide the Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as the Company shall reasonably request for use in connection with
offering the Variable Contracts issued by the Company. If requested by the
Company in lieu thereof, the Fund shall provide such documentation (including a
final copy of the Fund's proxy materials, periodic reports to shareholders and
other communications to shareholders, as set in type or in camera-ready copy)
and other assistance as reasonably necessary in order for the
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Company to print such shareholder communications for distribution to owners of
Variable Contracts issued by the Company.
4.5. For so long as the SEC interprets the 1940 Act to require pass-through
voting by Participating Insurance Companies whose Separate Accounts are
registered as investment companies under the 1940 Act ("Registered Separate
Accounts"), the Company shall vote shares of each Series of the Fund held in
Registered Separate Accounts or subaccounts thereof, at regular and special
meetings of the Fund in accordance with instructions timely received by the
Company (or its designated agent) from owners of Variable Contracts funded by
such Registered Separate Accounts or subaccounts thereof having a voting
interest in the Series. The Company shall vote shares of a Series of the Fund
held in Registered Separate Accounts or subaccounts thereof that are
attributable to the Variable Contracts as to which no timely instructions are
received, as well as shares held in such Registered Separate Accounts or
subaccounts thereof that are not attributable to the Variable Contracts and
owned beneficially by the Company (resulting from charges against the Variable
Contracts or otherwise), in the same proportion as the votes cast by owners of
the Variable Contracts funded by that Separate Account or subaccount thereof
having a voting interest in the Series from whom instructions have been timely
received. The Company shall vote shares of each Series of the Fund held in its
general account or in any Separate Account that is not registered under the 1940
Act, if any, in its discretion or in the same proportion as the votes cast
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with respect to shares of the Series held in all Registered Separate Accounts of
the Company or subaccounts thereof, in the aggregate.
ARTICLE V. Sales Material and Information
5.1. The Company agrees that neither it nor any of its affiliates shall
give any information or make any representations or statements on behalf of the
Fund or concerning the Fund other than the information or representations
contained in the Registration Statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee
and/or by Distributor or its designee, except with the prior permission of the
Fund or its designee and/or Distributor or its designee. The Parties agree that
total return information of the Fund and its Series derived from the prospectus
or Registration Statement of the Fund or from reports provided by the Fund or
Distributor to the Company may be used by the Company in connection with the
sale of the Variable Contracts without prior approval of the Fund or
Distributor, or their designees, and the Company shall be responsible for using
such information in conformity with the information provided to it.
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5.2. The Fund or Distributor or the designee of either shall furnish to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or its Separate Accounts are named, and no such
material shall be used without the prior approval of the Company or its
designee.
5.3. The Fund and Distributor agree that each and the affiliates of each
shall not give any information or make any representations on behalf of the
Company or concerning the Company, the Separate Accounts, or the Variable
Contracts issued by the Company, other than the information or representations
contained in a registration statement or prospectus for such Variable Contracts,
as such registration statement and prospectus may be amended or supplemented
from time to time, or in reports for the Separate Accounts or prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the Company or its designee, except with
the prior permission of the Company.
5.4. The Fund will provide to the Company at least one complete copy of all
prospectuses, Statements of Additional Information, reports, proxy statements
and other voting solicitation materials, and all amendments and supplements to
any of the above, that relate to the Fund or its shares, promptly after the
filing of such document with the SEC or other regulatory authorities.
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5.5. The Company will provide to the Fund at least one complete copy of all
prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the Company or interests therein are not registered under
the 1933 Act), Statements of Additional Information, reports, solicitations for
voting instructions, and all amendments or supplements to any of the above, that
relate to the Variable Contracts issued by the Company or the Separate Accounts
promptly after the filing of such document with the SEC or other regulatory
authority.
5.6. For purposes of this Article V, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, computerized media, or other public
media), sales literature (i.e., any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees.
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ARTICLE VI. Administration of Accounts
6.1 Services to Owners of Variable Contracts shall be the responsibility of
the Company and shall not be the responsibility of the Fund or Distributor.
These services include, but are not limited to:
(a) providing information periodically to Contract Owners showing their
interests in the Separate Accounts or subaccounts thereof that invest
in the Fund or in any Series thereof,
(b) addressing inquiries from Contract Owners relating to investing,
exchanging or transferring, or redeeming interests under the Variable
Contracts and the Separate Accounts or subaccounts or any Series
thereof funding such Variable Contracts, which inquiries may relate to
the Fund or a Series thereof;
(c) providing explanations to Owners regarding Fund investment objectives
and policies and other information about the Fund and its Series,
including the performance of the Series;
(d) forwarding shareholder communications from the Fund, including but not
limited to shareholder reports containing annual and semi-annual
financial statements of the Fund to Contract Owners;
(e) delivering the Fund prospectus and supplements thereto to Owners
whenever necessary under the Securities Act of 1933;
(f) delivering any notices of shareholder meetings and proxy statements
accompanying such notices in connection with general and special
meetings of shareholders of the Fund under which Contract Owners may
have voting rights, and helping tabulate the voting of Owners
tendering voting instructions to the Company.
6.2 The Fund and Adviser recognize the Company as the sole shareholder of
Fund shares issued under this Agreement and further recognize that Adviser
and/or the Fund will derive a substantial savings in administrative expense
because the Company will provide the services described above, thus allowing the
Fund significant reductions in
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postage expense and shareholder communications and recordkeeping, by virtue of
having a sole shareholder rather than multiple shareholders. In consideration of
the administrative savings resulting from such arrangement, the Company shall be
paid an amount equal to 15 basis points (0.15%) per annum of the average
aggregate amount invested by the Company under this Agreement.
6.3 For purposes of computing the payment to the Company contemplated by
this Section VI, the average aggregate amount invested by Company over a one
month period shall be computed by totaling the Company's aggregate investment
(share net asset value multiplied by total number of shares held by the Company)
on each business day during the month and dividing by the total number of
business days during such month.
6.4 The payment contemplated by this Section VI shall be calculated by
Adviser at the end of each calendar month and will be paid by Adviser to the
Company within ten (10) business days thereafter. Payment will be accompanied by
a statement showing the calculation of the monthly amount payable by Adviser and
such other supporting data as may be reasonably requested by the Company.
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ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the Fund, each of
its Directors/Trustees and officers, Adviser, and Distributor and each of the
Directors/Trustees of Adviser and Distributor (collectively, the "Indemnified
Parties" for purposes of this Section 7.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation expenses (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or litigation expenses:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus (which shall include an offering memorandum) for the
Variable Contracts issued by the Company or sales literature for such
Variable Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf
of the Fund: (1) for use in the registration statement or prospectus
for the Variable Contracts issued by the Company or in sales
literature (or any amendment or supplement to any of the foregoing) or
otherwise, (2) was contained in sales literature or other promotional
material that has been approved by the Fund or its designee or by
Distributor or its designee for use in connection with the sale of
such Variable Contracts or Fund shares, or (3) otherwise in connection
with the sale of the Variable Contracts or Fund shares; or
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(ii) arise Out Of Or result from 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;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof.
7.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations or
duties under this Agreement or to the Fund.
7.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Party shall have received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not relieve the Company
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the Indemnified Party named in the action. After notice
from the
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Company to such party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.1(d). The Indemnified Parties shall promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares thereunder or the Variable Contracts
issued by the Company or the operation of the Fund.
7.2. Indemnification By Distributor
7.2(a). Distributor agrees to indemnify and hold harmless the Company and
each of its directors and officers and the Separate Accounts (collectively, the
"Indemnified Parties" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of Distributor) or litigation expenses (including legal and
other expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or litigation expenses:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or sales literature of the Fund (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
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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 Distributor or
the Fund or the designee of either by or on behalf of the Company: (1)
for use in the registration statement or prospectus for the Fund or in
sales literature (or any amendment or supplement to any of the
foregoing) or otherwise, (2) was contained in sales literature or
other promotional material that has been approved by the Company or
its designee for use in connection with the sale of the Variable
Contracts or Fund shares, or (3) or otherwise for use in connection
with the sale of the Variable Contracts issued by the Company or Fund
shares; or
(ii) arise out of or result from the material breach of any representation
and/or warranty made by Distributor, Adviser, or the Fund in this
Agreement or arise out of or result from any other material breach of
this Agreement by Distributor, Adviser, or the Fund, including but not
limited to, compliance with the diversification requirements of
Section 817(h) of the Code and qualification of each Series of the
Fund as a Regulated Investment Company under Subchapter M of the Code;
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
7.2(b). Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations and
duties under this Agreement or to the Company or the Separate Accounts.
7.2(c). Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have
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notified Distributor in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party (or after such Party shall have
received notice of such service on any designated agent), but failure to notify
Distributor of any such claim shall not relieve Distributor from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this Indemnification Provision. In case any such
action is brought against an Indemnified Party, Distributor will be entitled to
participate, at its own expense, in the defense thereof. Distributor also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
Indemnified Party named in the action. After notice from Distributor to such
party of Distributor's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by it,
and Distributor will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2(d). The Company shall promptly notify Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issuance or sale of the Fund shares hereunder or the
Variable Contracts issued by the Company or the operation of the Separate
Accounts provided that such litigation or proceedings relate to or affect the
interests of the Fund or Distributor.
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ARTICLE VIII. Applicable Law
8.l. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. Termination
9.1. This Agreement shall terminate:
(a) at the option of any party upon 90 days advance written notice to the
other parties, unless a shorter time is agreed to by the parties to
this Agreement; or
(b) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by the Company, as determined by the Company, and
upon written notice by the Company to the other parties to this
Agreement; or,
(c) at the option of the Fund, Adviser, or Distributor upon institution of
formal proceedings against the Company by the NASD, the SEC, or any
state securities
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or insurance department or any other regulatory body if the Fund,
Adviser, or Distributor shall determine, in their sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations, financial condition, or
prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(d) at the option of the Company upon institution of formal proceedings
against the Fund, Adviser, or Distributor by the NASD, the SEC, or any
state securities or insurance department or any other regulatory body
if the Company shall determine, in its sole judgment exercised in good
faith, that the Fund, Adviser, or Distributor has suffered a material
adverse change in its business, operations, financial condition, or
prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(e) upon requisite vote of the Variable Contract Owners having an interest
in the Separate Accounts (or any subaccounts thereof) to substitute
the shares of another investment company or series thereof for the
corresponding shares of the Fund or a Series in accordance with the
terms of the Variable Contracts for which those shares had been
selected to serve as the underlying investment media; or
(f) in the event any of the shares of a Series are not registered, issued
or sold in accordance with applicable state and/or federal law, or
such law precludes the use of such shares as the underlying investment
media of the Variable Contracts issued or to be issued by the Company;
or
(g) at the option of the Company if the Fund or a Series fails to meet the
requirements specified in Section 3.2 hereof; or
25
(h) at the option of the Fund or Distributor if the Variable Contracts
issued by the Company cease to qualify as annuity contracts or life
insurance contracts, as applicable, under the Code or if the Variable
Contracts are not registered, issued or sold in accordance with
applicable state and/or federal law; or
(i) at the option of the Company upon any substitution of the shares of
another investment company or series thereof for shares of the Fund or
a Series of the Fund in accordance with the terms of the Contracts,
provided that the Company has given at least 30 days prior written
notice to the Fund or Distributor of the date of the substitution.
(j) at the option of the Company upon a material breach of this Agreement
or of any representation or warranty herein by the Fund, Adviser, or
Distributor, or at the option of the Fund, Adviser, or Distributor
upon a material breach of this Agreement or of any representation or
warranty herein by the Company.
9.2. Each party to this Agreement shall promptly notify the other parties
to the Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.1(c) and (d) hereof The Company shall
give 30 days prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in Section
9.1(e) hereof.
26
9.3. Under the terms of the Variable Contracts, the Company reserves the
right, subject to compliance with the law as then in effect, to make
substitutions for the securities that are held by a Separate Account of the
Company under certain circumstances. The parties acknowledge that the Company
has the right to substitute other securities for the shares of the Fund or a
Series thereof already purchased or to be purchased in the future if the shares
of the Fund or any or all of the Series of the Fund should no longer be
available for investment, or if, in the judgment of the Company's management,
further investment in shares of the Fund or any or all of the Series thereof
should become inappropriate in view of the purposes of the Contracts. The
Company will provide 30 days written notice to the Fund or to Distributor prior
to effecting any such substitution.
9.4. If this Agreement terminates, any provision of this Agreement
necessary to the orderly windup of business under it will remain in effect as to
that business, after termination.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
27
If to the Fund: Xxxxxxx Xxxxxxx
SEI Financial Services Company
000 Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
If to the Transfer Agent: Xxxxxxx Xxxxxx
Supervised Service Company
000 Xxxx
Xxxxxx Xxxx, XX 00000
If to Adviser: Xxxxxxx Xxxxxxxxxx
Pilgrim Xxxxxx & Associates, Ltd.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
If to Distributor: Xxxxxxx Xxxxxxx
SEI Financial Services Company
000 Xxxxxxxxxx Xxxx
Xxxxx, XX 00000
If to the Company: Xxxxxxx X. Xxxxxx
Associate General Counsel
American United Life Insurance
Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
ARTICLE XI. Miscellaneous
11.1. It is understood that the name "American United Life Insurance
Company", "AUL:' or any derivative thereof or logo associated with that name is
the valuable property of Distributor and its affiliates, and that the Company
has the right to use such name (or derivative or logo) only so long as this
Agreement is in effect. Upon
28
termination of this Agreement the Company shall forthwith cease to use such name
(or derivative or logo).
11.2. It is understood that the name "The PBHG Funds, Inc.", "PBHG",
"Pilgrim Xxxxxx & Associates" or any derivative thereof or logo associated with
that name is the valuable property of Distributor and its affiliates and
Adviser, and that the Company has the right to use such name (or derivative or
logo) only so long as this Agreement is in effect. Upon termination of this
Agreement the Company shall forthwith cease to use such name (or derivative or
logo).
11.3. The parties agree that the names, addresses, and other information
relating to the owners of the Variable Contracts or prospects for the sale of
the Variable Contracts are the exclusive property of Company and may not be used
by the Fund, Adviser, or Distributor without the written consent of the Company.
11.4. 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.
11.5. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
29
11.6. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.7. This Agreement may not be assigned by any party to the Agreement
except with the written consent of the other parties to the Agreement. For
purposes of this provision, assignment shall be as defined in the Investment
Company Act of 1940 and the rules thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
The PBHG Funds, Inc.
ATTEST: _______________________ By: _______________________
Name: Name: Xxxxx X. Xxx
Title: Title: President
Pilgrim Xxxxxx & Associates, Inc.
ATTEST: _______________________ By: _______________________
Name: Name: Xxxxxxx X. Xxxxxxxxxx
Title: Title: Mutual Funds Coordinator
SEI Financial Services Company
30
ATTEST: _______________________ By: ______________________
Name: Name: Xxxxx X. Xxx
Title: Title: President
American United Life Insurance
Company(R)
ATTEST: ______________________ By: _______________________
Name: Xxxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxxx
Title: Associate General Counsel Title: V.P., Pension Mktg.
AMENDMENT NO. 1
TO
FUND PARTICIPATION AGREEMENT
This AMENDMENT NO. 1 is made as of the day of February, 1997, by and among
American United Life Insurance Company (R) (the "Company"), a life insurance
company domiciled in Indiana, on its behalf and on behalf of the segregated
asset accounts of the Company; The PBHG Funds, Inc. (the "Fund"), a Maryland
corporation; SEI Financial Services Company (the "Distributor"), a Delaware
corporation; and Pilgrim Xxxxxx & Associates, Ltd. (the "Adviser"), a Delaware
corporation.
WITNESSETH
WHEREAS, the Company, the Fund, the Distributor, and the Adviser have
entered into a Participation Agreement dated April 3, 1995 relating to the
purchase and sale of shares of certain series of the Fund (the "Participation
Agreement"); and,
WHEREAS, the Company, the Fund, the Distributor and the Adviser desire to
amend the Participation Agreement to allow for the purchase of shares of
additional series of the Fund.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereby agree as follows:
1. Exhibit B to the Participation Agreement is hereby amended and
replaced by the Exhibit B that is attached hereto.
2. All other provisions of the Participation Agreement shall remain
unchanged.
3. This Amendment may be executed in two or more counterparts, each of
which when taken together shall constitute one and the same
instrument.
1
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
THE PBHG FUNDS, INC.
ATTEST: ___________________ By: __________________
Name: Xxxx X. Xxxx Name: Xxxxx X. Xxxxxxxx
Title: Vice President Title: Vice President
PILGRIM XXXXXX &
ASSOCIATES, LTD.
ATTEST: ___________________ By: __________________
Name: Xxxx X. Xxxx Name: Xxxx X. Xxxxxxx
Title: General Counsel & Secretary Title: President
SEI FINANCIAL
SERVICES COMPANY
ATTEST: ___________________ By: __________________
Name: Xxxxxxx X. Xxxxx Name: David Gene
Title: Account Director Title: Senior Vice President
AMERICAN UNITED LIFE
INSURANCE COMPANY(R)
ATTEST: ___________________ By: __________________
Name: Xxxxx Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Vice President Title: Associate General
Counsel
2
EXHIBIT B
Name of Portfolios
PBHG Growth Fund
PBHG Emerging Growth Fund
