EXHIBIT 99.27(h)(11)
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of April 18,
2002 and between MINNESOTA LIFE INSURANCE COMPANY (the "Company"), and AMERICAN
CENTURY INVESTMENT SERVICES, INC. ("Distributor").
WHEREAS, the Company offers to the public certain group and individual variable
annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options under the
Contracts Class II shares of VP Income & Growth, VP Value and VP Ultra (the
"Funds"), each of which is a series of mutual fund shares registered under the
Investment Company Act of 1940, as amended, and issued by American Century
Variable Portfolios, Inc. (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor desires
to make shares of the Funds available as investment options under the Contracts
and to retain the Company to perform certain administrative services on behalf
of the Funds, and the Company is willing and able to furnish such services;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. Transactions in the Funds. Subject to the terms and conditions of this
Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts (defined in Section 8(a) below) through a single account per Fund at
the net asset value applicable to each order. The Funds' shares shall be
purchased and redeemed on a net basis in such quantity and at such time as
determined by the Company to satisfy the requirements of the Contracts for which
the Funds serve as underlying investment media. Dividends and capital gains
distributions will be automatically reinvested in full and fractional shares of
the Funds.
2. Administrative Services. The Company agrees to provide all administrative
services for the Contract owners, including but not limited to those services
specified in EXHIBIT A (the "Administrative Services"). Neither Distributor nor
the Issuer shall be required to provide Administrative Services for the benefit
of Contract owners. The Company agrees that it will maintain and preserve all
records as required by law to be maintained and preserved in connection with
providing the Administrative Services, and will otherwise comply with all laws,
rules and regulations applicable to the marketing of the Contracts and the
provision of the Administrative Services. Upon request, the Company will provide
Distributor or its representatives reasonable information regarding the quality
of the Administrative Services being provided and its compliance with the terms
of this Agreement.
3. Timing of Transactions. Distributor hereby appoints the Company as agent for
the Funds for the limited purpose of accepting purchase and redemption orders
for Fund shares from the Plans and/or Participants, as applicable. On each day
the New York Stock Exchange (the "Exchange") is open for business (each, a
"Business Day"), the Company may receive instructions from the Plans and/or
Participants for the purchase or redemption of shares of the Funds ("Orders").
Orders received and accepted by the Company prior to the close of regular
trading on the Exchange (the "Close of Trading") on any given Business Day
(currently, 4:00 p.m. Eastern time) and transmitted to the Funds' transfer agent
by 9:30 a.m. Eastern time on the next Business Day will be executed at the net
asset value determined as of the Close of Trading on the previous Business Day.
Any Orders received by the Company on any Business Day but after the Close of
Trading, and all Orders that are transmitted to the Funds' transfer agent after
9:30 a.m. Eastern time on the next Business Day, will be executed at the net
asset value determined as of the Close of Trading on the next Business Day
following the receipt of such Order. The day as of which an Order is executed by
the Funds' transfer agent pursuant to the provisions set forth above is referred
to herein as the "Trade Date". All orders are subject to acceptance or rejection
by Distributor or the Funds in the sole discretion of any of them.
4. Processing of Transactions.
(a) If transactions in Fund shares are to be settled through the National
Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the Fund/SERV and
Networking Agreement, between the Company and American Century Services
Corporation, an affiliate of Distributor, shall apply.
(b) If transactions in Fund shares are to be settled directly with the Funds'
transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day, Distributor (or one of its
affiliates) will provide to the Company via facsimile or other electronic
transmission acceptable to the Company the Funds' net asset value, dividend and
capital gain information and, in the case of income funds, the daily accrual for
interest rate factor (mil rate), determined at the Close of Trading.
(2) By 9:30 a.m. Eastern time on the Business Day next following the Trade Date,
the Company will provide to the Funds' transfer agent via facsimile or other
electronic transmission acceptable to Distributor a report stating whether the
instructions received by the Company from Participants by the Close of Trading
on the previous Business Day resulted in the Plans being a net purchaser or net
seller of shares of the Funds. As used in this Agreement, the phrase "other
electronic transmission acceptable to Distributor" includes the use of remote
computer terminals located at the premises of the Company, its agents or
affiliates, which terminals may be linked electronically to the computer system
of Distributor, its agents or affiliates (hereinafter, "Remote Computer
terminals").
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(3) Upon the timely receipt from the Company of the report described in (2)
above, the Funds' transfer agent will execute the purchase or redemption
transactions (as the case may be) at the net asset value computed as at the
Close of Trading on the Trade Date. Payment for net purchase transactions shall
be made by wire transfer to the applicable Fund custodial account designated by
Distributor on the Business Day next following the Trade Date. Such wire
transfers shall be initiated by the Company's bank prior to 4:00 p.m. Eastern
time and received by the Funds prior to 6:00 p.m. Eastern time on the Business
Day next following the Trade Date ("T + 1"). If payment for a purchase Order is
not timely received, such Order will be, at Distributor's option. either (i)
executed at the net asset value determined on the Trade Date, and the Company
shall be responsible for all costs to the Distributor or the Funds resulting
from such delay, or (ii) executed at the net asset value next computed following
receipt of payment. Payments for net redemption transactions shall be made by
wire transfer by the Issuers to the account( s) designated by the Company on
T+l; provided, however, the Issuers reserve the right to settle redemption
transactions within the time period set forth in the applicable Fund's
then-current prospectus. On any Business Day when the Federal Reserve Wire
Transfer System is closed, all communication and processing rules will be
suspended for the settlement of Orders. Orders will be settled on the next
Business Day on which the Federal Reserve Wire Transfer System is open and the
original Trade Date will apply.
5. Pricing Errors.
(a) In the event any adjustment is required to correct any error in the
computation of the net asset value of a Fund's shares at the shareholder level
as a result of a pricing error that is deemed to be material under the pricing
policy of the Fund's Board of Directors or which Distributor otherwise deems
necessary to correct at the shareholder level, Distributor shall notify Company
as soon as reasonably practical after discovering the need for such adjustment.
(b) Any such notice shall state for each day for which the error occurred the
incorrect price, the correct price and, to the extent communicated to the Fund"
shareholders, the reason for the price change. Company may send this notice or a
derivation thereof (so long as such derivation is approved in advance by
Distributor) to Participants whose accounts are affected by the price change.
(c) If as a result of any such error the Account maintained by the fund for the
Plan receives an amount in excess of the amount to which it otherwise would be
entitled, Distributor and Company agree to evaluate the situation together, on a
case by case basis, with a goal toward pursuing an appropriate course of action.
If Distributor determines to make an adjustment at the shareholder level that
would reduce the number of shares held in the Plan's account, Distributor shall
reimburse Company its reasonable out-of-pocket expenses in correcting
Participant's records, communicating with Participants regarding any adjustment
to their account, and mailing out corrected statements to Participants.
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(d) If any such adjustment would increase the number of shares in the Account,
Distributor shall make al necessary adjustments as soon as reasonably practical
after discovering the need for the adjustment to the number of shares owned in
the Account for credit to the Participants' accounts.
6. Prospectus and Proxy Materials.
(a) Distributor shall provide the Company with copies of the Issuer's proxy
materials, periodic fund reports to shareholders and other .materials that are
required by law to be sent to the Issuer's shareholders. In addition,
Distributor shall provide the Company with a sufficient quantity of prospectuses
of the Funds to be used in conjunction with the transactions contemplated by
this Agreement, together with such additional copies of the Issuer's
prospectuses as may be reasonably requested by Company. If the Company provides
for pass-through voting by the Contract owners, or if the Company determines
that pass-through voting is required by law, Distributor will provide the
Company with a sufficient quantity of proxy materials for each, as directed by
the Company.
(b) The cost of preparing, printing and shipping of the prospectuses, periodic
fund reports and other materials of the Issuer to the Company shall be paid by
Distributor or its agents or affiliates; provided, however, that if at any time
Distributor or its agent reasonably deems the usage by the Company of such items
to be excessive, it may, prior to the delivery of any quantity of materials in
excess of what is deemed reasonable, request that the Company demonstrate the
reasonableness of such usage. If Distributor believes the reasonableness of such
usage has not been adequately demonstrated, it may request that the party
responsible for such excess usage pay the cost of printing (including press
time) and delivery of any excess copies of such materials. Unless the Company
agrees to make such payments, Distributor may refuse to supply such additional
materials and Distributor shall be deemed in compliance with this Section 6 if
it delivers to the Company at least the number of prospectuses and other
materials as may be required by the Issuer under applicable law.
(c) The cost of any distribution of prospectuses, proxy materials, periodic fund
reports and other materials of the Issuer to the Contract owners shall be paid
by the Company and shall not be the responsibility of Distributor or the Issuer.
(d) If the Company elects to include any materials provided by the Distributor,
specifically prospectuses, SAIs, shareholder reports and proxy materials, on its
web site or in any other computer or electronic format, the Company assumes sole
responsibility for maintaining such materials in the form provided by the
Distributor and for promptly replacing such materials in the form provided by
the Distributor and for promptly replacing such materials with all updates
proved by the Distributor. The Distributor agrees to provide all such materials
requested by the Company in Portable Document Format (PDF, both camera ready and
low resolution enhanced) in a timely fashion at no additional cost, together
with such other formats as may be mutually agreed upon.
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7. Compensation and Expenses.
(a) The Accounts shall be the sole shareholder of Fund shares purchased for the
Contract owners pursuant to this Agreement (the "Record Owner"). The Record
Owner shall properly complete any applications or other forms required by
Distributor or the Issuer from time to time.
(b) Distributor acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company,
Distributor will pay the Company a fee (the "Administrative Services Fee") equal
to 10 basis points (0.10%) per annum of the average aggregate amount invested by
the Company in Class II shares of the Funds under this Agreement. The payments
received by the Company under this Section 7(b) are for administrative and
shareholder services only and do not constitute payment in any manner for
investment advisory services or for costs of distribution.
(c) In consideration of performance of the Distribution Services specified on
EXHIBIT B by the Company, Distributor will pay the Company a fee (the
"Distribution Fee") of 25 basis points (0.25%) of the average aggregate amount
invested by the Company in Class n shares of the Funds under this Agreement.
(d) For the purposes of computing the payments to the Company contemplated by
this Section 7, the average aggregate amount invested by the Company on behalf
of the Accounts in the Funds over a one month period shall be computed by
totaling the Company's aggregate investment (share net asset value multiplied by
total number of shares of the Funds held by the Company) on each Business Day
during the month and dividing by the total number of Business Days during such
month.
(e) Distributor will calculate the amount of the payments to be made pursuant to
this Section 7 at the end of each calendar quarter and will make such payment to
the Company within 30 days thereafter. The check for such payments will be
accompanied by a statement showing the calculation of the amounts being paid by
Distributor for the relevant months and such other supporting data as may be
reasonably requested by the Company and shall be mailed to:
Minnesota Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xx. Xxxx, XX 00000
Attention: Xx. Xxxxxxxx Xxxxx, Actuarial Specialist,
Station A4-4289
Phone No.: 000-000-0000
Fax No.: 000-000-0000
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8. Representations.
(a) The Company represents and warrants that (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms; (ii) it has established the Variable
Annuity Account (the "Account"), which is a duly authorized and established
separate account under Section 61 A.14 of the Minnesota Statutes, as amended,
and has registered the Account as a unit investment trust under the Investment
Company Act of 1940 (the "1940 Act") to serve as an investment vehicle for the
Contracts; (ill) each Contract provides for the allocation of net amounts
received by the Company to an Account for investment in the shares of one or
more specified investment companies selected among those companies available
through the Account to act as underlying investment media; (iv) selection of a
particular investment company is made by the Contract owner under a particular
Contract, who may change such selection from time to time in accordance with the
terms of the applicable Contract; and (v) the activities of the Company
contemplated by this Agreement comply in all material respects with all
provisions of federal and state securities laws applicable to such activities.
(b) Distributor represents that (i) this Agreement has been duly authorized by
all necessary corporate action and, when executed and delivered, shall
constitute the legal, valid and binding obligation of Distributor, enforceable
in accordance with its terms; (ii) the investments of the Funds will at all
times be adequately diversified within the meaning of Section 817(h) of the
Internal Revenue Service Code of 1986, as amended (the "Code"), and the
regulations thereunder, and that at all times while this Agreement is in effect,
all beneficial interests in each of the Funds will be owned by one or more
insurance companies' segregated asset accounts or by any other party permitted
under Section 1.817-5(f)(3) of the Regulations promulgated under the Code; (iii)
each Fund has elected to be taxed as a "regulated investment company' under
Subchapter M of the Code; (iv) the prospectus of each Fund complies in all
material respects with federal and state securities laws; (v) shares of the
Issuer are registered and authorized for sale in accordance with all federal and
state securities laws; and (vi) it is duly registered and licensed under all
applicable federal and state securities laws where the failure to be so
registered would have a material adverse effect on its business.
9. Additional Covenants and Agreement.
(a) Each party shall comply with all provisions of federal and state laws
applicable to its respective activities under this Agreement. All obligations of
each party under this Agreement are subject to compliance with applicable
federal and state laws.
(b) Each party shall promptly notify the other party in the event that it is,
for any reason, unable to perform any of its obligations under this Agreement.
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(c) The Company covenants and agrees that all Orders accepted and transmitted by
it hereunder with respect to each Account on any Business Day will be based upon
instructions that it received from the Contract owners, in proper form prior to
the Close of Trading of the Exchange on that Business Day. The Company shall
time stamp all Orders or otherwise maintain records that will enable the Company
to demonstrate compliance with Section 9(c) hereof.
(d) The Company covenants and agrees that all Orders transmitted to the Issuer,
whether by telephone, telecopy, or other electronic transmission acceptable to
Distributor, shall be sent by or under the authority and direction of a person
designated by the Company as being duly authorized to act on behalf of the owner
of the Accounts. Distributor shall be entitled to rely on the existence of such
authority and to assume that any person transmitting Orders for the purchase,
redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Tern1inals
and assumes full responsibility for the security therefor. The Company further
agrees to be responsible for the accuracy, propriety and consequences of all
data transmitted to Distributor by the Company by telephone, telecopy or other
electronic transmission acceptable to Distributor.
(e) The Company agrees that, to the extent it is able to do so, it will use its
best efforts to give equal emphasis and promotion to shares of the Funds as is
given to other underlying investments of the Accounts, subject to applicable
Securities and Exchange Commission rules. In addition, the Company shall not
impose any fee, condition, or requirement for the use of the Funds as investment
options for the Contracts that operates to the specific prejudice of the Funds
vis-a-vis the other investment media made available for the Contracts by the
Company.
(f) The Company shall not, without the written consent of Distributor, make
representations concerning the Issuer or the shares of the Funds except those
contained in the then- current prospectus and in current printed sales
literature approved by Distributor or the Issuer.
(g) Advertising and sales literature with respect to the Issuer or the Funds
prepared by the Company or its agents, if any, for use in marketing shares of
the Funds as underlying investment media to Contract owners shall be submitted
to Distributor for review and approval at least 10 business days before such
material is used.
10. Use of Names. Except as otherwise expressly provided for in this Agreement,
neither Distributor nor any of its affiliates nor the Funds shall use any
trademark, trade name, service xxxx or logo of the Company, or any variation of
any such trademark, trade name, service xxxx or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service xxxx or logo of the
Issuer, Distributor or
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any variation of any such trademarks, trade names, service marks, or logos,
without the prior written consent of either the Issuer or Distributor, as
appropriate, the granting of which shall be at the sole option of Distributor
and/or the Issuer.
11. Proxy Voting.
(a) The Company or its designee shall provide pass-through voting privileges to
all Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company or its
designee to assure that it and the separate accounts of the other Participating
Companies (as defined in Section 12(a) below) participating in any Fund
calculate voting privileges in a consistent manner.
(b) The Company or its designee will distribute to Contract owners all proxy
material furnished by Distributor and will vote shares in accordance with
instructions received from such Contract owners. The Company or its designee
shall vote Fund shares for which no voting instructions are received in the same
proportion as shares for which such instructions have been received. The Company
and its agents shall not oppose or interfere with the solicitation of proxies
for Fund shares held for such Contract owners.
12. Indemnification by the Company.
(a) The Company shall indemnify and hold harmless the Distributor and the
Underwriter and each of the Trustees, directors of the Underwriter, officers,
employees or agents of the Trust or the Underwriter and each person, if any, who
controls the Distributor or the Underwriter within the meaning of Section 15 of
the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 9.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company which consent
may not be unreasonably withheld) or litigation (including reasonable 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 the Trust's shares or the Contracts or
the performance by the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statements of any material fact
contained in a Registration Statement, Prospectus or Statement of Additional
Information for the Contracts or contained in the Contracts or sales literature
for the Contracts (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Distributor for use in the Registration Statement, Prospectus or Statement of
Additional Information for the Contracts or in the Contracts
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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 written statements or representations (other
than statements or representations contained in the Fund's Registration
Statement or Prospectus, or in sales literature for Fund shares not supplied by
the Company, or persons under its control) or wrongful conduct of the Company or
persons under its control, with respect to the sale or distribution of the
Contracts or Trust shares; or
(iii) arise out of any untrue statement of a material fact contained in a
Registration Statement, Prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such a statement or omission was made in reliance upon
information furnished to the Distributor or its affiliates by or on behalf of
the Company; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Company in this Agreement or arise out of or result from
any other breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 12(b) and 12(c) hereof.
(b) The Company shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party to the extent such may arise from 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
the Distributor, whichever is applicable.
(c) The Company 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 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
Indemnified Party shall have received notice of such service on any designated
agent), on the basis of which the Indemnified Party should reasonably know of
the availability of indemnity hereunder in respect of such claim 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 the Indemnified Parties, 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
Company to such Indemnified 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
Indemnified
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Party under this Agreement for any legal or other expenses subsequently incurred
by such Indemnified Party independently in connection with the defense thereof
other than reasonable costs of investigation.
(d) The Distributor shall promptly notify the Company of the commencement of any
litigation or proceedings against the Distributor or the Funds in connection
with the issuance or sale of the Fund Shares or the Contracts.
(e) The provisions of this Section 12 shall survive any termination of this
Agreement.
13. Indemnification by the Distributor.
(a) The Distributor shall indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 13)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor which consent may not
be unreasonably withheld) or litigation (including reasonable 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 expenses (or actions in respect thereof) or settlements are related to the
sale or acquisition of the Fund's shares or the Contracts or the performance by
the parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statement of any material fact
contained in the sales literature of the Fund prepared by or approved by the
Distributor or Distributor (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission was made in
reliance upon and in conformity with information furnished to the Distributor by
or on behalf of the Company for use in 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 written statements or representations (other
than statements or representations contained in the Registration Statement,
Prospectus, Statement of Additional Information or sales literature for the
Contracts not supplied by the Distributor or persons under its control) of the
Distributor or persons under its control, with respect to the sale or
distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement of a material fact contained in a
Registration Statement, Prospectus, Statement of Additional Information or sales
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literature covering the Contracts, or any amendment thereof or supplement
thereto, or the omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not misleading,
if such statement or omission was made in reliance upon information furnished to
the Company by or on behalf of the Distributor; or
(iv) arise out of or result from any breach of any representation and/or
warranty made by the Distributor in this Agreement or arise out of or result
from any other breach of this Agreement by the Distributor; as limited by and in
accordance with the provisions of Sections 13(b) and 13(c) hereof.
(b) The Distributor shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from 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 each
Company or the Account, whichever is applicable.
(c) The Distributor 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 the 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 Indemnified Party shall have received notice of
such service on any designated agent) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Distributor of any such claim
shall not relieve the 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
the Indemnified Parties, the Distributor will be entitled to participate, at its
own expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Distributor to such Indemnified Party
of the 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 the Distributor will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Company shall promptly notify the 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 Contracts or the operation of each
Account.
(e) The provisions of this Section 13 shall survive any termination of this
Agreement.
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14. Potential Conflicts.
(a) The Company has received a copy of an application for exemptive relief, as
amended, filed by the Issuer on December 21, 1987, with the SEC and the order
issued by the SEC in response thereto (the "Shared Funding Exemptive Order").
The Company has reviewed the conditions to the requested relief set forth in
such application for exemptive relief. As set forth in such application, the
Board of Directors of the Issuer (the "Board") will monitor the Issuer for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all separate accounts ("Participating Companies") investing
in funds of the Issuer. An irreconcilable material conflict may arise for a
variety of reasons, including: (i) an action by any state insurance regulatory
authority; (ii) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar actions by insurance, tax or
securities regulatory authorities; (iii) an administrative or judicial decision
in any relevant proceeding; (iv) the manner in which the investments of any
portfolio are being managed; (v) a difference in voting instructions given by
variable annuity contract owners and variable life insurance contract owners; or
(vi) a decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that an
irreconcilable material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which it is
aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the Board
with all information reasonably necessary for the Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company to
inform the Board whenever contract owner voting instructions are disregarded
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with regard
to contract owner investments in a Fund, the Board shall give prompt notice to
all Participating Companies. If the Board determines that the Company is
responsible for causing or creating said conflict, the Company shall at its sole
cost and expense, and to the extent reasonably practicable (as determined by a
majority of the disinterested Board members), take such action as is necessary
to remedy or eliminate the irreconcilable material conflict. Such necessary
action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Fund and
reinvesting such assets in a different investment medium or submitting the
question of whether such segregation should be implemented to a vote of all
affected contract owners and as appropriate, segregating the assets of any
appropriate group (i.e., annuity contract owners, life insurance contract
owners, or variable contract owners of one or more Participating Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and/or
(ii) establishing a new registered management investment company or managed
12
separate account.
(d) If a material irreconcilable conflict arises as a result of a decision by
the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote by all
of its contract owners having an interest in the Issuer, the Company at its sole
cost, may be required. at the Board's election, to withdraw an Account's
investment in the Issuer and terminate this Agreement; provided, however, that
such withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
(e) For the purpose of this Section 14, a majority of the disinterested Board
members shall determine whether or not any proposed action adequately remedies
any irreconcilable material conflict, but in no event will the Issuer be
required to establish a new funding medium for any Contract. The Company shall
not be required by this Section 14 to establish a new funding medium for any
Contract if an offer to do so has been declined by vote of a majority of the
Contract owners materially adversely affected by the irreconcilable material
conflict.
15. Termination; Withdrawal of Offering. This Agreement may be terminated by any
party upon 180 days' prior written notice to the other party, or, on 60 days'
written notice pursuant to a vote of a majority of the outstanding securities of
the Funds. Notwithstanding the above, each Issuer reserves the right, without
prior notice, to suspend sales of shares of any Fund, in whole or in part, or to
make a limited offering of shares of any of the Funds in the event that (A) any
regulatory body commences formal proceedings against the Company, Distributor or
any of the Issuers, which proceedings Distributor reasonably believes may have a
material adverse impact on the ability of the Issuers or the Company to perform
its obligations under this Agreement or (B) in the judgment of Distributor,
declining to accept any additional instructions for the purchase or sale of
shares of any such Fund is warranted by market, economic or political
conditions. Notwithstanding the foregoing, this Agreement may be terminated
immediately (i) by any party as a result of any other breach of this Agreement
by another party, which breach is not cured within 30 days after receipt of
notice from the other party, or (ii) by any party upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order, (iii) by a vote of a majority of the
independent directors, or (iv) upon assignment by either party. Termination of
this Agreement shall not affect the obligations of the parties to make payments
under Section 4 for Orders received by the Company prior to such termination and
shall not affect the Issuers' obligation to maintain the Accounts in the name of
the Plans or any successor trustee or recordkeeper for the Plans. Following
termination, Distributor shall not have any Administrative Services payment
obligation to the Company (except for payment obligations accrued but not yet
paid as of the termination date).
16. Non-Exclusivity. Both parties acknowledge and agree that this Agreement and
the arrangement described herein are intended to be non-exclusive and that each
party is free to enter into similar agreements and arrangements with other
entities.
13
17. Survival. The provisions of Section 9 (Use of Names) and Sections 12 and 13
(Indemnity) of this Agreement shall survive termination of this Agreement.
18. Amendment. Neither this Agreement, nor any provision hereof, may be amended,
waived, discharged or terminated orally, but only by an instrument in writing
signed by all of the parties hereto.
19. Notices. All notices and other communications hereunder shall be given or
made in writing and shall be delivered personally, or sent by telex, telecopier,
express delivery or registered or certified mail, postage prepaid, return
receipt requested, to the party or parties to whom they are directed at the
following addresses, or at such other addresses as may be designated by notice
from such party to all other parties.
To the Company:
Minnesota Life Insurance Company
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, Assistant General Counsel
000-000-0000 (office number)
000-000-0000 (telecopy number)
email: xxxxxxxxxxxx@xxxxxxxxxxxxxxxx.xxx
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 17 shall be deemed to have been delivered on receipt.
20. Successors and Assigns. This Agreement may not be assigned and will be
terminated automatically upon any attempted assignment. This Agreement shall be
binding upon and inure to the benefit both parties hereto.
11. Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one agreement, and any party hereto
may execute this Agreement by signing any such counterpart.
14
22. Severability. In case anyone or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
23. Entire Agreement This Agreement, including the attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
If the foregoing correctly sets forth our understanding, please indicate your
agreement to and acceptance thereof by signing below, whereupon this Agreement
shall become a binding agreement between us as of the latest date indicated.
AMERICAN CENTURY INVESTMENT SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
Date: 4/18/02
We agree to and accept the terms of the foregoing Agreement.
MINNESOTA LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Second Vice President & Actuary
Date:
15
EXHIBIT A
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
I. Maintain separate records for each Contract owner, which records shall
reflect the shares purchased and redeemed and share balances of such Contract
owners. The Company will maintain a single master account with each Fund on
behalf of the Contract owners and such account shall be in the name of the
Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of redemptions of
shares of the Funds and all dividends and other distributions not reinvested in
shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or the
Contracts, periodic statements showing the total number of shares owned by the
Contract owners as of the statement closing date, purchases and redemptions of
Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf of the
Contract owners in accordance with the procedures set forth in Section 4 to the
Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus, proxy
materials, periodic fund reports to shareholders and other materials that the
Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be maintained and
preserved in connection with providing the Administrative Services for the
Contracts.
EXHIBIT B
DISTRIBUTION SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
distribution services for Class II shares of the Funds, including, but not
limited to, the following:
1. Receive and answer correspondence from prospective shareholders, including
distributing prospectuses, statements of additional information, and shareholder
reports.
2. Provide facilities to answer questions from prospective investors about Fund
shares.
3. Assist investors in completing application forms and selecting dividend and
other account options.
4. Provide other reasonable assistance in connection with the distribution of
Fund shares.
