PARTICIPATION AGREEMENT Among THE ALGER AMERICAN FUND., FRED ALGER & COMPANY, INCORPORATED and
EXHIBIT 8(a)(i)
Among
THE XXXXX AMERICAN FUND.,
XXXX XXXXX & COMPANY, INCORPORATED
and
IL ANNUITY AND INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 5th day of September, 1995 by and among IL
ANNUITY AND INSURANCE COMPANY (hereinafter the “Company”), a Massachusetts corporation, on its own
behalf and on behalf of each segregated asset account of the Company set forth on Schedule A hereto
as may be amended from time to time (each such account hereinafter referred to as the “Account”),
THE XXXXX AMERICAN FUND, an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts (hereinafter the “Fund”), and XXXX XXXXX & COMPANY, INCORPORATED
(hereinafter the “Distributor”), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management investment company and is
available to act as the investment vehicle for separate accounts established for variable life
insurance policies and variable annuity contracts (collectively, the “Variable Insurance Products”)
to be offered by insurance companies which have entered into participation agreements to which the
Fund is a party (hereinafter “Participating Insurance Companies”); and
WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and other assets, any one
or more of which may be made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series hereinafter referred to as a “Portfolio”);
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission, dated
February 17, 1989 (File No. 812-7076), granting Participating Insurance Companies and variable
annuity and variable life insurance separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended (hereinafter 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 (hereinafter the “Shared Funding Exemptive Order”); and
WHEREAS, the Fund is registered as an open-end management investment company under the
1940 Act and its shares are registered under the Securities Act of 1933, as amended
(hereinafter the “1933 Act”); and
WHEREAS, the Fund’s investment adviser, Xxxx Xxxxx Management, Inc., is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state
securities laws; and
WHEREAS, the Company has registered or will register certain variable life insurance and
variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated asset account,
established by resolution of the Board of Directors of the Company, on the date shown for such
Account on Schedule A hereto, to set aside and invest assets attributable to the aforesaid variable
annuity contracts; and
WHEREAS, the Company has registered or will register each Account as a unit investment trust
under the 1940 Act; and
WHEREAS, the Distributor is registered as a broker dealer with the Securities and Exchange
Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (hereinafter the “1934
Act”), and is a member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter “NASD”); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company
intends to purchase shares in the Portfolios on behalf of each Account to fund certain of the
aforesaid variable life or variable annuity contracts and the Distributor is authorized to sell
such shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund and
the Distributor agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 Shares of the Fund which each Account orders will be sold to the Company, and such orders
will be executed on a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company
shall be the designee of the Fund for receipt of such orders from each Account and receipt by such
designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order
by 9:30 a.m. on the next following Business Day. “Business Day” shall mean any day on which the New
York Stock Exchange is open for trading and on which the Fund calculates its next asset value
pursuant to the rules of the Securities and Exchange Commission.
1.2 The Fund agrees to make its shares available indefinitely for purchase at the applicable
net asst value per share by the Company and its Accounts on those days on which the Fund calculates
its net asset value pursuant to rules of the Securities and Exchange Commission, and the Fund shall
use reasonable efforts to calculate such net asset value on each day which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the Board of Trustees of the Fund
(hereinafter the “Board”) may refuse to sell shares of any Portfolio
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to any person, or suspend or terminate the offering of shares of any Portfolio if such action
is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion
of the Board acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of such Portfolio.
1.3 Shares of the Fund will be sold only to Participating Insurance Companies and their
separate accounts and to such other entities as may be permitted by Section 817(h) of the Code,
which may include the Distributor or its affiliates. No shares of any Portfolio will be sold to the
general public.
1.4 The Fund agrees to redeem for cash, on the Company’s request, any full or fractional
shares of the Fund held by the Company executing such requests on a daily basis at the net asset
value next computed after receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.4, the Compan shall be the designee of the Fund for receipt of requests
for redemption from each Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such request for redemption by 9:30 a.m. on the next
following Business Day.
1.5 The Company agrees that purchases and redemptions of Portfolio shares offered by the then
current prospectus of the Fund shall be made in accordance with the provisions of such prospectus.
The Company agrees that the Portfolios of the Fund specified on Schedule A attached hereto and
incorporated herein by reference will be made available under the variable annuity contracts with
the form number(s) which are listed on Schedule A, as such Schedule A may be amended from time to
time hereafter by mutual written agreement of all the parties hereto (the “Contracts”). The Fund
acknowledges that the investment companies which are listed on Schedule B attached hereto and
incorporated herein by reference, as such schedule may be updated from time to time hereafter by
the Company, are also available under the Contracts.
1.6 The Company shall pay for Fund shares on the next Business Day after an order to purchase
Fund shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire with the reasonable expectation of receipt by the Fund by 2:00
p.m. Eastern Time.
1.7 Issuance and transfer of the Fund’s shares will be by book entry only. Stock certificates
will not be issued to the Company or any Account. Shares ordered from the Fund will be recorded in
an appropriate title for each Account or the appropriate subaccount of each Account.
1.8 The Fund shall 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
Fund’s shares. The Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of that Portfolio. The
Company reserves the right to revoke this election and to receive all such income dividends and
capital gain distributions in cash. The Fund shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
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1.9 The Fund shall make the net asset value per share for each Portfolio available to the
Company on each Business Day as soon as reasonably practical after the net asset value per share is
calculated, and shall use its best efforts to make such net asset value per share available by 7
p.m. Eastern time. If the Fund provides incorrect share net asset value information, the Company
shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the
correct net asset value per share. Any error in the calculation or reporting of net asset value per
share, dividend or capital gains information, shall be reported promptly upon discovery to the
Company.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will be registered under the
1933 Act; and that the Contracts will be issued and sold in compliance in all material respects
with all applicable Federal and State laws. The Company further represents and warrants that it is
an insurance company duly organized and in good standing under applicable law and that it has
legally and validly established each Account prior to any issuance or sale thereof as a segregated
asset account under the laws of the Company’s state of domicile and has registered or, prior to any
issuance or sale of the Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated investment account for the
Contracts.
2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be
registered under the 1933 Act, duly authorized for issuance and sold in compliance with the laws of
the Company’s state of domicile and all applicable federal and state securities laws and that the
Fund is and shall remain registered under the 0000 Xxx. The Fund shall amend the Registration
Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order
to effect the continuous offering of its shares.
2.3 The Fund represents that it is currently qualified as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and that it will make
every effort to maintain such qualification (under Subchapter M or any successor or similar
provision), and that it will notify the Company immediately in the event that there is a reasonable
basis for believing that the Fund has ceased to so qualify or that it might not so qualify in the
future.
2.4 Subject to Article VI hereto, the Company represents that the Contracts are currently
treated as endowment, life insurance, or annuity contracts under applicable provisions of the Code,
and that it will make every effort to 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.
2.5 The Fund currently does not intend to make any payments to finance distribution expenses
pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it may make such payments in the
future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the
Fund undertakes to have a board of trustees, a majority of whom are not interested persons of the
Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses.
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2.6 The Fund represents and warrants that it will use its best efforts to ensure that the
investment policies, fees and expenses of the Portfolios are and shall at all times remain in
compliance with applicable insurance and other applicable laws of the Commonwealth of Massachusetts
and the State of Indiana and any other applicable state, to the extent required to perform this
Agreement or to the extent specifically requested in writing by the Company.
2.7 The Distributor represents and warrants that it is registered as a broker-dealer with the
SEC, and is a member in good standing of the National Association of Securities Dealers, Inc. The
Distributor further represents that it shall perform its obligations to the Fund in accordance with
the laws of the Company’s state of domicile and all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.8 The Fund represents that it is lawfully organized and validly existing under the laws of
the Commonwealth of Massachusetts and that it does and will comply in all material respects with
the 0000 Xxx.
2.9 The Distributor represents and warrants that it is and shall remain duly registered in all
material respects under all applicable federal and state securities laws and that the Distributor
shall perform its obligations for the Fund in compliance in all material respects with the laws of
the Company’s state of domicile and any applicable state and federal securities laws.
ARTICLE III. Prospectuses and Proxy Statements: Voting
3.1 The Distributor shall provide the Company with as many copies of the Fund’s current
prospectus(es) describing only the Portfolio(s) listed on Schedule A hereto 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 new prospectus as set in type at the Fund’s expense)
and other assistance as is reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended more frequently) to have the prospectus for
the Contracts and the Fund’s prospectus printed together in one document. The Fund shall bear the
expense of printing copies of its current prospectus and statement of additional information that
will be distributed to existing Contract owners, and the Company shall bear the expense of printing
copies of the Fund prospectus that are used in connection with offering the Contracts issued by the
Company.
3.2 The Fund’s prospectus shall state that the Statement of Additional Information for the
Fund is available from the Fund, and the Distributor, at its expense, shall print and provide such
Statement free of charge to the Company and to any owner of a Contract or prospective owner who
requests such Statement.
3.3 The Fund, at its expense, shall provide the Company with copies of its proxy statements,
reports to current shareholders, and other communications to current shareholders in such quantity
as the Company shall reasonably require for distributing to Contract owners.
3.4 So long as, and to the extent that, the Commission interprets the 1940 Act to require
pass-through voting privileges for Contract owners, the Company will provide pass-
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through voting privileges to Contract owners whose cash values are invested, through the
registered Accounts, in shares of one or more Portfolios of the Fund. The Fund shall require all
Participating Insurance Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges in the manner
established by the Fund. With respect to each registered Account, the Company will vote shares of
each Portfolio of the Fund held by a registered Account and for which no timely voting instructions
from Contract owners are received in the same proportion as those shares for which voting
instructions are received. The Company reserves the right, to the extent permitted by law, to vote
shares held in any Account in its sole discretion.
3.5 The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders,
and in particular the Fund will either provide for annual meetings or comply with Section 16(c) of
the 1940 Act as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund
will act in accordance with the Securities and Exchange Commission’s interpretation of the
requirements of Section 16(a) with respect to periodic elections of trustees and with whatever
rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sates Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the Fund or its designee,
each piece of sales literature or other promotional material in which the Fund or the Distributor
or the Distributor is named, at least fifteen Business Days prior to its use. No such material
shall be used if the Fund or its designee reasonably objects to such use within fifteen Business
Days after receipt of such material.
4.2 The Company shall not give any information or make any representations or statements on
behalf of the Fund or concerning the Fund in connection with the sale of the Contracts 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, except with the permission of the Fund
or its designee.
4.3 The Fund, the Distributor, or the designee of either, shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or other promotional
material in which the Company, any affiliate of the Company, and/or any of the Company’s separate
account(s), is named at least fifteen Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within fifteen Business Days
after receipt of such material.
4.4 The Fund and the Distributor shall not give any information or make any representations on
behalf of the Company or concerning the Company, each Account, or the Contracts other than the
information or representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain or approved by the
Company for distribution to Contract owners, or in sales literature or
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other promotional material approved by the Company or its designee, except with the permission
of the Company.
4.5 The Fund will provide to the Company at least one complete copy of all registration
statements, prospectuses, Statements of Additional Information, reports, proxy statements, sales
literature and other promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and Exchange Commission or
other regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of all registration
statements, prospectuses, Statements of Additional Information, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for exemptions,
requests for no-action letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.7 For purposes of this Article IV, the phrase “sales literature or other promotional
material” includes, but is not limited to, any of the following that refer to the Fund or any
affiliate of the Fund: 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, 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, and registration statements, prospectuses, Statements of
Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1 All expenses incident to performance by the Fund under this Agreement shall be paid by the
Fund. The Fund shall see to it that all its shares are registered and authorized for issuance in
accordance with applicable federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the
cost of registration and qualification of the Fund’s shares, preparation and filing of the Fund’s
prospectus and registration statement, proxy materials and reports, setting in type and printing
the Fund’s prospectus (except the cost of printing Fund prospectuses that will not be distributed
to then-current Contract owners investing in the Fund, such cost to be borne by the Company),
setting in type and printing the proxy materials and reports to shareholders (including the costs
of printing a prospectus that constitutes an annual report), the preparation of all statements and
notices required by any federal or state law, and all taxes on the issuance or transfer of the
Fund’s shares.
5.2 The Company shall bear the expenses of distributing the Fund’s prospectus to owners of
Contracts issued by the Company and of distributing the Fund’s proxy materials and reports to such
Contract owners.
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ARTICLE VI. Diversification
6.1 The Fund will at all times invest assets of the Portfolios in such manner to permit the
Portfolios to be used for investment by separate accounts of life insurance companies funding
variable annuity or variable life insurance contracts, as set forth under the Code and regulations
thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation § 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and any amendments or
other modifications to such Section or Regulations. In the event of a breach of this Article VI by
the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to
adequately diversify the Fund so as to achieve compliance with the grace period afforded by
Regulation § 1.817-5.
ARTICLE VII. Potential Conflicts
7.1 The Board will monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by
any state insurance regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance contract owners or by
contract owners of different life insurance companies investing in the Fund; or (f) 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.
7.2 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.
7.3 If it is determined by a majority of the Board, or a majority of its disinterested
trustees, that a material irreconcilable conflict exists, the Company and other Participating
Insurance 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 remedy or
eliminate the irreconcilable material conflicts up to and including: (1) withdrawing the assets
allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question whether (i) withdrawal of assets from the Fund or (ii)
segregation of assets should be implemented and, as appropriate, withdrawing or segregating the
assets of any particular group (i.e., annuity contract owners, life insurance contract
owners or qualified contract owners) that votes in favor of such withdrawal or
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segregation, or offering to the affected contract owners the option of making such a change;
and (2) establishing a new registered management investment company or managed separate account.
7.4 If a material irreconcilable conflict arises because of a decision by the Company to
disregard contract owner voting instructions and that decision represents a minority position or
would preclude a majority vote, the Company may be required, at the Fund’s election, to withdraw
the affected Account’s investment in the Fund and terminate this Agreement with respect to such
Account; provided, however that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be imposed against an Account or the
Company as a result of such withdrawal, The Company agrees that any remedial action taken by it in
resolving any material conflicts of interest will be carried out with a view only to the interests
of Contract owners.
7.5 If a material irreconcilable conflict arises because a particular state insurance
regulator’s decision applicable to the Company conflicts with the majority of other state
regulators, then the Company will withdraw the affected Account’s investment in the Fund and
terminate this Agreement with respect to such Account; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the Board.
7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the
disinterested members of the Board shall determine whether any proposed action adequately remedies
any irreconcilable material conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a
new funding medium for the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners materially adversely affected by the irreconcilable material conflict. In the
event that the Board determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the Account’s investment in the
Fund and terminate this Agreement, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as determined by a
majority of the disinterested members of the Board.
7.7 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted,
to provide exemptive relief from any provision of the Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding Exemptive Order, then
(a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as
may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of
this Agreement shall continue in effect only to the extent that terms and conditions substantially
identical to such Sections are contained in such Rule(s) as so amended or adopted.
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ARTICLE VIII. Indemnification
8.1 Indemnification By The Company
(a) The Company agrees to indemnify and hold harmless the Distributor, the Fund and each of
its trustees, officers, employees and agents, and each person, if any, who controls the Fund within
the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of
this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or acquisition of the Fund’s
shares or the Contracts and:
| (i) | arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the Registration Statement or prospectus 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 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 or the Distributor for use in the Registration Statement or prospectus for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or | ||
| (ii) | arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement or prospectus or sales literature of the Fund not supplied by the Company, or by 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 Fund Shares; or | ||
| (iii) | arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Fund by or on behalf of the Company; or |
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| (iv) | arise out of or result from any 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, as limited by and in accordance with the provisions of Sections 8. 1(b) and 8. 1(c) hereof; or | ||
| (v) | arise out of or result from any failure by the Company to provide the services or furnish the materials required under the terms of this Agreement; or | ||
| (vi) | arise out of or result from the provision by the Company to the Fund of insufficient or incorrect information regarding the purchase or sale of shares of any Portfolio, or the failure of the Company to provide such information on a timely basis. |
8.1(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 as 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 Fund, whichever
is applicable.
8.1(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), 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 party named in the action. After notice from the 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.
8.1(d) The Indemnified Parties will 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
or the Contracts or the operation of the Fund.
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8.2 Indemnification by the Distributor
8.2(a) The Distributor agrees to indemnify and hold harmless the Company and each of its
directors, officers, employees, and agents and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act (collectively, the “Indemnified Parties” for purposes of
this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or litigation (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 expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund’s shares or the
Contracts and:
| (i) | arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Distributor or Fund by or on behalf of the Company for use in the Registration Statement or prospectus for the Fund or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or | ||
| (ii) | arise out of or as a result of statements or representations (other than statements or representations contained in the Registration Statement, prospectus or sales literature for the Contracts not supplied by the Distributor or persons under its control) or wrongful conduct of the Fund, Distributor or Distributor or persons under their control, with respect to the sale or distribution of the Contracts or Fund shares; or | ||
| (iii) | arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, prospectus, or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the 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 Fund; or |
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| (iv) | arise as a result of any failure by the Fund whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement; or | ||
| (v) | arise out of or result from any material breach of any representation and/or warranty made by the Distributor in this Agreement or arise out of or result from any other material breach of this Agreement by the Distributor; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof; or | ||
| (vi) | arise out of or result from any failure by the Distributor or the Fund to provide the services or furnish the materials required under the terms of this Agreement; or | ||
| (vii) | arise out of or result from the provision by the Fund or the Distributor to the Company of insufficient or incorrect information regarding the net asset value per share of any Portfolio, or the failure of the Fund or the Distributor to provide such information by 7 p.m. Eastern time. |
8.2(b) The Distributor shall not be liable under this indemnification provision with respect
to any losses, claims, damages, liabilities or litigation to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party’s willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party’s duties or by reason of such Indemnified
Party’s reckless disregard of obligations and duties under this Agreement or to each Company or the
Account, whichever is applicable.
8.2(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), 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 party named in the action. After notice from the
Distributor to such 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 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.
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8.2(d) The Company agrees promptly to 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.
8.3 Indemnification By the Fund
8.3(a) The Fund agrees to indemnify and hold harmless the Company, and each of its directors
and officers and each person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act (collectively, the “Indemnified Parties” for purposes of this Section 8.3) against any
and all losses, claims, damages, liabilities (including amounts paid in settlement with the written
consent of the Fund) or litigation (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 expenses (or actions in respect thereof) or settlements result from
the gross negligence, bad faith or willful misconduct of the Board or any member thereof, are
related to the operations of the Fund and:
| (i) | arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement, or to comply with the diversification requirements specified in Article VI of this Agreement; or | ||
| (ii) | arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; as limited by and in accordance with the provisions of Sections 8,3(b) and 8.3(c) hereof; or | ||
| (iii) | arise out of or result from the provision by the Distributor or the Fund to the Company of insufficient or incorrect information regarding the net asset value per share of any Portfolio, or the failure of the Distributor or the Fund to provide such information by 7 p.m. Eastern time. |
8.3(b) The Fund 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 the Company, the
Fund, the Distributor, or each Account, whichever is applicable.
8.3(c) The Fund shall not be liable under this indemnification provision with respect to any
claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund
in writing within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any designated agent), but
failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it
may have to the Indemnified Party against whom such action is
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brought otherwise than on account of this indemnification provision. In case any such action
is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own
expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After notice from the Fund to such
party of the Fund’s election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs of investigation.
8.3(d) The Company and the Distributor agree promptly to notify the Fund of the commencement
of any litigation or proceedings against it or any of its respective officers or directors in
connection with this Agreement, the issuance or sale of the Contracts, with respect to the
operation of either Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1 This Agreement shall be construed and the provisions hereof interpreted under and in
accordance with the laws of the Commonwealth of Massachusetts.
9.2 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 Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
10.1 This Agreement shall continue in full force and effect until the first to occur of:
(a) termination by any party for any reason by six (6) months advance written notice delivered
to the other parties unless a shorter time is mutually agreed to by the parties; or
(b) termination by the Company by written notice to the Fund and the Distributor with respect
to any Portfolio based upon the Company’s determination that shares of such Portfolio are not
reasonably available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the Distributor with respect
to any Portfolio in the event any of the Portfolio’s shares 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 Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to the Fund and the Distributor with respect
to any Portfolio in the event that such Portfolio ceases to qualify as a
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Regulated Investment Company under Subchapter M of the Code or under any successor or similar
provision, or if the Company reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the Distributor with respect
to any Portfolio in the event that such Portfolio fails to meet the diversification requirements
specified in Article VI hereof; or
(f) termination by either the Fund or the Distributor by written notice to the Company, if
either one or both of the Fund or the Distributor respectively, shall determine, in their sole
judgment exercised in good faith, that the Company and/or its affiliated companies 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
(g) termination by the Company by written notice to the Fund and the Distributor, if the
Company shall determine, in its sole judgment exercised in good faith, that either the Fund or the
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.
(h) termination by the Fund or the Distributor if the Contracts issued by the Company cease to
qualify as annuity contracts or endowment contracts or life insurance contracts, as applicable,
under the Code or if the Contracts are not registered, issued or sold in accordance with applicable
state and/or federal law; or
(i) termination by any party by 180 days written notice upon a determination by a majority of
the Trustees of the Fund, or a majority of its disinterested Trustees, that a material
irreconcilable conflict exists.
10.2 Effect of Termination Notwithstanding any termination of this Agreement, the Fund
shall at the option of the Company, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as “Existing Contracts”).
Specifically, without limitation, the owners of the Existing Contracts shall be permitted to
reallocate investments in the Fund, redeem investments in the Fund and/or invest in the Fund upon
the making of additional purchase payments under the Existing Contracts. The parties agree that
this Section 10.2 shall not apply to any terminations under Article VII and the effect of such
Article Vll terminations shall be governed by Article Vll of this Agreement.
ARTICLE XI. 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.
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If to the Fund:
The Xxxxx American Fund
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
If to the Company:
IL Annuity and Insurance Company
0000 Xxxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. XxXxxxxx, Esq.
0000 Xxxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx X. XxXxxxxx, Esq.
If to the Distributor:
Xxxx Xxxxx & Company, Incorporated
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
ARTICLE XII. Miscellaneous
12.1 All liabilities of the Fund arising, directly or indirectly, under this Agreement, of any
and every nature, shall be satisfied solely out of the assets of the Fund and no Trustee, officer,
agent or holder of shares of beneficial interest of the Fund shall be personally liable for any
such liabilities.
12.2 Subject to the requirements of legal process and regulatory authority, each party hereto
shall treat as confidential the names and addresses of the owners of the Contracts and all
information reasonably identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize such names and addresses
and other confidential information until such time as it may come into the public domain without
the express written consent of the affected party.
12.3 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.
12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which
taken together shall constitute one and the same instrument.
12.5 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.
12.6 Each party hereto shall cooperate with each other party and all appropriate governmental
authorities (including without limitation the SEC, the NASD and state insurance
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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. Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the California Insurance Commissioner with any information or reports in
connection with services provided under this Agreement which such Commissioner may request in order
to ascertain whether the insurance operations of the Company are being conducted in a manner
consistent with the California Insurance Regulations and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are
in addition to any and all rights, remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
12.8 This Agreement or any of the rights and obligations hereunder may not be assigned by any
party without the prior written consent of all parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its
name and on its behalf by its duly authorized representative and its seal to be hereunder affixed
hereto as of the date specified below.
| IL ANNUITY AND INSURANCE COMPANY | IL ANNUITY AND INSURANCE COMPANY | |||||||||||||
| ATTEST: | ||||||||||||||
| By: | /s/ Xxxxxxx X. Xxxxxx | By: | /s/ Xxxxxxx X. Xxxxxx | |||||||||||
| Name: | Xxxxxxx X. Xxxxxx | Name: | Xxxxxxx X. Xxxxxx | |||||||||||
| Title: | President | Title: | Assistant Secretary | |||||||||||
| THE XXXXX AMERICAN FUND |
||||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Treasurer | |||
| XXXX XXXXX & COMPANY, INCORPORATED : |
||||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Executive VP | |||
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SCHEDULE A
Separate Accounts, Associated Contracts, and Fund Portfolios
| Name of Separate Account | Policy Form Numbers of | Portfolios of the Fund | ||
| and Date Established by | Contracts Funded | Available Under | ||
| Board of Directors | By Separate Account | the Contracts | ||
IL Annuity and
Insurance Co.
Separate Account 1
(November 1, 1994)
|
VA-95 | MidCap Growth Portfolio Small Capitalization Portfolio |
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SCHEDULE B
Other investment companies currently available under the Contracts:
Variable Insurance Products Fund
Variable Insurance Products Fund II
Quest for Value Accumulation Trust
X. Xxxx Price Fixed Income Series, Inc.
X. Xxxx Price International Series, Inc.
Xxx Xxx Worldwide Insurance Trust
Variable Insurance Products Fund II
Quest for Value Accumulation Trust
X. Xxxx Price Fixed Income Series, Inc.
X. Xxxx Price International Series, Inc.
Xxx Xxx Worldwide Insurance Trust
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