PARTICIPATION AGREEMENT
BY AND AMONG
SUMMIT MUTUAL FUNDS, INC.,
CARILLON INVESTMENTS, INC.,
AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AMERICAN EQUITY CAPITAL, INC.
TABLE OF CONTENTS
DESCRIPTION PAGE
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Section 1. Available Funds............................................................................. 2
1.1 Availability................................................................................ 2
1.2 Addition, Deletion or Modification of Funds................................................. 2
1.3 No Sales to the General Public.............................................................. 2
Section 2. Processing Transactions..................................................................... 3
2.1 Timely Pricing and Orders................................................................... 3
2.2 Timely Payments ............................................................................ 3
2.3 Applicable Price............................................................................ 4
2.4 Dividends and Distributions................................................................. 4
2.5 Book Entry.................................................................................. 5
Section 3. Costs and Expenses.......................................................................... 5
3.1 General..................................................................................... 5
3.2 Parties To Cooperate........................................................................ 5
Section 4. Legal Compliance ........................................................................... 5
4.1 Tax Laws.................................................................................... 5
4.2 Insurance and Certain Other Laws............................................................ 6
4.3 Securities Laws............................................................................. 7
4.4 Notice of Certain Proceedings and Other Circumstances....................................... 8
4.5 LIFE COMPANY To Provide Documents; Information About SMFI................................... 9
4.6 SMFI To Provide Documents; Information About LIFE COMPANY................................... 10
Section 5. Mixed and Shared Funding.................................................................... 12
5.1 General..................................................................................... 12
5.2 Disinterested Directors .................................................................... 12
5.3 Monitoring for Material Irreconcilable Conflicts............................................ 12
5.4 Conflict Remedies........................................................................... 13
5.5 Notice to LIFE COMPANY...................................................................... 14
5.6 Information Requested by Board of Directors................................................. 14
5.7 Compliance with SEC Rules................................................................... 15
5.8 Other Requirements.......................................................................... 15
Section 6. Termination........................................................................................ 15
6.1 Events of Termination....................................................................... 15
6.2 Notice Requirement for Termination.......................................................... 17
6.3 Funds To Remain Available................................................................... 17
6.4 Continuance of Agreement.................................................................... 17
DESCRIPTION PAGE
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Section 7. Amendments.................................................................................. 17
Section 8. Assignment.................................................................................. 17
Section 9. Notices..................................................................................... 18
Section 10. Voting Procedures........................................................................... 18
Section 11. Foreign Tax Credits......................................................................... 19
Section 12. Indemnification............................................................................. 19
12.1 Of SMFI and Carillon by LIFE COMPANY and UNDERWRITER........................................ 19
12.2 Of LIFE COMPANY and UNDERWRITER by SMFI and Carillon........................................ 21
12.3 Effect of Notice............................................................................ 24
12.4 Successors.................................................................................. 24
Section 13. Applicable Law.............................................................................. 24
Section 14. Execution in Counterparts................................................................... 25
Section 15. Severability................................................................................ 25
Section 16. Rights Cumulative........................................................................... 25
Section 17. Headings.................................................................................... 25
Section 18. Confidentiality............................................................................. 25
Section 19. Trademarks and Fund Names................................................................... 26
Section 20. Parties to Cooperate ....................................................................... 28
Schedule A
Schedule B
Schedule C
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the _19th_ day of
_September_, 2001 ("Agreement"), by and among Summit Mutual Funds, Inc., a
Maryland corporation ("SMFI"), Carillon Investments, Inc., an
Ohio
Corporation ("Carillon"), American Equity Investment Life Insurance Company,
a life insurance company ("LIFE COMPANY"), on behalf of itself and each of
its segregated asset accounts listed in Schedule A hereto, as the parties
hereto may amend from time to time (each, an "Account," and collectively, the
"Accounts"); and American Equity Capital, Inc., an affiliate of LIFE COMPANY
and the principal underwriter of certain variable annuity and variable life
insurance contracts ("UNDERWRITER") (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, SMFI is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, SMFI currently consists of seven separate series ("Series")
within its Pinnacle series of funds, shares ("Shares") of each of which are
registered under the Securities Act of 1933, as amended (the "1933 Act") and
are currently sold to one or more separate accounts of life insurance
companies to fund benefits under variable annuity contracts and variable life
insurance contracts; and
WHEREAS, SMFI will make Shares of each Series listed on Schedule A
hereto as the Parties hereto may amend from time to time (each a "Fund";
references herein to "SMFI" includes reference to each Fund, to the extent
the context requires) available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity
contracts and variable life insurance contracts ("Contracts") as set forth on
Schedule A hereto, as the Parties hereto may amend from time to time, which
Contracts (hereinafter collectively, the "Contracts"), if required by
applicable law, will be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts,
each of which may be divided into two or more subaccounts ("Subaccounts";
references herein to an "Account" includes reference to each Subaccount
thereof to the extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts,
each of which is registered as a unit investment trust investment company
under the 1940 Act (or exempt therefrom), and the security interests deemed
to be issued by the Accounts under the Contracts will be registered as
securities under the 1933 Act (or exempt therefrom); and
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase Shares in one or more of the
Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC
under the Securities Exchange Act of 1934 ("1934 Act") and a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD");
WHEREAS, Carillon is a broker-dealer registered with the SEC under
the Securities Exchange Act of 1934 ("1934 Act") and a member in good
standing of the National Association of Securities Dealers, Inc. ("NASD");
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY.
SMFI will make Shares of each Fund available to LIFE COMPANY for
purchase and redemption at net asset value and with no sales charges, subject
to the terms and conditions of this Agreement. The Board of Directors of SMFI
may refuse to sell Shares of any Fund to any person, or suspend or terminate
the offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of
the Directors acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, such action is deemed in the
best interests of the shareholders of such Fund (it being understood that for
this purpose shareholders mean Contract owners). SMFI shall use its best
efforts to provide to the LIFE COMPANY as much advance notice of its election
to suspend or terminate as is reasonably practicable in order to give the
LIFE COMPANY sufficient time to take appropriate steps in response to such
suspension or termination.
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS.
The Parties hereto may agree, from time to time, to add other Funds
to provide additional funding media for the Contracts, or to delete, combine,
or modify existing Funds, by amending Schedule A hereto. Upon such amendment
to Schedule A, any applicable reference to a Fund, SMFI, or its Shares herein
shall include a reference to any such additional Fund. Schedule A, as amended
from time to time, is incorporated herein by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC.
SMFI represents and warrants that no Shares of any Fund on Schedule
A have been or will be sold to the general public.
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SECTION 2 PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS.
(a) SMFI or its designated agent will use its best efforts to
provide LIFE COMPANY with the net asset value per Share for each Fund by 7:00
p.m. Eastern Standard Time on each Business Day. As used herein, "Business
Day" shall mean any day on which (i) the New York Stock Exchange is open for
regular trading (ii) SMFI calculates the Fund's net asset value, and (iii)
LIFE COMPANY is open for business.
(b) LIFE COMPANY will use the data provided by SMFI each Business
Day pursuant to paragraph (a) immediately above to calculate Account unit
values and to process transactions that receive that same Business Day's
Account unit values. LIFE COMPANY will perform such Account processing the
same Business Day, and will place corresponding orders to purchase or redeem
Shares with SMFI by 10:00 a.m. Eastern Time the following Business Day;
provided, however, that SMFI shall provide additional time to LIFE COMPANY in
the event that SMFI is unable to meet the 7:00 p.m. time stated in paragraph
(a) immediately above. Such additional time shall be equal to the additional
time that SMFI takes to make the net asset values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY
and of redemption proceeds by SMFI, LIFE COMPANY and SMFI shall net purchase
and redemption orders with respect to each Fund and shall transmit one net
payment per Fund in accordance with Section 2.2, below.
(d) If SMFI provides materially incorrect Share net asset value
information (as determined under SEC guidelines), LIFE 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 material error in the
calculation or reporting of net asset value per Share, dividend or capital
gain information shall be reported promptly upon discovery to LIFE COMPANY.
In the event LIFE COMPANY realizes any losses resulting from overpayments to
Contract owners attributable to the provision of materially incorrect Share
net asset value information by SMFI that is not subsequently corrected and
communicated to LIFE COMPANY in reasonably sufficient time to prevent the
overpayment, SMFI and Carillon agree to reimburse LIFE COMPANY for the amount
of such losses, provided the LIFE COMPANY has made reasonable efforts to
recoup the overpayments.
2.2 TIMELY PAYMENTS.
LIFE COMPANY will wire payment for net purchases to a custodial
account designated by SMFI by 2:00 p.m. Eastern Time on the same day as the
order for Shares is placed, to the extent practicable. SMFI will wire payment
for net redemptions to an account designated by LIFE COMPANY by 2:00 p.m.
Eastern Time on the same day as the Order is placed, to the extent
practicable, but in any event within five (5) calendar days after the date
the order is placed in order to enable LIFE COMPANY to pay
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redemption proceeds within the time specified in Section 22(e) of the 1940
Act or such shorter period of time as may be required by law.
2.3 APPLICABLE PRICE.
(a) Share purchase payments and redemption orders that result from
purchase payments, premium payments, surrenders and other transactions under
Contracts (collectively, "Contract transactions") and that LIFE COMPANY
receives prior to the close of regular trading on the New York Stock Exchange
on a Business Day will be executed at the net asset values of the appropriate
Funds next computed after receipt by SMFI or its designated agent of the
orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the
designated agent of SMFI for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by SMFI; provided that SMFI receives notice of such orders
by 10:00 a.m. Eastern Standard Time on the next following Business Day or
such later time as computed in accordance with Section 2.1 (b) hereof.
(b) All other Share purchases and redemptions by LIFE COMPANY will
be effected at the net asset values of the appropriate Funds next computed
after receipt by SMFI or its designated agent of the order therefor, and such
orders will be irrevocable.
(c) Notwithstanding any provision of the Agreement to the contrary,
the Parties agree that SMFI shall determine the applicable price for Share
orders attributable to Contracts funded by unregistered Accounts in
accordance with Section 2.3(a) hereof, provided that LIFE COMPANY represents
and warrants that it is legally or contractually obligated to treat such
orders in the same manner as orders attributable to Contracts funded by
registered Accounts. Each Share order placed by LIFE COMPANY that is
attributable, in whole or in part, to Contracts funded by an unregistered
Account, shall be deemed to constitute such representation and warranty by
LIFE COMPANY unless the order specifically states to the contrary. Otherwise,
SMFI shall determine the applicable price for Share orders attributable to
Contracts funded by unregistered Accounts in accordance with Section 2.3(b)
hereof. As used herein, an Account is registered if it is registered under
the 1940 Act.
2.4 DIVIDENDS AND DISTRIBUTIONS.
SMFI will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to LIFE COMPANY of any income
dividends or capital gain distributions payable on the Shares of any Fund.
LIFE COMPANY hereby elects to reinvest all dividends and capital gains
distributions in additional Shares of the corresponding Fund at the
ex-dividend date net asset values until LIFE COMPANY otherwise notifies SMFI
in writing, it being agreed by the Parties that the ex-dividend date and the
payment date with respect to any dividend or distribution will be the same
Business Day. LIFE COMPANY reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash.
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2.5 BOOK ENTRY.
Issuance and transfer of SMFI Shares will be by book entry only.
Stock certificates will not be issued to LIFE COMPANY. Shares ordered from
SMFI will be recorded in an appropriate title for LIFE COMPANY, on behalf of
its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided in Schedule C, attached
hereto and made a part hereof, each Party will bear, or arrange for other to
bear, all expenses incident to its performance under this Agreement.
3.2 PARTIES TO COOPERATE.
Each Party agrees to cooperate with the others, as applicable, in
arranging to print, mail and/or deliver, in a timely manner, combined or
coordinated prospectuses or other materials of SMFI and the Accounts.
SECTION 4 LEGAL COMPLIANCE
4.1 TAX LAWS.
(a) SMFI represents and warrants that each Fund is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that
it will use its best efforts to qualify and to maintain qualification of each
Fund as a RIC. SMFI will notify LIFE COMPANY immediately upon having a
reasonable basis for believing that a Fund has ceased to so qualify or that
it might not so qualify in the future.
(b) SMFI represents that it currently complies and will continue to
comply with the diversification requirements set forth in Section 817(h) of
the Code and Section 1.817-5(b) of the regulations under the Code. SMFI will
notify LIFE COMPANY immediately upon having a reasonable basis for believing
that a Fund has ceased to so comply or that a Fund might not so comply in the
future. In the event of a breach of this Section 4.1(b) by SMFI, it will use
its best efforts to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Section 1.817-5 of the regulations under
the Code. The representations and warranties of this Section 4.1(b) shall not
apply with respect to any Fund whose beneficial interests are held solely by
owners of "pension plan contracts" within the meaning of Section 818(a) of
the Code and other persons whose federal income tax treatment is not
dependent on the Fund's compliance with the requirements of Section 817(h) of
the Code.
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(c) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS")
asserts in writing in connection with any governmental audit or review of
LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Participant, that any
Fund has failed to comply with the diversification requirements of Section
817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that
could give rise to any claim against SMFI or its affiliates as a result of
such a failure or alleged failure LIFE COMPANY will promptly notify SMFI of
such assertion or potential claim (subject to the Confidentiality provisions
of Section 18 as to any Participant);
(d) Upon the occurrence of any event contemplated under Section
4.1(c) to this Agreement, each party agrees to act in good faith to minimize
any liability to the other party that may arise as a result of such failure
or alleged failure to the extent practicable and except where a party's
respective interests are adverse to or in conflict with the other party's
interests.
(e) LIFE COMPANY represents and warrants that the Contracts
currently are and will be treated as annuity contracts or life insurance
contracts under applicable provisions of the Code and that it will use its
best efforts to maintain such treatment; LIFE COMPANY will notify SMFI
immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated
in the future.
(f) LIFE COMPANY represents and warrants that each Account is a
"segregated asset account" and that interests in each Account are offered
exclusively through the purchase of or transfer into a "variable contract,"
within the meaning of such terms under Section 817 of the Code and the
regulations thereunder. LIFE COMPANY will use its best efforts to continue to
meet such definitional requirements, and it will notify SMFI immediately upon
having a reasonable basis for believing that such requirements have ceased to
be met or that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS.
(a) SMFI will use its best efforts to comply with any applicable
state insurance laws or regulations, to the extent specifically requested in
writing by LIFE COMPANY, including, the furnishing of information not
otherwise available to LIFE COMPANY which is required by state insurance law
to enable LIFE COMPANY to obtain the authority needed to issue the Contracts
in any applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance
company duly organized, validly existing and in good standing under the laws
of the State of Iowa and has full corporate power, authority and legal right
to execute, deliver and perform its duties and comply with its obligations
under this Agreement, (ii) it has legally and validly established and
maintains each Account as a segregated asset account under Iowa Insurance Law
and the regulations thereunder, and (iii) the Contracts comply in all
material respects with all other applicable federal and state laws and
regulations.
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(c) SMFI represents and warrants that it is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Maryland and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
4.3 SECURITIES LAWS.
(a) LIFE COMPANY represents and warrants that (i) interests in each
Account pursuant to the Contracts will be registered under the 1933 Act to
the extent required by the 1933 Act, (ii) the Contracts will be duly
authorized for issuance and sold in compliance with all applicable federal
and state laws, including, without limitation, the 1933 Act, the 1934 Act,
the 1940 Act and Iowa law, (iii) each Account is and will remain registered
under the 1940 Act, to the extent required by the 1940 Act, (iv) each Account
does and will comply in all material respects with the requirements of the
1940 Act and the rules thereunder, to the extent required, (v) each Account's
1933 Act registration statement relating to the Contracts, together with any
amendments thereto, will at all times comply in all material respects with
the requirements of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY
will amend the registration statement for its Contracts under the 1933 Act
and for its Accounts under the 1940 Act from time to time as required in
order to effect the continuous offering of its Contracts or as may otherwise
be required by applicable law, and (vii) each Account's prospectus, statement
of additional information, private placement memoranda and other documents
pursuant to which Contracts are offered, and any amendments or supplements
thereto (collectively, the "Account Prospectus"), will at all times comply in
all material respects with all applicable requirements of the 1933 Act and
the rules thereunder.
(b) SMFI represents and warrants that (i) Shares sold pursuant to
this Agreement will be registered under the 1933 Act to the extent required
by the 1933 Act and duly authorized for issuance and sold in compliance with
Maryland law, (ii) SMFI is and will remain registered under the 1940 Act to
the extent required by the 1940 Act, (iii) SMFI will amend the registration
statement for its Shares under the 1933 Act and itself under the 1940 Act
from time to time as required in order to effect the continuous offering of
its Shares, (iv) SMFI does and will comply in all material respects with the
requirements of the 1940 Act and the rules thereunder, (v) SMFI's 1933 Act
registration statement, together with any amendments thereto, will at all
times comply in all material respects with the requirements of the 1933 Act
and rules thereunder, and (vi) SMFI's prospectus, statement of additional
information and any amendments or supplements thereto (collectively, the
"SMFI Prospectus") will at all times comply in all material respects with all
applicable requirements of the 1933 Act and the rules thereunder.
(c) SMFI will at its expense register and qualify its Shares for
sale in accordance with the laws of any state or other jurisdiction if and to
the extent reasonably deemed advisable by SMFI.
(d) SMFI 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
7
reserves the right to make such payments in the future. To the extent that it
decides to finance distribution expenses pursuant to Rule 12b-1, SMFI
undertakes to have its Board of Directors, a majority of whom are not
"interested" persons of the Fund, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
(e) SMFI represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
having access to the funds and/or securities of the Fund are and continue to
be at all times covered by a blanket fidelity bond or similar coverage for
the benefit of the Fund in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
(f) Carillon represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer under the 1934 Act.
Carillon further represents that it will sell and distribute SMFI's shares in
accordance with all applicable federal and state securities laws, including
without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) SMFI will immediately notify LIFE COMPANY of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to SMFI's registration statement under the
1933 Act or SMFI Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or SMFI Prospectus that may affect the offering
of Shares of SMFI, (iii) the initiation of any proceedings for that purpose
or for any other purpose relating to the registration or offering of SMFI's
Shares, or (iv) any other action or circumstances that may prevent the lawful
offer or sale of Shares of any Fund in any state or jurisdiction, including,
without limitation, any circumstances in which (a) such Shares are not
registered and, in all material respects, issued and sold in accordance with
applicable state and federal law, or (b) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY. SMFI will make every reasonable effort to prevent the
issuance, with respect to any Fund, of any such stop order, cease and desist
order or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
(b) LIFE COMPANY will immediately notify SMFI of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to each Account's registration statement
under the 1933 Act relating to the Contracts or each Account Prospectus, (ii)
any request by the SEC for any amendment to such registration statement or
Account Prospectus that may affect the offering of Shares of SMFI, (iii) the
initiation of any proceedings for that purpose or for any other purpose
relating to the registration or offering of each Account's interests pursuant
to the Contracts, or (iv) any other action or circumstances that may prevent
the lawful offer or sale of said interests in any state or jurisdiction,
including, without limitation, any
8
circumstances in which said interests are not registered and, in all material
respects, issued and sold in accordance with applicable state and federal
law. LIFE COMPANY will make every reasonable effort to prevent the issuance
of any such stop order, cease and desist order or similar order and, if any
such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT SMFI.
(a) LIFE COMPANY will provide to SMFI or its designated agent at
least one (1) complete copy of all SEC registration statements, Account
Prospectuses, reports, any preliminary and final voting instruction
solicitation material, applications for exemptions, requests for no-action
letters, and notices, orders or responses relating thereto, and all
amendments and supplements to any of the above, that relate to each Account
or the Contracts, contemporaneously with the filing of such document with the
SEC or NASD.
(b) LIFE COMPANY will provide to SMFI or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which SMFI or any of its affiliates is named, at
least five (5) Business Days prior to its use or such shorter period as the
Parties hereto may, from time to time, agree upon. No such material shall be
used if SMFI or its designated agent objects to such use within five (5)
Business Days after receipt of such material or such shorter period as the
Parties hereto may, from time to time, agree upon. SMFI hereby designates
Summit Investment Partners, Inc. as the entity to receive such sales
literature, until such time as SMFI appoints another designated agent by
giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
SMFI or its designee reserves the right to reasonably object to the continued
use of any such sales literature or other promotional material in which SMFI
or any of its affiliates is named, and no such material shall be used if SMFI
or its designee so object.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any
information or make any representations or statements on behalf of or
concerning SMFI or its affiliates in connection with the sale of the
Contracts other than (i) the information or representations contained in the
registration statement, including the SMFI Prospectus contained therein,
relating to Shares, as such registration statement and SMFI Prospectus may be
amended from time to time; or (ii) in reports or proxy materials for SMFI; or
(iii) in published reports for SMFI that are in the public domain and
approved by SMFI for distribution; or (iv) in sales literature or other
promotional material approved by SMFI, except with the express written
permission of SMFI.
(d) UNDERWRITER shall adopt and implement procedures reasonably
designed to ensure that information concerning SMFI and its affiliates that
is intended for use only by brokers or agents selling the Contracts (i.e.,
information that is not intended for distribution to Participants) ("broker
only materials") is so used, and neither SMFI nor any of its affiliates shall
be liable for any losses, damages or expenses relating to the improper use of
such broker only materials.
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(e) For the purposes of this Section 4.5, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures,
telephone directories (other than routine listings), electronic media,
computerized media, or other public media, (e.g., on-line networks such as
the Internet or other electronic messages), sales literature (i.e., any
written or electronic communication distributed or made generally available
to customers or the public, including, but not limited to, brochures,
circulars, research reports, market letters, performance reports or
summaries, form letters, telemarketing scripts, 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, registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.6 SMFI TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY.
(a) SMFI will provide to LIFE COMPANY at least one (1) complete copy
of all SEC registration statements, SMFI Prospectuses, reports, any
preliminary and final proxy material, applications for exemptions, requests
for no-action letters, and notices, orders or responses relating thereto, and
all amendments and supplements to any of the above, that relate to SMFI or
the Shares of a Fund, contemporaneously with the filing of such document with
the SEC or NASD.
(b) SMFI will provide to LIFE COMPANY camera ready copy of all SMFI
prospectuses and printed copies, in an amount specified by LIFE COMPANY, of
SMFI statements of additional information, proxy materials, periodic reports
to shareholders and other materials required by law to be sent to
Participants who have allocated any Contract value to a Fund. SMFI will
provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE
COMPANY, as the case may be, to print and distribute such materials within
the time required by law to be furnished to Participants.
(c) SMFI will provide to LIFE COMPANY or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which LIFE COMPANY, or any of its respective
affiliates is named, or that refers to the Contracts, at least five (5)
Business Days prior to its use or such shorter period as the Parties hereto
may, from time to time, agree upon. No such material shall be used if LIFE
COMPANY or its designated agent objects to such use within five (5) Business
Days after receipt of such material or such shorter period as the Parties
hereto may, from time to time, agree upon. LIFE COMPANY shall receive all
such sales literature until such time as it appoints a designated agent by
giving notice to SMFI in the manner required by Section 9 hereof. LIFE
COMPANY or its designee reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which
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LIFE COMPANY or any of its affiliates is named, and no such material shall be
used if LIFE COMPANY or its designee so object.
(d) Neither SMFI nor any of its affiliates will give any information
or make any representations or statements on behalf of or concerning LIFE
COMPANY, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each
Account Prospectus contained therein, relating to the Contracts, as such
registration statement and Account Prospectus may be amended from time to
time; or (ii) in published reports for the Account or the Contracts that are
in the public domain and approved by LIFE COMPANY for distribution; or (iii)
in sales literature or other promotional material approved by LIFE COMPANY or
its affiliates, except with the express written permission of LIFE COMPANY.
(e) SMFI shall cause its principal underwriter to adopt and
implement procedures reasonably designed to ensure that information
concerning LIFE COMPANY, and its respective affiliates that is intended for
use only by brokers or agents selling the Contracts (i.e., information that
is not intended for distribution to Participants) ("broker only materials")
is so used, and neither LIFE COMPANY, nor any of its respective affiliates
shall be liable for any losses, damages or expenses relating to the improper
use of such broker only materials.
(f) For purposes of this Section 4.6, the phrase "sales literature
or other promotional material" includes, but is not limited to,
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures,
telephone directories (other than routine listings), electronic media,
computerized media, or other public media, (e.g., on-line networks such as
the Internet or other electronic messages), sales literature (i.e., any
written or electronic communication distributed or made generally available
to customers or the public, including, but not limited to, brochures,
circulars, research reports, market letters, performance reports or
summaries, form letters, telemarketing scripts, 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, registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act or the 1940 Act.
(g) SMFI will provide the LIFE COMPANY with as much notice as is
reasonably practicable of any proxy solicitation for any Fund, and of any
change in the Fund's registration statement or prospectus, particularly any
change resulting in a change to the registration statement or prospectus for
any Account. SMFI will work with the LIFE COMPANY so as to enable the LIFE
COMPANY to solicit proxies from Contract owners, or to make changes to its
registration statement or prospectus, in an orderly manner. SMFI will make
reasonable efforts to attempt to have changes effecting
11
Contract prospectuses become effective simultaneously with the annual updates
for such prospectuses.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL.
SMFI has received an order from the SEC exempting it from certain
provisions of the 1940 Act and rules thereunder so that SMFI may be available
for investment by certain other entities, including, without limitation,
separate accounts funding variable annuity contracts or variable life
insurance contracts, separate accounts of insurance companies unaffiliated
with LIFE COMPANY, and trustees of qualified pension and retirement plans
(collectively, "Mixed and Shared Funding"). The Parties recognize that the
SEC has imposed terms and conditions for such orders that are substantially
identical to many of the provisions of this Section 5. Sections 5.2 through
5.8 below shall apply pursuant to such an exemptive order granted to SMFI.
SMFI hereby notifies LIFE COMPANY that it may be appropriate to include in
the prospectus pursuant to which a Contract is offered disclosure regarding
the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED DIRECTORS.
SMFI agrees that its Board of Directors shall at all times consist
of directors a majority of whom (the "Disinterested Directors") are not
interested persons of SMFI within the meaning of Section 2(a)(19) of the 1940
Act and the rules thereunder and as modified by any applicable orders of the
SEC, except that if this condition is not met by reason of the death,
disqualification, or bona fide resignation of any director, then the
operation of this condition shall be suspended (a) for a period of forty-five
(45) days if the vacancy or vacancies may be filled by the Board;(b) for a
period of sixty (60) days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the SEC may prescribe
by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS.
SMFI agrees that its Board of Directors will monitor for the
existence of any material irreconcilable conflict between the interests of
the Participants in all separate accounts of life insurance companies
utilizing SMFI ("Participating Insurance Companies"), including each Account,
and participants in all qualified retirement and pension plans investing in
SMFI ("Participating Plans"). LIFE COMPANY agrees to inform the Board of
Directors of SMFI of the existence of or any potential for any such material
irreconcilable conflict of which it is aware. The concept of a "material
irreconcilable conflict" is not defined by the 1940 Act or the rules
thereunder, but the Parties recognize that such a conflict may arise for a
variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory
authority;
12
(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 Fund are being
managed;
(e) a difference in voting instructions given by variable annuity
contract and variable life insurance contract Participants or by Participants
of different Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the
voting instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting
instructions of Plan participants.
Consistent with the SEC's requirements in connection with exemptive
orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will
assist the Board of Directors in carrying out its responsibilities by
providing the Board of Directors with all information reasonably necessary
for the Board of Directors to consider any issue raised, including
information as to a decision by LIFE COMPANY to disregard voting instructions
of Participants. LIFE COMPANY's responsibilities in connection with the
foregoing shall be carried out with a view only to the interests of
Participants.
5.4 CONFLICT REMEDIES.
(a) It is agreed that if it is determined by a majority of the
members of the Board of Directors or a majority of the Disinterested
Directors that a material irreconcilable conflict exists, LIFE COMPANY will,
if it is a Participating Insurance Company for which a material
irreconcilable conflict is relevant, at its own expense and to the extent
reasonably practicable (as determined by a majority of the Disinterested
Directors), take whatever steps are necessary to remedy or eliminate the
material irreconcilable conflict, which steps may include, but are not
limited to:
(i) withdrawing the assets allocable to some or all of the
Accounts from SMFI or any Fund and reinvesting such assets in
a different investment medium, including another Fund of SMFI,
or submitting the question whether such segregation should be
implemented to a vote of all affected Participants and, as
appropriate, segregating the assets of any particular group
(e.g., annuity Participants, life insurance Participants or
all Participants) that votes in favor of such segregation, or
offering to the affected Participants the option of making
such a change; and
13
(ii) establishing a new registered investment company of the type
defined as a "management company" in Section 4(3) of the 1940
Act or a new separate account that is operated as a management
company.
(b) If the material irreconcilable conflict arises because of LIFE
COMPANY's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote,
LIFE COMPANY may be required, at SMFI's election, to withdraw each Account's
investment in SMFI or any Fund. No charge or penalty will be imposed as a
result of such withdrawal. Any such withdrawal must take place within six (6)
months after SMFI gives notice to LIFE COMPANY that this provision is being
implemented, and until such withdrawal SMFI shall continue to accept and
implement orders by LIFE COMPANY for the purchase and redemption of Shares of
SMFI.
(c) If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to LIFE COMPANY
conflicts with the majority of other state regulators, then LIFE COMPANY will
withdraw each Account's investment in SMFI within six (6) months after SMFI's
Board of Directors informs LIFE COMPANY that it has determined that such
decision has created a material irreconcilable conflict, and until such
withdrawal SMFI shall continue to accept and implement orders by LIFE COMPANY
for the purchase and redemption of Shares of SMFI. No charge or penalty will
be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in
resolving any material irreconcilable conflict will be carried out at its
expense and with a view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will SMFI or any of
its affiliates be required to establish a new funding medium for any
Contracts. LIFE COMPANY will not be required by the terms hereof to establish
a new funding medium for any Contracts if an offer to do so has been declined
by vote of a majority of Participants materially adversely affected by the
material irreconcilable conflict.
5.5 NOTICE TO LIFE COMPANY.
SMFI will promptly make known in writing to LIFE COMPANY the Board
of Directors' determination of the existence of a material irreconcilable
conflict, a description of the facts that give rise to such conflict and the
implications of such conflict.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
LIFE COMPANY and SMFI (or its investment adviser) will at least
annually submit to the Board of Directors of SMFI such reports, materials or
data as the Board of
14
Directors may reasonably request so that the Board of Directors may fully
carry out the obligations imposed upon it by the provisions hereof or any
exemptive order granted by the SEC to permit Mixed and Shared Funding, and
said reports, materials and data will be submitted at any reasonable time
deemed appropriate by the Board of Directors. All reports received by the
Board of Directors of potential or existing conflicts, and all Board of
Directors actions with regard to determining the existence of a conflict,
notifying Participating Insurance Companies and Participating Plans of a
conflict, and determining whether any proposed action adequately remedies a
conflict, will be properly recorded in the minutes of the Board of Directors
or other appropriate records, and such minutes or other records will be made
available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES.
If, at any time during which SMFI is serving as an investment medium
for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if
applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive
relief with respect to Mixed and Shared Funding. SMFI agrees that it will
comply with the terms and conditions thereof and that the terms of this
Section 5 shall be deemed modified if and only to the extent required in
order also to comply with the terms and conditions of such exemptive relief
that is afforded by any of said rules that are applicable.
5.8 OTHER REQUIREMENTS.
SMFI will require that each Participating Insurance Company and
Participating Plan enter into an agreement with SMFI that contains in
substance the same provisions as are set forth in Sections 4.1(b), 4.1(d),
4.3(a), 4.4(b), 4.5(a), 5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION.
Subject to Section 6.4 below, this Agreement will terminate as to a
Fund:
(a) at the option of any party, with or without cause with respect
to the Fund, upon six (6) months advance written notice to the other parties,
or, if later, upon receipt of any required exemptive relief from the SEC,
unless otherwise agreed to in writing by the parties; or
(b) at the option of SMFI upon institution of formal proceedings
against LIFE COMPANY or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding LIFE COMPANY's
obligations under this Agreement or related to the sale of the Contracts, the
operation of each Account, or the purchase of Shares, if, in each case, SMFI
reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing
15
material adverse consequences on the Fund with respect to which the Agreement
is to be terminated; or
(c) at the option of LIFE COMPANY upon institution of formal
proceedings against SMFI, its principal underwriter, or its investment
adviser by the NASD, the SEC, or any state insurance regulator or any other
regulatory body regarding SMFI's obligations under this Agreement or related
to the operation or management of SMFI or the purchase of SMFI Shares, if, in
each case, LIFE COMPANY reasonably determines that such proceedings, or the
facts on which such proceedings would be based, have a material likelihood of
imposing material adverse consequences on LIFE COMPANY, or the Subaccount
corresponding to the Fund with respect to which the Agreement is to be
terminated; or
(d) at the option of any Party in the event that (i) the Fund's
Shares are not registered, where required, and, in all material respects,
issued and sold in accordance with any applicable federal or state law, or
(ii) such law precludes the use of such Shares as an underlying investment
medium of the Contracts issued or to be issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in
the Fund pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a
RIC under Subchapter M of the Code or under successor or similar provisions,
or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify;
or
(g) at the option of LIFE COMPANY if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, as
applicable, or if LIFE COMPANY reasonably believes that the Fund may fail to
so comply; or
(h) at the option of SMFI if the Contracts issued by LIFE COMPANY
cease to qualify as annuity contracts or life insurance contracts under the
Code (other than by reason of the Fund's noncompliance with Section 817(h) or
Subchapter M of the Code) or if interests in an Account under the Contracts
are not registered, where required, and, in all material respects, are not
issued or sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this
Agreement; or
(j) by either SMFI or Carillon by written notice to the LIFE
COMPANY, if either one or both of SMFI or Carillon respectively, shall
determine, in their sole judgment exercised in good faith, that the LIFE
COMPANY has suffered a material adverse change in its business, operations,
financial condition or prospects since the date of this Agreement or is
subject to material adverse publicity; or
16
(k) by the LIFE COMPANY by written notice to the SMFI and Carillon,
if the LIFE COMPANY shall determine, in its sole judgment exercised in good
faith, that either SMFI or Carillon has suffered a material adverse change in
its business, operations, financial condition or prospects since the date of
this Agreement or is subject to material adverse publicity.
6.2 NOTICE REQUIREMENT FOR TERMINATION.
No termination of this Agreement will be effective unless and until
the Party terminating this Agreement gives prior written notice to the other
Party to this Agreement of its intent to terminate, and such notice shall set
forth the basis for such termination.
6.3 FUNDS TO REMAIN AVAILABLE.
Notwithstanding any termination of this Agreement, SMFI will, at the
option of LIFE 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 will be permitted to
reallocate investments in the Fund (as in effect on such date), 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 6.3 will not apply to any terminations under Section 5 and
the effect of such terminations will be governed by Section 5 of this
Agreement.
6.4 CONTINUANCE OF AGREEMENT.
The provisions of Section 4 and Sections 12 through 20 shall survive
termination of this Agreement. In addition, all other applicable provisions
of this Agreement shall survive termination as long as shares of the Fund are
held on behalf of Contract owners in accordance with Section 6.3, except that
SMFI and Carillon shall have no further obligation to make Fund shares
available in Contracts issued after termination.
SECTION 7. AMENDMENTS
No provision of this Agreement may be amended or modified in any
manner except by a written agreement executed by all Parties hereto.
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the
written consent of each other Party.
17
SECTION 9. NOTICES
Notices and communications required or permitted by this Agreement
will be given by means mutually acceptable to the Parties concerned. Each
other notice or communication required or permitted by this Agreement will be
given to the following persons at the following addresses and facsimile
numbers, or such other persons, addresses or facsimile numbers as the Party
receiving such notices or communications may subsequently direct in writing:
AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY
AMERICAN EQUITY CAPITAL, INC.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxx Xxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxx, Chief Financial Officer
SUMMIT MUTUAL FUNDS, INC.
CARILLON INVESTMENTS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxxxxx, Esq., Law Dept.
Xxxxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxxxxxx
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3
hereof, LIFE COMPANY will distribute all proxy material furnished by SMFI to
Participants and/or Policyholders to whom pass-through voting privileges are
required to be extended and will solicit voting instructions from
Participants. LIFE COMPANY will vote Shares in accordance with timely
instructions received from Participants. LIFE COMPANY will vote Shares that
are (a) not attributable to Participants to whom pass-through voting
privileges are extended, or (b) attributable to Participants, but for which
no timely instructions have been received, in the same proportion as Shares
for which said instructions have been received from Participants, so long as
and to the extent that the SEC continues to interpret the 1940 Act to require
pass through voting privileges for Participants. Neither LIFE COMPANY nor any
of its affiliates will in any way oppose or interfere with the solicitation
of proxies for the Shares held for such Participants. LIFE COMPANY reserves
the right to vote shares held in any Account in its own right, to the extent
permitted by law. LIFE COMPANY shall be responsible for assuring that each of
its Accounts holding Shares calculates voting privileges in a manner
consistent with that of other Participating Insurance Companies or in the
manner required by the Mixed and Shared Funding exemptive order obtained by
SMFI. SMFI will notify LIFE COMPANY of any changes of interpretations or
amendments to Mixed and Shared Funding exemptive order it obtains. SMFI will
comply with all provisions of the 1940 Act
18
requiring voting by shareholders, and in particular, SMFI either will provide
for annual meetings (except insofar as the SEC may interpret Section 16 of
the 1940 Act not to require such meetings) or will comply with Section 16(c)
of the 1940 Act (although SMFI is not one of the trusts described in Section
16(c) of that Act) as well as with Sections 16(a) and, if and when
applicable, 16(b). Further, SMFI will act in accordance with the SEC's
interpretation of the requirements of Section 16(a) with respect to periodic
elections of directors and with whatever rules the SEC may promulgate with
respect thereto.
SECTION 11. FOREIGN TAX CREDITS
SMFI agrees to consult in advance with LIFE COMPANY concerning any
decision to elect or not to elect pursuant to Section 853 of the Code to pass
through the benefit of any foreign tax credits to its shareholders.
SECTION 12. INDEMNIFICATION
12.1 OF SMFI AND CARILLON BY LIFE COMPANY AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, LIFE COMPANY and UNDERWRITER agree to indemnify and hold harmless
SMFI, Carillon, their affiliates, and each person, if any, who controls SMFI,
Carillon, or their affiliates within the meaning of Section 15 of the 1933
Act and each of their respective directors and officers (but not including
any Participating Insurance Company), (collectively, the "Indemnified
Parties" for purposes of this Section 12.1) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of LIFE COMPANY and UNDERWRITER) or actions in respect
thereof (including, to the extent 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 actions:
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, the Contracts, or
sales literature or advertising 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 LIFE COMPANY or UNDERWRITER
by or on behalf of SMFI or Carillon for use in any
Account's 1933 Act, registration statement, any
Account
19
Prospectus, the Contracts, or sales literature or
advertising or otherwise for use in connection with
the sale of Contracts or Shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in SMFI's 1933 Act
registration statement, SMFI Prospectus, sales
literature or advertising of SMFI, or any amendment
or supplement to any of the foregoing, not supplied
for use therein by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates and on
which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of LIFE
COMPANY, UNDERWRITER or their respective affiliates
or persons under their control (including, without
limitation, their employees and "Associated Persons,"
as that term is defined in paragraph (m) of Article I
of the NASD's By-Laws), in connection with the sale
or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in SMFI's 1933 Act registration statement,
SMFI Prospectus, sales literature or advertising of
SMFI, or any amendment or supplement to any of the
foregoing, 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 and in conformity with
information furnished to SMFI, Carillon or their
affiliates by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates for use
in SMFI's 1933 Act registration statement, SMFI
Prospectus, sales literature or advertising of SMFI,
or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY or
UNDERWRITER to perform the obligations, provide the
services and furnish the materials required of them
under the terms of this Agreement, or any material
breach of any representation and/or warranty made by
LIFE COMPANY or UNDERWRITER in this Agreement or
arise out of or result from any other material breach
of this Agreement by LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued
by LIFE COMPANY to qualify as annuity contracts or
life insurance contracts under the Code, otherwise
than by reason of any Fund's failure to comply with
Subchapter M or Section 817(h) of the Code.
20
(b) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any losses, claims, damages, liabilities or
actions to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance by
that Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii)
LIFE COMPANY, UNDERWRITER, each Account or Participants.
(c) Neither LIFE COMPANY nor UNDERWRITER shall be liable under this
Section 12.1 with respect to any action against an Indemnified Party unless
SMFI or Carillon shall have notified LIFE COMPANY and UNDERWRITER in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the action 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 LIFE
COMPANY and UNDERWRITER of any such action shall not relieve LIFE COMPANY and
UNDERWRITER from any liability which they may have to the Indemnified Party
against whom such action is brought otherwise than on account of this Section
12.1. Except as otherwise provided herein, in case any such action is brought
against an Indemnified Party, LIFE COMPANY and UNDERWRITER shall be entitled
to participate, at their own expense, in the defense of such action and also
shall be entitled to assume the defense thereof, with counsel approved by the
Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from LIFE COMPANY or UNDERWRITER to such
Indemnified Party of LIFE COMPANY's or UNDERWRITER's election to assume the
defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY
and UNDERWRITER and shall bear the fees and expenses of any additional
counsel retained by it, and neither LIFE COMPANY nor UNDERWRITER will 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.
12.2 OF LIFE COMPANY AND UNDERWRITER BY SMFI AND CARILLON.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, SMFI and Carillon agree to indemnify and hold harmless LIFE
COMPANY, UNDERWRITER, their respective affiliates, and each person, if any,
who controls LIFE COMPANY, UNDERWRITER or their respective affiliates within
the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers, (collectively, the "Indemnified Parties" for purposes
of this Section 12.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
SMFI and/or Carillon) or actions in respect thereof (including, to the extent
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 actions:
21
(i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in SMFI's 1933 Act registration statement,
SMFI Prospectus or sales literature or advertising of
SMFI (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 SMFI or
its affiliates by or on behalf of LIFE COMPANY,
UNDERWRITER or their respective affiliates for use
in SMFI's 1933 Act registration statement, SMFI
Prospectus, or in sales literature or advertising
or otherwise for use in connection with the sale of
Contracts or Shares (or any amendment or supplement
to any of the foregoing); or
(ii) arise out of or as a result of any other statements
or representations (other than statements or
representations contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of SMFI,
Carillon or their affiliates and on which such
persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of SMFI, Carillon or
their affiliates or persons under their control
(including, without limitation, their employees and
"Associated Persons" as that term is defined in
Section (m) of Article I of the NASD By-Laws), in
connection with the sale or distribution of SMFI
Shares; or
(iii) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact
contained in any Account's 1933 Act registration
statement, any Account Prospectus, sales literature
or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing, or
the omission or alleged omission to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, if such statement or omission was made
in reliance upon and in conformity with information
furnished to LIFE COMPANY, UNDERWRITER or their
respective affiliates by or on behalf of SMFI,
Carillon or their affiliates for use in any Account's
1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering
the Contracts, or any amendment or supplement to any
of the foregoing; or
22
(iv) arise as a result of any failure by SMFI to perform
the obligations, provide the services and furnish the
materials required of it under the terms of this
Agreement, or any material breach of any
representation and/or warranty made by SMFI in this
Agreement or arise out of or result from any other
material breach of this Agreement by SMFI; or
(v) arise as a result of any failure by Carillon to
perform the obligations, provide the services and
furnish the materials required of it under the terms
of this Agreement, or any material breach of any
representation and/or warranty made by Carillon in
this Agreement or arise out of or result from any
other material breach of this Agreement by Carillon,
it being expressly understood by the parties hereto
that only Carillon and not SMFI shall be responsible
for any indemnification arising from this subsection
(v).
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, SMFI and Carillon agree to indemnify and hold harmless the
Indemnified Parties from and against any and all losses, claims, damages,
liabilities (including amounts paid in settlement thereof) or actions in
respect thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Fund to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder, or (ii) Section 817(h) of the Code and regulations
thereunder, including, without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against LIFE COMPANY pursuant to the Contracts, the costs
of any ruling and closing agreement or other settlement with the IRS, and the
cost of any substitution by LIFE COMPANY of Shares of another investment
company or portfolio for those of any adversely affected Fund as a funding
medium for each Account that LIFE COMPANY reasonably deems necessary or
appropriate as a result of the noncompliance.
(c) Neither SMFI nor Carillon shall be liable under this Section
12.2 with respect to any losses, claims, damages, liabilities or actions to
which an Indemnified Party would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance by that
Indemnified Party of its duties or by reason of such Indemnified Party's
reckless disregard of its obligations and duties (i) under this Agreement, or
(ii) to SMFI or Carillon.
(d) Neither SMFI nor Carillon shall be liable under this Section
12.2 with respect to any action against an Indemnified Party unless the
Indemnified Party shall have notified SMFI and/or Carillon in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the action 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 SMFI
23
or Carillon of any such action shall not relieve SMFI or Carillon from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this Section 12.2. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, SMFI and/or Carillon will be entitled to participate, at
its own expense, in the defense of such action and also shall be entitled to
assume the defense thereof, with counsel approved by the Indemnified Party
named in the action, which approval shall not be unreasonably withheld. After
notice from SMFI and/or Carillon to such Indemnified Party of SMFI's or
Carillon's election to assume the defense thereof, the Indemnified Party will
cooperate fully with SMFI and Carillon and shall bear the fees and expenses
of any additional counsel retained by it, and SMFI and Carillon 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.
(e) In no event shall SMFI or Carillon be liable under the
indemnification provisions contained in this Agreement to LIFE COMPANY or
UNDERWRITER with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by LIFE COMPANY or UNDERWRITER hereunder; (ii)
the failure by LIFE COMPANY to maintain its segregated asset account (which
invests in any Fund) as a legally and validly established segregated asset
account under applicable state law and as a duly registered unit investment
trust under the provisions of the 1940 Act (unless exempt therefrom); or
(iii) the failure by LIFE COMPANY to maintain its variable annuity or life
insurance contracts (with respect to which any Fund serves as an underlying
funding vehicle) as annuity contracts or life insurance contracts under
applicable provisions of the Code.
12.3 EFFECT OF NOTICE.
Any notice given by the indemnifying Party to an Indemnified Party
referred to in Sections 12.1 (c) or 12.2(d) above of participation in or
control of any action by the indemnifying Party will in no event be deemed to
be an admission by the indemnifying Party of liability, culpability or
responsibility, and the indemnifying Party will remain free to contest
liability with respect to the claim among the Parties or otherwise.
12.4 SUCCESSORS.
A successor by law of any Party shall be entitled to the benefits of
the indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof
interpreted under and in accordance with
Ohio law, without regard for that
state's principles of conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together will constitute one and the same
instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby.
SECTION 16. RIGHTS CUMULATIVE
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, that the Parties are entitled to under
federal and state laws.
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for
purposes of reference only and shall not limit or define the meaning of the
provisions of this Agreement.
SECTION 18. CONFIDENTIALITY
SMFI acknowledges that the identities of the customers of LIFE
COMPANY or any of its affiliates (collectively, the "LIFE COMPANY Protected
Parties" for proposes of this Section 18), information maintained regarding
those customers, and all computer programs and procedures or other
information developed by the LIFE COMPANY Protected Parties or any of their
employees or agents in connection with LIFE COMPANY's performance of its
duties under this Agreement are the valuable property of the LIFE COMPANY
Protected Parties. SMFI agrees that if it comes into possession of any list
or compilation of the identities of or other information about the LIFE
COMPANY Protected Parties' customers, or any other information or property of
the LIFE COMPANY Protected Parties, other than such information as may be
independently developed or compiled by SMFI from information supplied to it
by the LIFE COMPANY Protected Parties' customers who also maintain accounts
directly with SMFI, SMFI will hold such information or property in confidence
and refrain from using, disclosing or distributing any of such information or
other property except: (a) with LIFE COMPANY'S prior written consent; or (b)
as required by law or judicial process. LIFE COMPANY acknowledges that the
identities of the customers of SMFI or any of its affiliates (collectively,
the "SMFI Protected Parties" for purposes of this Section 18), information
maintained regarding those customers, and all computer programs and
procedures or other information developed by the SMFI Protected Parties or
any of their employees or agents in connection with SMFI's performance of its
duties under this Agreement are the valuable property of the SMFI Protected
Parties. LIFE COMPANY agrees that if it comes into possession of any list or
compilation of the identities of or
25
other information about the SMFI Protected Parties' customers or any other
information or property of the SMFI Protected Parties, other than such
information as may be independently developed or compiled by LIFE COMPANY
from information supplied to it by the SMFI Protected Parties' customers who
also maintain accounts directly with LIFE COMPANY, LIFE COMPANY will hold
such information or property in confidence and refrain from using, disclosing
or distributing any of such information or other property except: (a) with
SMFI's prior written consent; or (b) as required by law or judicial process.
Each party acknowledges that any breach of the agreements in this Section 18
would result in immediate and irreparable harm to the other parties for which
there would be no adequate remedy at law and agree that in the event of such
a breach, the other parties will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as any
court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) Summit Investment Partners, Inc. ("Summit" or "licensor"), an
affiliate of SMFI, owns all right, title and interest in and to the name,
trademark and service xxxx "Summit Pinnacle" and such other tradenames,
trademarks and service marks as may be set forth on Schedule B, as amended
from time to time by written notice from Summit to LIFE COMPANY (the "Summit
licensed marks" or the "licensor's licensed marks") and is authorized to use
and to license other persons to use such marks. LIFE COMPANY and its
affiliates are hereby granted a non-exclusive, non-transferable and
non-sublicensable license to use the Summit licensed marks in connection with
LIFE COMPANY's performance of the services contemplated under this Agreement,
subject to the terms and conditions set forth in this Section 19.
(b) The grant of license to LIFE COMPANY and its affiliates ( the
"licensee") shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor's
licensed marks, except that LIFE COMPANY shall have the right to continue to
service any outstanding Contracts bearing any of the Summit licensed marks.
Upon Summit's elective termination of this license, LIFE COMPANY and its
affiliates shall immediately cease to issue any new annuity or life insurance
contracts bearing any of the Summit licensed marks and shall likewise cease
any activity which suggests that it has any right under any of the Summit
licensed marks or that it has any association with Summit, except that LIFE
COMPANY shall have the right to continue to service outstanding Contracts
bearing any of the Summit licensed marks. Should Summit electively terminate
this license, Summit shall assume the reasonable expenses incurred by the
licensee as to its printed materials in changing to a new name.
(c) The licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approvals shall not be unreasonably
withheld. Any disapproval shall likewise be in writing and indicate the
reasons therefor. Notwithstanding the foregoing,
26
should licensor fail to provide a written response to a request for an
approval within five business days of its receipt, such request shall be
deemed approved.
(d) During the term of this grant of license, a licensor may request
that a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The licensor's
approval shall not be unreasonably withheld, and the licensor, when
requesting reconsideration of a prior approval, shall assume the reasonable
expenses of withdrawing and replacing such disapproved materials. The
licensee shall obtain the prior written approval of the licensor for the use
of any new materials developed to replace the disapproved materials, in the
manner set forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to
the best of the knowledge of the licensee, the licensor's licensed marks are
valid and enforceable trademarks and/or service marks and that such licensee
does not own the licensor's licensed marks and claims no rights therein other
than as a licensee under this Agreement; (ii) agrees never to contend
otherwise in legal proceedings or in other circumstances; and (iii)
acknowledges and agrees that the use of the licensor's licensed marks
pursuant to this grant of license shall inure to the benefit of the licensor.
(f) LIFE COMPANY and UNDERWRITER understand that (i) the S&P MidCap
400(R) Index is a trademark of The XxXxxx-Xxxx Companies, Inc., the
Nasdaq-100(R) Index is a trademark of The Nasdaq Stock Market, Inc., and the
Xxxxxxx 2000(R) Index is a trademark of the Xxxxx Xxxxxxx Company
(collectively, the "Third-Party Marks"); (ii) these Third-Party Marks have
been licensed by Summit or its affiliate for use by SMFI; and (iii) the Funds
are not sponsored, endorsed, sold or promoted by any of the licensing
organizations, and they make no representation or warranty regarding the
Funds, and bear no liability with respect to the Funds. LIFE COMPANY and
UNDERWRITER agree to comply with any reasonable requirements of the licensing
organizations disclosed to LIFE COMPANY and UNDERWRITER regarding the use of
Third-Party Marks in any prospectuses, sales literature or other promotional
material, including without limitation the approval process for, and the
required use of certain notices and disclaimers in, all materials referencing
the Third-Party Marks. Summit or its affiliate shall use its reasonable
commercial efforts to continue in full force and effect those separate
agreements with the respective licensing organizations for continued use of
the Third-Party Marks for the duration of the term of the license granted
under this Section 19.
(g) During the term of the license granted under this Section 19,
the licensor shall use its best efforts to maintain in effect and protect the
value of the licensor's licensed marks as authorized herein. The licensor
shall at its own expense exercise licensor's common law and statutory rights
against infringement of the licensed marks as authorized herein, provided,
however, nothing herein shall obligate the licensor to
27
undertake an action or settlement, or refrain from an action or settlement
with respect to any particular potential, threatened or actual infringement
of such licensed marks. LIFE COMPANY and UNDERWRITER shall cooperate with the
licensor in the maintenance, registration (if any) and policing of licensor's
rights in such licensed marks, and in any action, settlement or undertaking
with respect to any particular potential, threatened or actual infringement
of such licensed marks. Such cooperation is not a waiver of nor shall it
require violation of LIFE COMPANY'S, UNDERWRITER'S or their affiliates'
attorney/client, work product or other privilege.
SECTION 20. PARTIES TO COOPERATE
Each Party to this Agreement will cooperate with each other Party
and all appropriate governmental authorities (including, without limitation,
the SEC, the NASD and state insurance regulators) and will permit each other
and such authorities reasonable access to its books and records (including
copies thereof) in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby to the extent
practicable and except where a Party's respective interests are adverse to or
in conflict with another Party's interests.
-----------------------------------------
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers signing below.
SUMMIT MUTUAL FUNDS, INC.
Attest:_/s/ Xxxx X. Lucas_____ By:_/s/ Xxxx X. Labmeier__________
Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxxxxx
Title: Assistant Secretary Title: Vice President
CARILLON INVESTMENTS, INC.
Attest:_/s/ Xxxx X. Lucas_________ By: _/s/ Xxxx X. Labmeier__________
Name: Xxxx X. Xxxxx Name: Xxxx X. Xxxxxxxx
Title: Assistant Secretary Title: Vice President
AMERICAN EQUITY INVESTMENT
LIFE INSURANCE COMPANY, on
behalf of itself and its
separate accounts
Attest:_/s/ Harley A. Whitfield_____ By:_/s/ Xxxxx X. Reimer___________
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Title: Executive Vice President/Treasurer
28
AMERICAN EQUITY CAPITAL, INC.
Attest:_/s/ Harley A. Whitfield_____ By:_/s/ Xxxxx X. Reimer__________
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Title: Executive Vice President/Treasurer
9/13/01
29
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
Summit Mutual Funds, Inc. Pinnacle Series:
S&P MidCap 400 Index Portfolio
Xxxxxxx 2000 Small Cap Index Portfolio
Nasdaq-100 Index Portfolio
SEPARATE ACCOUNTS UTILIZING THE FUNDS
American Equity Life Annuity Account
UNREGISTERED SEPARATE ACCOUNTS UTILIZING THE FUNDS
N/A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Individual Flexible Premium Deferred Variable Annuity Contract
SCHEDULE B
SUMMIT MUTUAL FUNDS, INC.
Summit Pinnacle Series:
S&P MidCap 400 Index Portfolio
Xxxxxxx 2000 Small Cap Index Portfolio
Nasdaq-100 Index Portfolio
Summit and Design
SCHEDULE C
EXPENSE ALLOCATIONS
----------------------------------------------------------- --------------------------------------------------------
LIFE COMPANY SMFI /CARILLON
----------------------------------------------------------- --------------------------------------------------------
preparing and filing the Account's preparing and filing the Fund's registration
registration statement statement
text composition for Account prospectuses text composition for Fund prospectuses and
and supplements supplements
----------------------------------------------------------- --------------------------------------------------------
text alterations of prospectuses (Account) and text alterations of prospectuses (Fund) and
supplements (Account) supplements (Fund)
printing Account and Fund prospectuses and a camera ready Fund prospectus
supplements
----------------------------------------------------------- --------------------------------------------------------
text composition and printing Account SAIs text composition and printing Fund SAIs
mailing and distributing Account SAIs to mailing and distributing Fund SAIs to policy
policy owners and prospective purchasers owners andprospective purchasers upon request
upon request
----------------------------------------------------------- --------------------------------------------------------
mailing and distributing prospectuses
(Account and Fund) and supplements
(Account and Fund) to policy owners of
record as required by Federal Securities Laws
and to prospective purchasers; mailing and
distributing Fund prospectuses and
supplements to prospective purchasers
text composition (Account), printing, mailing, text composition of annual and semi-annual
and distributing annual and semi-annual reports (Fund)
reports for Account (Fund and Account as,
applicable)
----------------------------------------------------------- --------------------------------------------------------
text composition, printing, mailing, text composition, printing, mailing,
distributing, and tabulation of proxy distributing and tabulation of proxy
statements and voting instruction solicitation statements and voting instruction solicitation
materials to policy owners with respect to materials to policy owners with respect to
proxies related to the Account proxies related to the Fund
----------------------------------------------------------- --------------------------------------------------------
preparation, printing and distributing sales
material and advertising relating to the Funds,
insofar as such materials relate to the
Contracts and filing such materials with and
obtaining approval from, the SEC, the NASD,
any state insurance regulatory authority, and
any other appropriate regulatory authority, to
the extent required
----------------------------------------------------------- --------------------------------------------------------
ADMINISTRATIVE SERVICES AGREEMENT
American Equity Investment Life Insurance Company ("INSURER") and
Summit Investment Partners, Inc. ("Summit") (collectively, the "Parties")
mutually agree to the arrangements set forth in this Administrative Services
Agreement (the "Agreement") dated as of September 19, 2001.
WHEREAS, Summit is the investment adviser to Summit Mutual Funds,
Inc. (the "Fund"); and
WHEREAS, Summit has entered into an Investment Advisory Agreement,
dated March 22, 1984, with the Fund ("Advisory Agreement") pursuant to which
it has agreed to provide, or arrange to provide, not only investment advisory
services, but also certain administrative services, including such services
as may be requested by the Fund's Board of Directors from time to time; and
WHEREAS, INSURER issues variable life insurance policies and/or
variable annuity contracts (collectively, the "Contracts"); and
WHEREAS, INSURER has entered into a
participation agreement, dated
September 19, 2001 ("
Participation Agreement"), with the Fund, pursuant to
which the Fund has agreed to make shares of certain of its portfolios
("Portfolios") available for purchase by one or more of INSURER's separate
accounts or divisions thereof (each, a "Separate Account"), in connection
with the allocation by Contract owners of purchase payments to corresponding
investment options offered under the Contracts; and
WHEREAS, INSURER and Summit expect that the Fund, and its
Portfolios, can derive substantial savings in administrative expenses by
virtue of having one or more Separate Accounts of INSURER each as a single
shareholder of record of Portfolio shares, rather than having numerous public
shareholders of such shares; and
WHEREAS, INSURER and Summit expect that the Fund, and its
Portfolios, can derive such substantial savings because INSURER performs the
administrative services listed on Schedule A hereto for the Fund in
connection with the Contracts issued by INSURER; and
WHEREAS, INSURER has no contractual or other legal obligation to
perform such administrative services, other than pursuant to this Agreement
and the
Participation Agreement; and
WHEREAS, INSURER desires to be compensated for providing such
administrative services; and
WHEREAS, Summit desires that the Fund benefit from the lower
administrative expenses resulting from the administrative services performed
by INSURER; and
WHEREAS, Summit desires to retain the administrative services of
INSURER and to compensate INSURER for providing such administrative services;
NOW, THEREFORE, the Parties agree as follows:
SECTION 1. ADMINISTRATIVE SERVICES; PAYMENTS THEREFOR.
(a) INSURER shall provide the administrative services set out in
Schedule A hereto and made a part hereof, as the same may be amended from time
to time. For such services, Summit agrees to pay to INSURER a quarterly fee
("Quarterly Fee") equal to a percentage of the average daily net assets of the
Fund attributable to the Contracts issued by INSURER ("INSURER Fund Assets") at
the following annual rates:
ANNUAL RATE TOTAL AVERAGE QUARTERLY NET ASSETS FOR ALL PORTFOLIOS
10 basis On all net assets attributable to the Contracts
points issed by INSURER
(b) Summit shall calculate the Quarterly Fee at the end of each
calendar quarter and will make such payment to INSURER, without demand or
notice by INSURER, within 30 days thereafter. For purposes of computing the
Quarterly Fee payable to the INSURER contemplated under this paragraph, the
average aggregate net asset value of shares of the Portfolios held by a
Separate Account over a calendar quarter shall be computed by totaling the
Separate Account's aggregate investment (share net asset value multiplied by
total number of shares held by the Separate Account) on each business day
during the calendar quarter, and dividing by the total number of business
days during such quarter.
(c) From time to time, the Parties shall review the Quarterly Fee to
determine whether it reasonably approximates the incurred and anticipated
costs, over time, of INSURER in connection with its duties hereunder. The
Parties agree to negotiate in good faith any change to the Quarterly Fee
proposed by a Party in good faith.
SECTION 2. NATURE OF PAYMENTS.
The Parties to this Agreement recognize and agree that Summit's
payments to INSURER hereunder are for administrative services only and do not
constitute payment in any manner for investment advisory services or for
costs of distribution of Contracts or of Portfolio shares, and are not
otherwise related to investment advisory or distribution services or
expenses. INSURER represents and warrants that the fees to be paid by Summit
for services to be rendered by INSURER pursuant to the terms of this
Agreement are to compensate the INSURER for providing administrative services
to the Fund, and are not designed to reimburse or compensate INSURER for
providing administrative services with respect to the Contracts or any
Separate Account.
SECTION 3. TERM AND TERMINATION.
Any Party may terminate this Agreement, without penalty, on 60 days'
written notice to the other Party. Unless so terminated, this Agreement shall
continue in effect for so long as Summit or its successors) in interest, or
any affiliate thereof, continues to perform in a similar capacity for the
Fund, and for so long as INSURER provides the services contemplated hereunder
with respect to Contracts under which values or monies are allocated to a
Portfolio.
SECTION 4. AMENDMENT.
This Agreement may be amended upon mutual agreement of the Parties
in writing.
SECTION 5. NOTICES.
All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
to
AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Chief Financial Officer
SUMMIT INVESTMENT PARTNERS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq., Law Dept.
Xxxxxx X. Xxxxxxxxxxxx
SECTION 6. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Parties and their transferees, successors and assigns. The benefits of and the
right to enforce this Agreement shall accrue to the Parties and their
transferees, successors and assigns.
(b) ASSIGNMENT. Neither this Agreement nor any of the rights,
obligations or liabilities of any Party hereto shall be assigned without the
written consent of the other Party.
(c) INTENDED BENEFICIARIES. Nothing in this Agreement shall be
construed to give any person or entity other than the Parties, as well as the
Fund, any legal or equitable claim, right or remedy. Rather, this Agreement is
intended to be for the sole and exclusive benefit of the Parties, as well as the
Fund.
(d) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall together constitute
one and the same instrument.
(e) APPLICABLE LAW. This Agreement shall be interpreted, construed, and
enforced in accordance with the laws of the State of
Ohio without reference to
the conflict of law principles thereof.
(f) SEVERABILITV. If any portion of this Agreement shall be found to be
invalid or unenforceable by a court or tribunal or regulatory agency of
competent jurisdiction, the remainder shall not be affected thereby, but shall
have the same force and effect as if the invalid or unenforceable portion had
not been inserted.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date of first above written.
AMERICAN EQUITY INVESTMENT LIFE
INSURANCE COMPANY
By:_/s/ Xxxxx X. Reimer________
Title:_Executive Vice President/Treasurer_
SUMMIT INVESTMENT PARTNERS, INC.
By:_/s/ Xxxx X. Labmeier_______
Title:_Secretary_______________
SCHEDULE A
ADMINISTRATIVE SERVICES FOR
SUMMIT MUTUAL FUNDS, INC.
INSURER shall provide certain administrative services respecting the
operations of the Fund, as set forth below. This Schedule, which may be
amended from time to time as mutually agreed upon by INSURER and Summit,
constitutes an integral part of the Agreement to which it is attached.
Capitalized terms used herein shall, unless otherwise noted, have the same
meaning as the defined terms in the Agreement to which this Schedule relates.
A. RECORDS OF PORTFOLIO SHARE TRANSACTIONS; MISCELLANEOUS RECORDS
1. INSURER shall maintain master accounts with the Fund, on
behalf of each Portfolio, which accounts shall bear the name of INSURER as
the record owner of Portfolio shares on behalf of each Separate Account
investing in the Portfolio.
2. INSURER shall maintain a daily journal setting out the
number of shares of each Portfolio purchased, redeemed or exchanged on behalf
of Contract owners each day, as well as the net purchase or redemption orders
for Portfolio shares submitted each day, to assist Summit, the Fund and/or
the Fund's transfer agent in tracking and recording Portfolio share
transactions, and to facilitate the computation of each Portfolio's net asset
value per share. INSURER shall promptly provide Summit, the Fund, and the
Fund's transfer agent with a copy of such journal entries or information
appearing thereon in such format as may be reasonably requested from time to
time. INSURER shall provide such other assistance to Summit, the Fund, and
the Fund's transfer agent as may be necessary to cause various Portfolio
share transactions effected on behalf of Contract owners to be properly
reflected on the books and records of the Fund.
3. In addition to the foregoing records, and without
limitation, INSURER shall maintain and preserve all records as required by
law to be maintained and preserved in connection with providing
administrative services hereunder.
B. ORDER PLACEMENT AND PAYMENT
1. INSURER shall determine the net amount to be transmitted to
the Separate Accounts as a result of redemptions of each Portfolio's shares
based on Contract owner redemption requests and shall disburse or credit to
the Separate Accounts all proceeds of redemptions of Portfolio shares.
INSURER shall notify the Fund of the cash required to meet redemption
payments.
2. INSURER shall determine the net amount to be transmitted to
the Fund as a result of purchases of Portfolio shares based on Contract owner
purchase payments and transfers allocated to the Separate Accounts investing
in each Portfolio. INSURER shall transmit net purchase payments to the Fund's
custodian.
C. ACCOUNTING SERVICES
INSURER shall perform miscellaneous accounting services as may be
mutually agreed to between INSURER and Summit or the Fund, which services
shall relate to the business contemplated by the
Participation Agreement
between INSURER and the Fund, as amended from time to time. Such services may
include, without limitation, periodic reconciliation (at least quarterly) and
balancing of INSURER's books and records with those of the Fund with respect
to such matters as cash accounts, Portfolio share purchase and redemption
orders placed with the Fund, dividend and distribution payments by the Fund,
and such other accounting matters that may arise from time to time in
connection with the operations of the Fund as related to the business
contemplated by the
Participation Agreement.
D. REPORTS
INSURER acknowledges that Summit may, from time to time, be called
upon by the Fund's Board of Directors ("Board"), to provide various types of
information pertaining to the operations of the Fund and related matters, and
that Summit also may, from time to time, decide to provide such information
to the Board in its own discretion. Accordingly, INSURER shall provide Summit
with such assistance as mutually agreed upon between INSURER and SUMMIT so
that Summit can report such information to the Fund's Board in a timely
manner. INSURER acknowledges that such information and assistance shall be in
addition to the information and assistance required of INSURER pursuant to
the Fund's mixed and shared funding SEC exemptive order, described in the
Participation Agreement.
INSURER shall provide Summit with such assistance as mutually agreed
upon between INSURER and SUMMIT with respect to the preparation and
submission of reports and other documents pertaining to the Fund to
appropriate regulatory bodies and third party reporting services.
E. FUND-RELATED CONTRACT OWNER SERVICES
INSURER agrees to print and distribute, in a timely manner,
prospectuses, statements of additional information, supplements thereto,
periodic reports, proxy materials and any other materials of the Fund
required by law or otherwise to be given to its shareholders, including,
without limitation, Contract owners investing in Portfolio shares. INSURER
further agrees to provide telephonic support for Contract owners, including,
without limitation, responding to inquiries about the Fund and each Portfolio
thereof (not including information about performance or related to sales),
and assisting with proxy solicitations, specifically with respect to
soliciting voting instructions from Contract owners.
F. MISCELLANEOUS SERVICES
INSURER shall provide such other administrative support to the Fund as
mutually agreed between INSURER and Summit or the Fund from time to time.
INSURER shall, from time to time, relieve the Fund of other usual or incidental
administration services of the type ordinarily borne by mutual funds that offer
shares to individual members of the general public, as mutually agreed between
INSURER and Summit.
9/13/01
