PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the __ day of _____, 200_ by and
among American United Life Insurance Company (hereinafter the "Company"), a life
insurance company organized under the laws of Indiana, on its own behalf and on
behalf of each separate account of the Company set forth on Schedule B hereto as
may be amended from time to time (each such account hereinafter referred to as
the "Account"), and ROYCE CAPITAL FUND (hereinafter the "Fund"), a Delaware
business trust, and ROYCE FUND SERVICES, INC., a New York corporation (the
"Distributor").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established by insurance companies for individual and group life
insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans (hereinafter "Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into a
participation agreement with the Fund and the Distributor (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made available for Variable
Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on Schedule A
(each such series hereinafter referred to as a "Portfolio"), as may be amended
from time to time by mutual agreement of the parties hereto, under this
Agreement to the Accounts of the Company; and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 24, 1996 (File No. 812-9988), granting Participating
Insurance Companies and Variable Insurance Product separate accounts exemptions
from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Investment
Company Act of 1940, as amended (hereinafter the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Fund to be sold to and held by Variable Insurance Products
separate accounts of both affiliated and unaffiliated life insurance companies
and Qualified Plans (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC under the
Securities
Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is
a member in good standing of the National Association of Securities Dealers,
Inc. ("NASD"); and
WHEREAS, the Distributor is the principal underwriter of the Portfolios of the
Fund; and
WHEREAS, the Company has registered or will register certain Variable Insurance
Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution or under authority of the Board of Directors
of the Company, on the date shown for such Account on Schedule B hereto, to set
aside and invest assets attributable to the aforesaid Variable Insurance
Products; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in the Portfolios on behalf of each
Account to fund certain of the aforesaid Variable Insurance Products;
NOW, THEREFORE, in consideration of their mutual promises, the Company and the
Fund agree as follows:
ARTICLE I. Fund Shares
1.1. The Fund agrees to make available for purchase by the Company shares of the
Portfolios set forth on Schedule A and shall execute orders placed for each
Account on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of such order. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee of orders prior to the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m. Eastern time) shall
constitute receipt by the Fund; provided that the Fund receives notice of such
order by 10:00 a.m. Eastern time on the next following Business Day.
Notwithstanding the foregoing, the Company shall use its best efforts to provide
the Fund with notice of such orders by 9:00 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates the net
asset value pursuant to the rules of the SEC, as set forth in the Fund's
Prospectus and Statement of Additional Information. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to permit the Fund to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Portfolio.
1.2. The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their Variable Insurance Products and to certain
Qualified Plans. No shares of any Portfolio will be sold to the general public.
1.3. The Fund will not make its shares available for purchase by any insurance
company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 2.9, 3.4 and Article VII of this
Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day in accordance with the timing
rules described in Section 1.1.
1.5. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Accounts of the Company, under which
amounts may be invested in the Fund, are listed on Schedule B attached hereto
and incorporated herein by reference, as such Schedule B may be amended from
time to time by mutual written agreement of all of the parties hereto.
1.6. The Company will place separate orders to purchase or redeem shares of each
Portfolio. Each order shall describe the net amount of shares and dollar amount
of each Portfolio to be purchased or redeemed. In the event of net purchases,
the Company shall pay for Portfolio shares on the next Business Day after an
order to purchase Portfolio shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. In
the event of net redemptions, the Portfolio shall use its best efforts to pay
the redemption proceeds in federal funds transmitted by wire on the next
Business Day, in any event redemption proceeds shall be wired to the Company
within three Business Days or such longer period permitted by the 1940 Act,
after an order to redeem a Portfolio's shares is made in accordance with the
provision of Section 1.4 hereof. Notwithstanding the foregoing, if the payment
of redemption proceeds on the next Business Day would require the Portfolio to
dispose of securities or otherwise incur substantial additional costs, and if
the Portfolio has determined to settle redemption transactions for all
shareholders on a delayed basis, it reserves the right to suspend the right of
redemption or postpone the date of payment or satisfaction upon redemption
consistent with Section 22(e) of the 1940 Act and the Portfolio shall notify in
writing the person designated by the Company as the recipient for such notice of
such delay promptly.
1.7. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.8. The Fund shall make the dividends or capital gain distributions per share
payable on the
Fund's shares available to the Company as soon as reasonably practical after the
dividends or capital gains are declared (normally by 6:30 p.m. Eastern time) and
shall use its best efforts to furnish same day notice by 7:00 p.m. Eastern time
(by wire or telephone, followed by written confirmation) to the Company of any
dividends or capital gain distributions per share payable on the Fund's shares.
The Company hereby elects to receive all such dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such dividends and capital gain distributions in cash. The Fund
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7:00 p.m. Eastern time. In the event that the Fund is unable to meet the 7:00
p.m. time stated immediately above, then the Fund shall provide the Company with
additional time to notify the Fund of purchase or redemption orders pursuant to
Sections 1.1 and 1.4, respectively, above. Such additional time shall be equal
to the additional time that the Fund takes to make the net asset values
available to the Company; provided, however, that notification must be made by
10:15 a.m. Eastern time on the Business Day such order is to be executed
regardless of when the net asset value is made available. If the Fund provides
the Company with materially incorrect share net asset value information, the
Separate Account(s) shall be entitled to any adjustment to the number of shares
purchased or redeemed necessary to make the Separate Account(s) whole. Any
material error in the calculation of the net asset value per share, dividend or
capital gain information shall be reported promptly upon discovery to the
Company. If such material error results in an overpayment to the Separate
Account(s), the Company will use its best efforts to collect such overpayment.
If, after such efforts, the Company is not able to recover all such overpayment,
the Company will cooperate with the attempts of the Fund and/or Distributor to
recover the overpayment. Furthermore, the Distributor shall be liable for the
reasonable administrative costs incurred by the Company in relation to the
correction of any material error, provided such error is attributable to the
Fund or the Distributor. Administrative costs shall include reasonable
allocation of staff time, costs of outside service providers, printing and
postage. Non-material errors will be corrected in the next Business Day's net
asset value per share.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the interests of the Accounts (the
"Contracts") are or will be registered and will maintain the registration under
the 1933 Act and the regulations thereunder to the extent required by the 1933
Act; that the Contracts will be issued in compliance in all material respects
with all applicable federal and state laws and regulations. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under the _Indiana_ Insurance Law and the regulations thereunder
and has registered or, prior to any issuance or sale of the Contracts, will
register and will maintain the registration of each Account as a unit investment
trust in accordance with and to the extent required by the provisions of the
1940 Act and the regulations thereunder to serve as a segregated investment
account for the Contracts. The Company shall amend its registration statement
for its contracts under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act and the regulations thereunder
to the extent required by the 1933 Act, duly authorized for issuance in
accordance with the laws of the State of Delaware and sold in compliance with
all applicable federal and state securities laws and regulations and that the
Fund is and shall remain registered under the 1940 Act and the regulations
thereunder to the extent required by the 0000 Xxx. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund.
2.3 The Fund and the Distributor represent that the Fund is currently qualified
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and that the Fund will make every effort
to maintain such qualification (under Subchapter M or any successor or similar
provision) and that the Fund or its designee will notify the Company immediately
upon having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that a Portfolio might not so qualify in the future.
2.4. The Company represents that each Account is and will continue to be a
"segregated account" under applicable provisions of the Code and that each
Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatments and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.5. The Fund represents that to the extent it decides to finance distribution
expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund undertakes to have
a board of trustees, a majority of whom are not interested persons of the Fund,
formulate and approve any plan under Rule 12b-1 to finance distribution expenses
in accordance with the 1940 Act.
2.6. The Fund makes no representation as to whether any aspect of its operations
(including, but not limited to, fees and expenses and investment policies)
complies with the insurance laws or regulations of the various states.
2.7. The Fund and the Distributor represent that the Fund is lawfully organized
and validly existing under the laws of Delaware and that the Fund does and will
comply in all material respects with the 1940 Act.
2.8. The Distributor represents and warrants that it is and shall remain duly
registered in all
material respects under all applicable federal securities laws and that it will
perform its obligations for the Fund and the Company in compliance in all
material respects with the laws and regulations of its state of domicile and any
applicable state and federal securities laws and regulations.
2.9. The Company represents and warrants that all of its trustees, officers,
employees, investment adviser, and other individuals/entities dealing with the
money and/or securities of the Fund are covered by a blanket fidelity bond or
similar coverage, in an amount equal to the greater of $5 million or any amount
required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund in the event that such coverage no longer applies.
2.10. The Company represents and warrants that it will adhere to the Fund's
policy intended to discourage shareholders from trading that could be
detrimental to long-term shareholders of the Fund (the "Policy"), as set forth
in the Fund's current prospectus ("Fund Prospectus"). The aforesaid includes
among other things, the monitoring of shareholder/participant trading activity
and the restriction of shareholder/participant trading privileges at the
sub-account level if warranted by the Policy.
2.11. The Company represents and warrants that it will adhere to all applicable
anti-money laundering rules and regulations in fulfilling its obligations under
this Agreement.
2.12. The Company, Fund and Distributor agree that all non-public records,
information, and data relating to the business of the other (including customer
names and information and portfolio holdings information) that are exchanged or
negotiated pursuant to this Agreement or in carrying out this Agreement shall
remain confidential, and shall not be voluntarily disclosed by either party
without the prior written consent of the other party, except as may be required
by law or by such party to carry out this Agreement or an order of an court,
governmental agency or regulatory body.
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements; Voting
3.1(a) The Fund or its designee shall provide the Company with as many printed
copies of the Fund Prospectus as the Company may reasonably request. If
requested by the Company, in addition to providing printed copies of the Fund
Prospectus, the Fund shall provide camera-ready film or computer diskettes
containing the Fund Prospectus, or shall provide the same electronically in .pdf
format, and such other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the Fund Prospectus is amended
during the year) to have the prospectus for the Contracts (the "Contract
Prospectus") and the Fund Prospectus printed together in one document or
separately. The Company may elect to print the Fund Prospectus in combination
with other fund companies' prospectuses. For purposes hereof, any combined
prospectus including the Fund Prospectus along with the Contract Prospectus or
prospectus of other fund companies shall be referred to as a "Combined
Prospectus." For purposes hereof, the term "Fund Portion of the
Combined Prospectus" shall refer to the percentage of the number of Fund
Prospectus pages in the Combined Prospectus in relation to the total number of
pages of the Combined Prospectus.
3.1(b) The Fund shall provide the Company with as many printed copies of the
Fund's current statement of additional information (the "Fund SAI") as the
Company may reasonably request. If requested by the Company in addition to
providing printed copies of the Fund SAI, the Fund shall provide camera-ready
film or computer diskettes containing the Fund SAI, or shall provide the same
electronically in .pdf format, and such other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
Fund SAI is amended during the year) to have the statement of additional
information for the Contracts (the "Contract SAI") and the Fund SAI printed
together or separately. The Company may also elect to print the Fund SAI in
combination with other fund companies' statements of additional information. For
purposes hereof, any combined statement of additional information including the
Fund SAI along with the Contract SAI or statement of additional information of
other fund companies shall be referred to as a "Combined SAI." For purposes
hereof, the term "Fund Portion of the Combined SAI" shall refer to the
percentage of the number of Fund SAI pages in the Combined SAI in relation to
the total number of pages of the Combined SAI.
3.1(c) The Fund shall provide the Company with as many printed copies of the
Fund's annual report and semi-annual report (collectively, the "Fund Reports")
as the Company may reasonably request. If requested by the Company in lieu of
providing printed copies of the Fund Reports, the Fund shall provide
camera-ready film or computer diskettes containing the Fund's Reports, or shall
provide the same electronically in .pdf format, and such other assistance as is
reasonably necessary in order for the Company once each year to have the annual
report and semi-annual report for the Contracts (collectively, the "Contract
Reports") and the Fund Reports printed together or separately. The Company may
also elect to print the Fund Reports in combination with other fund companies'
annual reports and semi-annual reports. For purposes hereof, any combined annual
reports and semi-annual reports including the Fund Reports along with the
Contract Reports or annual reports and semi-annual reports of other fund
companies shall be referred to as "Combined Reports." For purposes hereof, the
term "Fund Portion of the Combined Reports" shall refer to the percentage of the
number of Fund Reports pages in the Combined Reports in relation to the total
number or pages of the Combined Reports.
3.2 Expenses
3.2(a) Expenses Borne by Company. Except as otherwise provided in this Section
3.2., all expenses of preparing, setting in type and printing and distributing
(i) Contract Prospectuses, Fund Prospectuses, and Combined Prospectuses; (ii)
Fund SAIs, Contract SAIs, and Combined SAIs; (iii) Fund Reports, Contract
Reports, and Combined Reports, and (iv) Contract proxy material that the Company
may require in sufficient quantity to be sent to Contract owners, annuitants, or
participants under Contracts (collectively, the "Participants"), shall be the
expense of the Company.
3.2(b) Expenses Borne by Fund
Fund Prospectuses
With respect to existing Participants, the Fund shall pay the cost of setting in
type and printing Fund Prospectuses made available by the Company to such
existing Participants in order to update disclosure as required by the 1933 Act
and/or the 1940 Act. With respect to existing Participants, in the event the
Company elects to prepare a Combined Prospectus, the Fund shall pay the cost of
setting in type and printing the Fund Portion of the Combined Prospectus made
available by the Company to its existing Participants in order to update
disclosure as required by the 1933 Act and/or the 1940 Act. In such event, the
Fund shall bear the cost of typesetting to provide the Fund Prospectus to the
Company in the format in which the Fund is accustomed to formatting prospectus.
Notwithstanding the foregoing, in no event shall the Fund pay for any such costs
that exceed by more than five (5) percent what the Fund would have paid to print
such documents. The Fund shall not pay any costs of typesetting and printing the
Fund Prospectus (or Combined Prospectus, if applicable) to prospective
Participants.
Fund SAIs, Fund Reports and Proxy Material
With respect to existing Participants, the Fund shall pay the cost of setting in
type and printing Fund SAIs, Fund Reports and Fund proxy material made available
by the Company to its existing Participants. With respect to existing
Participants, in the event the Company elects to prepare a Combined SAI or
Combined Reports, the Fund shall pay the cost of setting in type and printing
the Fund Portion of the Combined SAI or Combined Reports, respectively, made
available by the Company to its existing Participants. In such event, the Fund
shall bear the cost of typesetting to provide the Fund SAI or Fund Reports to
the Company in the format in which the Fund is accustomed to formatting
statements of additional information and annual and semi-annual reports.
Notwithstanding the foregoing, in no event shall the Fund pay for any such costs
that exceed by more than five (5) percent what the Fund would have paid to print
such documents.
The Company agrees to provide the Fund or its designee with such information as
may be reasonably requested by the Fund to assure that the Fund's expenses do
not include the cost of typesetting, printing or distributing any of the
foregoing documents other than as described above.
3.3. The Fund SAI shall be obtainable from the Fund, the Company or such other
person as the Fund may designate.
3.4. If and to the extent required by law the Company shall distribute all proxy
material furnished by the Fund to Participants to whom voting privileges are
required to be extended and shall:
(i) solicit voting instructions from Participants;
(ii) vote the Fund shares in accordance with instructions received from
Participants; and
(iii) vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such Portfolio for which instructions
have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. The Company
reserves the right to vote Fund shares held in any segregated asset account in
its own right, to the extent permitted by law. The Fund and the Company shall
follow the procedures, and shall have the corresponding responsibilities, for
the handling of proxy and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by reference. Participating
Insurance Companies shall be responsible for ensuring that each of their
separate accounts participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth on Schedule C, which standards
will also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular the Fund will either provide for annual
meetings (except insofar as the Securities and Exchange Commission may interpret
Section 16 not to require such meetings) or comply with Section 16(c) of the
1940 Act (although the Fund 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, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee, each piece of sales literature or other promotional material
prepared by the Company or any person contracting with the Company in which the
Fund or the Distributor is named, at least ten Business Days prior to its use.
No such material shall be used if the Fund, the Distributor, or their designee
reasonably objects to such use within five Business Days after receipt of such
material.
4.2. Neither the Company nor any person contracting with the Company shall give
any information or make any representations or statements on behalf of the Fund
or concerning the Fund in connection with the sale of the Contracts other than
the information or representations contained in the registration statement or
the Fund Prospectus, as such registration statement or Fund Prospectus may be
amended or supplemented from time to time, or in reports or proxy statements for
the Fund, or in sales literature or other promotional material approved by the
Fund or its designee, except with the written permission of the Fund.
4.3. The Fund or its designee shall furnish, or shall cause to be furnished, to
the Company or its designee, each piece of sales literature or other promotional
material prepared by the Fund in which the Company or its Account(s) are named
at least ten Business Days prior to its use. No such material shall be used if
the Company or its designee reasonably objects to such use within five
Business Days after receipt of such material.
4.4. Neither the Fund nor the Distributor shall give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports or solicitations for voting instructions for
each Account which are in the public domain or approved by the Company for
distribution to Participants, or in sales literature or other promotional
material approved by the Company or its designee, except with the written
permission of the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the investment
in an Account or Contract contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials.
ARTICLE V. [Reserved]
ARTICLE VI. Diversification
6.1. The Fund represents, that it and each Portfolio will use its best efforts
at all times to comply with Section 817(h) of the Code and Treasury Regulation
1.817-5, relating to the diversification requirements for variable annuity,
endowment, or life insurance contracts and any
amendments or other modifications to such Section or Regulations. In the event a
Portfolio ceases to so qualify, the Fund will take all reasonable steps (a) to
notify the Company of such breach and (b) to adequately diversify the Portfolio
so as to achieve compliance within the grace period afforded by Regulation
817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract owners and variable life insurance contract owners;
or (f) a decision by a Participating Insurance Company to disregard the voting
instructions of Contract owners. The Board shall promptly inform the Company if
it determines that an irreconcilable material conflict exists and the
implications thereof.
7.2. The Company will report any potential or existing material irreconcilable
conflicts of which it is aware to the Board. The Company will assist the Board
in carrying out its responsibilities under the Shared Funding Exemptive Order,
by providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner voting
instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested directors, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the Separate Accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
owners, or variable Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
7.4. If a material irreconcilable conflict arises because of a decision by the
Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and these responsibilities will
be carried out with a view only to the interests of Contract owners.
7.5. For purposes of Sections 7.3 and 7.4 of this Agreement, a majority of the
disinterested members of the Board shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. The
Company shall not be required by Section 7.3 or 7.4 to establish a new funding
medium for the Contracts if an offer to do so has been declined by vote of a
majority of Contract owners materially adversely affected by the irreconcilable
material conflict.
7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act
or the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable.
7.7 The Company and the Distributor shall at least annually submit to the Board
of the Fund such reports, materials or data as the Board may reasonably request
so that the Board may fully carry out the obligations imposed upon them by the
provisions hereof, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Board. All reports received by the Board
of potential or existing conflicts, and all Board action with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies of a conflict, and determining whether any proposed action adequately
remedies a conflict, shall be properly recorded in the minutes of the Board or
other appropriate records, and such minutes or other records shall be made
available to the SEC upon request.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a) The Company agrees to indemnify and hold harmless the Fund and each
member of its Board and officers, and the Distributor and each director and
officer of the Distributor, and each person, if any, who controls the Fund or
the Distributor within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" and individually, "Indemnified
Party," for purposes of this Section 8.1) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Contracts or contained in the
Contracts or sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the Company by or
on behalf of the Fund for use in the registration statement or
prospectus for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of any statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the Fund not
supplied by the Company or persons under its control and other than
statements or representations authorized by the Fund or the
Distributor) or unlawful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration
statement, prospectus, or sales literature of the Fund or any
amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading if
such a statement or omission was made in reliance upon and in
conformity with information furnished to the Fund by or on behalf of
the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement;
or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company.
8.1(b). Notwithstanding Section 8.1(a) above, the Company shall not be liable
under this indemnification provision with respect to any losses, claims,
damages, liabilities or litigation incurred or assessed against an Indemnified
Party as such may arise from such Indemnified Party's willful misfeasance, bad
faith, or gross negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement.
8.1(c). Notwithstanding Section 8.1(a) above, the Company shall not be liable
under this indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the Company
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability which
it may have to the Indemnified Party against whom such action is brought unless
the Company is materially prejudiced by failure to notify. In case any such
action is brought against the Indemnified Parties, the Company shall be entitled
to participate, at its own expense, in the defense of such action. The Company
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Company to such Party of
the Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses under this Agreement for any legal or other
expenses subsequently incurred by such Party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2. Indemnification by the Distributor
8.2(a). The Distributor agrees, with respect to each Portfolio that it serves as
principal underwriter, to indemnify and hold harmless the Company and each of
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" and individually, "Indemnified Party," for purposes of this Section
8.2) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Distributor) or litigation
(including legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the operation of the Distributor or the Fund and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Distributor or the Fund
by or on behalf of the Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Contracts not supplied by the
Distributor or persons under its control and other than statements or
representations authorized by the Company) or unlawful conduct of the
Distributor or persons under its control, with respect to the sale or
distribution of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished in writing to the
Company by or on behalf of the Distributor; or
(iv) arise as a result of any failure by the Distributor to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Distributor in this Agreement or arise out of
or result from any other material breach of this Agreement by the Fund or
the Distributor; including without limitation any failure by the Fund to
comply with the conditions of Article VI hereof.
8.2(b).The Distributor shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
8.2(c). The Distributor shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Distributor in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Distributor of
any such claim shall not relieve the Distributor from any liability
which it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Distributor will be
entitled to participate, at its own expense, in the defense thereof. The
Distributor also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Distributor
to such Party of the Distributor's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Distributor will not be liable to such Party under this
Agreement for any legal or other expenses subsequently incurred by such Party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d). The Company agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against it or any of its officers,
trustees or directors in connection with this Agreement, the issuance or sale of
the Contracts with respect to the operation of each Account, or the sale or
acquisition of shares of the Fund.
8.2(e). It is understood that these indemnities shall have no effect on any
other agreement or arrangement between the Fund and/or its series and the
Distributor.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the first to
occur of:
(a) termination by any party for any reason upon six-months advance written
notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said termination
to be effective ten (10) days after receipt of notice unless the Fund makes
available a sufficient number of shares to reasonably meet the requirements
of the Account within said ten (10) day period; or
(c) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment medium of the Contracts issued or to be
issued by the Company. The terminating party shall give prompt notice to
the other parties of its decision to terminate; or
(d) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Distributor with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Distributor by written notice to
the Company if the Distributor or the Fund shall determine, in its sole
judgment exercised in good faith, that the Company and/or its affiliated
companies has suffered a material adverse change in its business,
operations, financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity and as a result
ability to perform obligations under this Agreement is materially impaired,
provided that the Fund or the Distributor will give the Company sixty (60)
days' advance written notice of such determination of its intent to
terminate this Agreement, and provided further that after consideration of
the actions taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the Fund or the
Distributor shall continue to apply on the 60th day since giving of such
notice, then such 60th day shall be the effective date of termination; or
(g) termination by the Company by written notice to the Fund and the
Distributor, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Distributor (with respect to the
appropriate Portfolio) has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity; provided
that the Fund or the Distributor will give the Company sixty (60) days'
advance written notice of such determination of its intent to terminate
this Agreement, and provided further that after consideration of the
actions taken by the Company and any other changes in circumstances since
the giving of such notice, the determination of the Company shall continue
to apply on the 60th day since giving of such notice, then such 60th day
shall be the effective date of termination; or
(h) termination by the Company in the event that formal administrative
proceedings are instituted against the Fund or Distributor by the NASD, the
SEC, or any state securities or insurance department or any other
regulatory body in respect of the sale of shares of the Fund to the
Company, provided, however, that the Company determines in its sole
judgment exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Fund or the
Distributor to perform its obligations under this Agreement; or
(i) termination by the Fund or the Distributor by written notice to the
Company, if the Company gives the Fund and the Distributor the written
notice specified in Section 1.6 hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective sixty (60) days after the notice
specified in Section 1.6 was given; or
(j) termination by any party upon the other party's breach of any
representation in Section 2 or any material provision of this Agreement,
which breach has not been cured to the satisfaction of the terminating
party within ten (10) days after written notice of such breach is delivered
to the Fund or the Company, as the case may be; or
(k) termination by the Fund or the Distributor by written notice to the
Company in the event an Account or Contract is not registered or sold in
accordance with applicable federal or state law or regulation, or the
Company fails to provide pass-through voting privileges as specified in
Section 3.4; provided that the Fund or the Distributor will give the
Company sixty (60) days' advance written notice of such intent.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts") unless such further sale of Fund shares is proscribed by law,
regulation or applicable regulatory body, or unless the Fund determines
that liquidation of the Fund following termination of this Agreement is in
the best interests of the Fund and its shareholders. Specifically, without
limitation, the owners of the Existing Contracts shall be permitted to
direct reallocation of investments in the Fund, redemption of investments
in the Fund and/or investment in the Fund upon the making of additional
purchase payments under the Existing Contracts. The parties agree that this
Section 10.2 shall not apply to any terminations under Article VII and the
effect of such Article VII terminations shall be governed by Article VII of
this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's
assets held in the Account) except (i) as necessary to implement Contract
Owner initiated or approved transactions, or (ii) as required by state
and/or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption") or
(iii) as permitted by an order of the SEC pursuant to Section 26(b) of the
1940 Act. Upon request, the Company will promptly furnish to the Fund the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Distributor) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the appropriate Distributor 90 days prior
written notice of its intention to do so.
10.4. Notwithstanding any termination of this Agreement pursuant to Article
X hereof, all rights and obligations arising under Article VIII of this
Agreement shall survive. .
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at
such other address as such party may from time to time specify in writing
to the other party.
If to the Fund:
Royce Capital Fund
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to the Distributor:
Royce Fund Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
If to the Company:
American United Life Insurance Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xx 00000
Attn: Xxxxxxx Xxxxxx
ARTICLE XII. Foreign Tax Credits
The Fund and the Distributor agree to consult with the Company concerning
whether any Portfolio of the Fund qualifies to provide a foreign tax credit
pursuant to Section 853 of the Code.
ARTICLE XIII. Miscellaneous
13.1. All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the Board,
officers, agents or shareholders assume any personal liability for obligations
entered into on behalf of the Fund.
13.2. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
13.3. The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
13.4. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
13.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
13.6. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement are
cumulative and
are in addition to any and all rights, remedies and obligations at law or in
equity, which the parties hereto are entitled to under state and federal laws.
13.8. This Agreement or any of the rights and obligations hereunder may not be
assigned by any party without the prior written consent of all parties hereto;
provided, however, that the Distributor may assign this Agreement or any rights
or obligations hereunder to any affiliate of or company under common control
with the Distributor, if such assignee is duly licensed and registered to
perform the obligations of the Distributor under this Agreement.
13.9 The Company shall furnish, or shall cause to be furnished, to the Fund or
its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical and in any event within
90 days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory) (and GAAP, if
any), as soon as practical and in any event within 45 days after the end of
each semi-annual period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders and/or policyholders;
(d) any registration statement (without exhibits) and financial reports of
the Company filed with the SEC or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
13.10. The Company hereby acknowledges that the Fund has notified the
Company that it may be appropriate for its separate account prospectuses or
offering memoranda to contain disclosure regarding the potential risks of
mixed and shared funding.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized
representative hereto as of the date specified above.
American United Life Insurance Company on behalf of itself and each of its
Accounts named in Schedule B hereto, as amended from time to time.
By:
Name:
Title:
ROYCE FUND SERVICES, INC.
By:
Name: Xxxx X. Xxxxxxxxx
Title: President
ROYCE CAPITAL FUND
By:
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
SCHEDULE A
PORTFOLIOS OF ROYCE CAPITAL FUND
FUNDS AVAILABLE FOR
PURCHASE BY American United Life Insurance Company
Royce Capital Fund - Micro-Cap Portfolio
Royce Capital Fund - Small-Cap Portfolio
SCHEDULE B
SEPARATE ACCOUNTS AND CONTRACTS
Separate Account
AUL American Individual Unit Trust
AUL American Individual Variable Universal Life
AUL American Individual Variable Annuity
AUL American Individual Variable Annuity B
Contracts
Voyage Protector - Individual Flexible Premium Deferred Variable Annuity
StarPoint - Individual Flexible Premium Deferred Variable Annuity
DirectPoint -Individual Flexible Premium Deferred Variable Annuity
SelectPoint - Individual Flexible Premium Deferred Variable Annuity
IVA - AUL American Individual Unit Trust Individual Variable Annuity Contracts
FPVUL - Flexible Premium Adjustable Variable Life
SPVUL - Modified Single Premium Variable Life
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as possible
before the date set by the Fund for the shareholder meeting to enable the
Company to consider and prepare for the solicitation of voting instructions from
owners of the Contracts and to facilitate the establishment of tabulation
procedures. At this time the Fund will inform the Company of the Record, Mailing
and Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of units
which are attributed to each contract owner/policyholder (the "Customer") as of
the Record Date. Allowance should be made for account adjustments made after
this date that could affect the status of the Customers' accounts as of the
Record Date.
Note: The number of proxy statements is determined by the activities described
in this Step #2. The Company will use its best efforts to call in the number of
Customers to the Fund , as soon as possible, but no later than two weeks after
the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall produce
and personalize the Voting Instruction Cards. The Fund or its affiliate must
approve the Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes (already
on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
4. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices and
statements will be sent to Company for insertion into envelopes (envelopes and
return envelopes are provided and paid for by the Company). Contents of envelope
sent to Customers by the Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company or its
tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single sheet
of paper that requests Customers to vote as quickly as possible and that their
vote is important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved in
advance by the Fund.
5. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
6. Package mailed by the Company. * The Fund must allow at least a 15-day
solicitation time to the Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days from (but not
including,) the meeting, counting backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place in
another department or another vendor depending on process used. An often used
procedure is to sort Cards on arrival by proposal into vote categories of all
yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information would
be due to an insurance company's internal procedure and has not been required by
the Fund in the past.
8. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card and is the
signature needed on the Card.
9. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent
back to Customer with an explanatory letter and a new Card and return envelope.
The mutilated or illegible Card is disregarded and considered to be not received
for purposes of vote tabulation. Any Cards that have been "kicked out" (e.g.
mutilated, illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are usually
remedied individually.
10. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the Cards
as they first arrive into categories depending upon their vote; an estimate of
how the vote is progressing may then be calculated. If the initial estimates and
the actual vote do not coincide, then an internal audit of that vote should
occur. This may entail a recount.
11. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated in
terms of a percentage and the number of shares.) The Fund must review and
approve tabulation format.
12. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund may
request an earlier deadline if reasonable and if required to calculate the vote
in time for the meeting.
13. A Certification of Mailing and Authorization to Vote Shares will be required
from the Company as well as an original copy of the final vote. The Fund will
provide a standard form for each Certification.
14. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise necessary
for legal, regulatory, or accounting purposes, the Fund will be permitted
reasonable access to such Cards.
15. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
L:\COMMON\ktroise\Agreements\One America RCF Part Agmt 4.9.08.doc
6
AGREEMENT
THIS AGREEMENT ("Agreement") made as of __________, 2008, is by and between
ROYCE FUND SERVICES, INC., a New York corporation ("Distributor") and American
United Life Insurance Company, a life insurance company organized under the laws
of the State of Indiana ("AUL").
W I T N E S S E T H :
WHEREAS, Royce Capital Fund, the investment company listed on Schedule One
hereto ("Schedule One", as the same may be amended from time to time), is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "Act") (each series of such investment
company is hereinafter called a "Fund" ); and
WHEREAS, each Fund is available as an investment vehicle for certain separate
accounts of AUL, established for variable life insurance policies and/or
variable annuity contracts offered by AUL (the "Separate Account," whether one
or more); and
WHEREAS, has entered into a participation agreement dated as of the date hereof
among AUL, Distributor and Royce Capital Fund, (the "Participation Agreement,"
as amended from time to time); and
WHEREAS, Distributor is the principal underwriter of the Funds; and
WHEREAS, Distributor desires AUL to provide the administrative services
specified in the attached Exhibit A ("Administrative Services"), in connection
with the ownership of interests of the Separate Account, which, in turn, is the
owner of shares of the Funds for the benefit of persons who own contracts
supported by investments in the Separate Account, whose interests are included
in the master account ("Master Account") referred to in paragraph 1, of Exhibit
A ("Shareholders"), and AUL is willing and able to provide such Administrative
Services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, each party hereto severally agrees as follows:
1. AUL agrees to perform the Administrative Services specified in Exhibit A
hereto for the benefit of the Shareholders.
2. AUL represents and agrees that it will maintain and preserve all records as
required by law to be maintained and preserved in connection with providing the
Administrative Services, and will otherwise comply with all laws, rules and
regulations applicable to the Administrative Services.
3. AUL may, with the consent of Distributor, contract with or establish
relationships with other parties for the provision of the Administrative
Services or other activities of AUL required by this Agreement, or the
Participation Agreement, provided that AUL shall be fully responsible for the
acts and omissions of such other parties.
4. AUL hereby agrees to notify Distributor promptly if for any reason it is
unable to perform fully and promptly any of its obligations under this
Agreement.
5. The provisions of the Agreement shall in no way limit the authority of
Distributor or the Funds to take such action as any of such parties may deem
appropriate or advisable in connection with all matters relating to the
operations of any Fund and/or sale of its shares.
6. In consideration of the performance of the Administrative Services by AUL,
Distributor agrees to pay AUL a quarterly fee at an annual rate which shall
equal .25% of the value of the average daily net assets of the Service Class
shares of each Fund maintained in the Master Account for the Shareholders. The
foregoing fee will be paid by Distributor to AUL on a calendar quarterly basis,
and in this regard, payment of such fee will be made by Distributor to AUL
within thirty (30) days following the end of each calendar quarter. The
determination of applicable assets shall be made by averaging assets of
applicable Service Class shares of the Funds maintained in the Master Account
for the Shareholders, as of the last Business Day (as defined in the
Participation Agreement) of each month falling within the applicable calendar
quarter. AUL acknowledges that Distributor's payments may be funded, in whole or
in part, by payments received from a Fund under a plan of distribution adopted
by the Fund pursuant to Rule 12b-1 under the Act; if this is the case, AUL will
provide such information to Distributor as is reasonably necessary to comply
with its obligations under the 12b-1 Plan, including but not limited to,
obligations to make disclosures to the board of trustees of the Fund.
Notwithstanding anything in this Agreement or the Participation Agreement
appearing to the contrary, the payments by Distributor to AUL relate solely to
the performance by AUL of the Administrative Services described herein only, and
do not constitute payment in any manner for services provided by AUL to AUL
policy or contract owners, or to any separate account organized by AUL, or for
any investment advisory services, or for costs associated with the distribution
of any variable annuity or variable life insurance contracts.
7. AUL shall indemnify and hold harmless the Funds, Distributor and each of
their respective officers, Directors, employees and agents from and against any
and all losses, claims, damages, expenses, or liabilities that any one or more
of them may incur including without limitation reasonable attorneys' fees,
expenses and costs arising out of or related to the performance or
non-performance by AUL of the Administrative Services under this Agreement.
8. This Agreement may be terminated without penalty at any time by AUL or by
Distributor as to one or more of the Funds, upon ninety (90) days written notice
to the other party. Notwithstanding the foregoing, the provisions of paragraphs
2, 3, 9 and 11 of this Agreement, shall continue in full force and effect after
termination of this Agreement.
This Agreement shall not require AUL to preserve any records (in any medium or
format) relating to this Agreement beyond the time periods otherwise required by
the laws to which AUL or the Funds are subject provided that such records shall
be offered to the Funds in the event AUL decides to no longer preserve such
records following such time periods.
9. After the date of any termination of this Agreement in accordance with
paragraph 10 of this Agreement, no fee will be due with respect to any amounts
first placed in the Master Account for the benefit of Shareholders after the
date of such termination. However, notwithstanding any such termination,
Distributor will remain obligated to pay AUL the fee specified in paragraph 6 of
this Agreement, with respect to the value of each Fund's Service Class shares'
average daily net assets maintained in the Master Account as of the date of such
termination, for so long as such amounts are held in the Master Account and AUL
continues to provide the Administrative Services with respect to such amounts in
conformity with this Agreement. This Agreement, or any provisions hereof, shall
survive termination to the extent necessary for each party to perform its
obligations with respect to amounts for which a fee continues to be due
subsequent to such termination.
10. AUL understands and agrees that the obligations of Distributor under this
Agreement are not binding upon any Fund, upon any of their Board members or upon
any shareholder of any of the Funds.
11. It is understood and agreed that in performing the services under this
Agreement AUL, acting in its capacity described herein, shall at no time be
acting as an agent for Distributor or the Funds. AUL agrees, and agrees to cause
its agents, not to make any representations concerning the Funds except those
contained in each Fund's then-current prospectus; in current sales literature
furnished by the Funds or Distributor to AUL; in the then-current prospectus for
a variable annuity contract or variable life insurance policy issued by AUL or
then-current sales literature with respect to such variable annuity contract or
variable life insurance policy, approved by the Distributor.
12. AUL represents and warrants that it will adhere to all applicable anti-money
laundering rules and regulations in fulfilling its obligations under this
Agreement.
13. AUL and the Distributor agree that all non-public records, information, and
data relating to the business of the other (including customer names and
information and portfolio holdings information) that are exchanged or negotiated
pursuant to this Agreement or in carrying out this Agreement shall remain
confidential, and shall not be voluntarily disclosed by either party without the
prior written consent of the other party, except as may be required by law or by
such party to carry out this Agreement or an order of an court, governmental
agency or regulatory body.
14. This Agreement shall be governed by the laws of the State of New York,
without giving effect to the principles of conflicts of law of such
jurisdiction.
15. This Agreement, including Exhibit A and Schedule One hereto, constitutes the
entire agreement between the parties with respect to the matters dealt with
herein and supersedes any previous agreements, other than the Participation
Agreement and documents with respect to such matters. The parties agree that
Schedule One may be replaced from time to time with a new Schedule One to
accurately reflect any changes in the Fund available as investment vehicles
under the Participation Agreement.
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
_________________________________
By: ____________________________
ROYCE FUND SERVICES, INC.
By: ____________________________
Xxxx X. Xxxxxxxxx
President
SCHEDULE ONE
Investment Company: Available Funds:
Royce Capital Fund Royce Small-Cap Portfolio - Investment Class
and Service Class
Royce Micro-Cap Portfolio - Investment Class
and Service Class
EXHIBIT A
Pursuant to the Agreement by and among the parties hereto, AUL shall perform the
following Administrative Services:
1. Maintain separate records for each Shareholder, which records shall reflect
shares purchased and redeemed for the benefit of the Shareholder and share
balances held for the benefit of the Shareholder. AUL shall maintain the Master
Account with the transfer agent of each Fund on behalf of Shareholders and such
Master Account shall be in the name of AUL or its nominee as the record owner of
the shares held for such Shareholders.
2. For each Fund, disburse or credit to Shareholders all proceeds of redemptions
of shares of the Fund and all dividends and other distributions not reinvested
in shares of the Fund or paid to the Separate Account holding the Shareholders'
interests.
3. Prepare and transmit to Shareholders periodic account statements showing the
total number of shares held for the benefit of the Shareholder as of the
statement closing date (converted to interests in the Separate Account),
purchases and redemptions of Fund shares for the benefit of the Shareholder
during the period covered by the statement, and the dividends and other
distributions paid for the benefit of the Shareholder during the statement
period (whether paid in cash or reinvested in Fund shares).
4. Transmit to Shareholders proxy materials and reports and other information
received by AUL from any Fund and required to be sent to Shareholders under the
federal securities laws and, upon request of any of the Fund's transfer agent,
transmit to Shareholders material Fund communications deemed by the Fund,
through its Board of Directors or other similar governing body, to be necessary
and proper for receipt for all Fund beneficial shareholders.
5. Transmit to each Fund's transfer agent purchase and redemption orders on
behalf of Shareholders.
6. Provide to the Fund, or to the transfer agent for any Fund, or any of the
agents designated by any of them, such periodic reports as shall reasonably be
concluded to be necessary to enable each Fund to comply with any applicable
State Blue Sky requirements.
L:\COMMON\ktroise\Agreements\One America RCF Svcs Agmt 4.9.08.doc
