FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the ___ day of ________,, by and between Lord
Xxxxxx Series Fund, Inc. ("FUND"), a Maryland Corporation, Lord, Xxxxxx & Co.
("ADVISER"), a _____________________, and GREAT AMERICAN RESERVE INSURANCE
COMPANY (the "COMPANY"), a life insurance company organized under the laws of
the State of Indiana.
WHEREAS, FUND is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the " 40 Act"),
as an open-end, diversified management investment company; and
WHEREAS, FUND is organized as a series fund comprised of several
Portfolios ("Portfolios"), those currently available are listed on Appendix A
hereto; and
WHEREAS, FUND was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable
Contracts") offered by life insurance companies through separate accounts
("Separate Accounts") of such life insurance companies ("Participating
Insurance Companies") and also offers its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, FUND intends to apply for an order from the SEC, granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Portfolios of the Fund to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and Qualified Plans ("Exemptive
Order"); and
WHEREAS, the COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having FUND as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, ADVISER is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and as a broker-dealer under the
Securities Exchange Act of 1934, as amended and acts as the FUND's investment
adviser and its subsidiary Lord Xxxxxx Distributors LLC, a New York limited
liability Company (the "Distributor") acts as principal underwriter; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the COMPANY intends to purchase shares of FUND to fund the
aforementioned Variable Contracts and FUND is authorized to sell such shares
to the COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the COMPANY,
FUND, and ADVISER agree as follows:
Article I. SALE OF FUND SHARES
1.1 FUND agrees to make available to the Separate Accounts of the
COMPANY shares of the selected Portfolios as listed on Appendix B for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in FUND's Registration Statement.
1.2 FUND agrees to sell to the COMPANY those shares of the selected
Portfolios of Fund which the COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by FUND or its
designee of the order for the shares of FUND. For purposes of this Section
1.2, the COMPANY shall be the designee of FUND for receipt of such orders from
the designated Separate Account and receipt by such designee shall constitute
receipt by FUND; provided that the COMPANY receives the order by 4:00 p.m. New
York time and FUND receives notice from the COMPANY by telephone or facsimile
(or by such other means as FUND and the COMPANY may agree in writing) of such
order by 9:00 a.m. New York 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 FUND calculates its net asset value pursuant to the
rules of the SEC.
1.3 FUND agrees to redeem on the COMPANY's request, any full or
fractional shares of FUND held by the COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by FUND or its
designee of the request for redemption, in accordance with the provisions of
this agreement and FUND's Registration Statement. For purposes of this
Section 1.3, the COMPANY shall be the designee of FUND for receipt of requests
for redemption from the designated Separate Account and receipt by such
designee shall constitute receipt by FUND; provided that the COMPANY receives
the request for redemption by 4:00 p.m. New York time and FUND receives notice
from the COMPANY by telephone or facsimile (or by such other means as FUND and
the COMPANY may agree in writing) of such request for redemption by 9:00 a.m.
New York time on the next following Business Day.
1.4 FUND shall furnish, on or before the ex-dividend date, notice to the
COMPANY of any income dividends or capital gain distributions payable on the
shares of any Portfolios of FUND. The COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. FUND shall notify
the COMPANY or its designee of the number of shares so issued as payment of
such dividends and distributions.
1.5 FUND shall make the net asset value per share for the selected
Portfolio(s) available to the COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use
its best efforts to make such net asset value available by 6:30 p.m. New York
time. In the event that FUND is unable to meet the 6:30 p.m. time stated
herein, it shall provide additional time for the COMPANY to place orders for
the purchase and redemption of shares. Such additional time shall be equal to
the additional time which FUND takes to make the net asset value available to
the COMPANY. If FUND provides the COMPANY with materially incorrect share net
asset value information through no fault of the COMPANY, the COMPANY on behalf
of the Separate Accounts, shall be entitled to an adjustment to the number of
shares purchased or redeemed to reflect the correct share net asset value.
Any material error in the calculation of net asset value per share, dividend
or capital gain information shall be reported promptly upon discovery to the
COMPANY. If a Separate Account due to such error has received amounts in
excess of the amounts to which it is entitled, the COMPANY, when requested by
FUND, shall make adjustments to the Separate Account to reflect the change in
the values of the shares as reflected in the unit values of the affected
Variable Contract owners who still have values in the Portfolio. When making
adjustments for an error, the FUND shall not net same day transactions in a
Separate Account. No adjustment for an error shall be taken in any Separate
Account until such time as the parties hereto have agreed to a resolution of
the error, but the parties shall use all reasonable efforts to reach such
agreement within two business days after the discovery of the error.
1.6 At the end of each Business Day, the COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar
amount of FUND shares which shall be purchased or redeemed at that day's
closing net asset value per share. The net purchase or redemption orders so
determined shall be transmitted to FUND by the COMPANY by 9:00 a.m. New York
Time on the Business Day next following the COMPANY's receipt of such requests
and premiums in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If the COMPANY's order requests the purchase of FUND shares, the
COMPANY shall pay for such purchase by wiring federal funds to FUND or its
designated custodial account on the day the order is transmitted by the
COMPANY. If the COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to the COMPANY, FUND shall use its best efforts
to wire the redemption proceeds to the COMPANY by the next Business Day,
unless doing so would require FUND to dispose of Portfolio securities or
otherwise incur additional costs. In any event, proceeds shall be wired to
the COMPANY within three Business Days or such longer period permitted by the
'40 Act or the rules, orders or regulations thereunder and FUND shall notify
the person designated in writing by the COMPANY as the recipient for such
notice of such delay by 3:00 p.m. New York Time the same Business Day that the
COMPANY transmits the redemption order to FUND. If the COMPANY's order
requests the application of redemption proceeds from the redemption of shares
to the purchase of shares of another Portfolio advised by ADVISER, FUND shall
so apply such proceeds the same Business Day that the COMPANY transmits such
order to FUND.
1.8 FUND agrees that all shares of the Portfolios of FUND will be sold
only to Participating Insurance Companies which have agreed to participate in
FUND to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of
the Portfolios of FUND will not be sold directly to the general public.
1.9 FUND may refuse to sell shares of any Portfolios to any person, or
suspend or terminate the offering of the shares of any Portfolios if such
action is required by law or by regulatory authorities having jurisdiction or
is, in the sole discretion of the Board of Directors of the FUND (the
"Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in
the best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to the COMPANY or the Separate
Accounts. Shares ordered from Portfolios will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 The COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of Indiana and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws.
2.2 The COMPANY represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions
of the 40 Act and cause each Separate Account to remain so registered to
serve as a segregated asset account for the Variable Contracts, unless an
exemption from registration is available.
2.3 The COMPANY represents and warrants that the Variable Contracts will
be registered under the Securities Act of 1933 (the " 33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all
material respects with state insurance law suitability requirements.
2.4 The COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that
it will maintain such treatment and that it will notify FUND immediately upon
having a reasonable basis for believing that the Variable Contracts have
ceased to be so treated or that they might not be so treated in the future.
2.5 FUND represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold
in accordance with all applicable federal and state laws, and FUND shall be
registered under the 40 Act prior to and at the time of any issuance or sale
of such shares. FUND, subject to Section 1.9 above, shall amend its
registration statement under the 33 Act and the 40 Act from time to time as
required in order to effect the continuous offering of its shares. FUND shall
register and qualify its shares for sale in accordance with the laws of the
various states only if and to the extent deemed advisable by FUND.
2.6 FUND represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately
diversify the Portfolio to achieve compliance.
2.7 FUND represents and warrants that each Portfolio invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify the COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
2.8 ADVISER represents and warrants that Distributor is and will be a
member in good standing of the National Association of Securities Dealers,
Inc. ("NASD") and is and will be registered as a broker-dealer with the SEC.
ADVISER further represents that Distributor will sell and distribute Portfolio
shares in accordance with all applicable state and federal laws and
regulations, including without limitation the '33 Act, the '34 Act and the '40
Act.
2.9 ADVISER represents and warrants that it and Distributor are still and
will remain duly registered and licensed in all material respects under all
applicable federal and state securities laws and shall perform its obligations
hereunder in compliance in all material respects with any applicable state and
federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 FUND shall prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of FUND.
Except for the costs and fees the Distributor is obligated to pay pursuant to
its distribution agreement with the FUND, the FUND shall bear the costs of
registration and qualification of shares of the Portfolios, preparation and
filing of the documents listed in this Section 3.1 and all taxes and filing
fees to which an issuer is subject on the issuance and transfer of its shares.
3.2 At least annually, FUND or its designee shall provide the COMPANY,
free of charge, with as many copies of the current prospectus for the shares
of the Portfolios as the COMPANY may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
shares. FUND or its designee shall provide the COMPANY, at the COMPANY's
expense, with as many more copies of the current prospectus for the shares as
the COMPANY may reasonably request for distribution to prospective purchasers
of Variable Contracts. If requested by the COMPANY in lieu thereof, FUND or
its designee shall provide such documentation (including a "camera ready" copy
of the new prospectus as set in type or, at the request of the COMPANY, as a
diskette in the form sent to the financial printer) and other assistance as is
reasonably necessary in order for the parties hereto once a year (or more
frequently if the prospectus for the shares is supplemented or amended) to
have the prospectus for the Variable Contracts and the prospectus for the FUND
shares and any other fund shares offered as investments for the Variable
Contracts printed together in one document. The expenses of such printing will
be apportioned between (a) the COMPANY and (b) FUND in proportion to the
number of pages of the Variable Contract, other fund shares prospectuses and
the Fund shares prospectus, taking account of other relevant factors affecting
the expense of printing, such as covers, columns, graphs and charts; FUND to
bear the cost of printing the shares' prospectus portion of such document for
distribution only to owners of existing Variable Contracts funded by the FUND
shares and the COMPANY to bear the expense of printing the portion of such
documents relating to the Separate Account; provided, however, the COMPANY
shall bear all printing expenses of such combined documents where used for
distribution to prospective purchasers or to owners of existing Variable
Contracts not funded by the shares. In the event that the COMPANY requests
that FUND or its designee provide FUND's prospectus in a "camera ready" or
diskette format, FUND shall be responsible for providing the prospectus in the
format in which it is accustomed to formatting prospectuses and shall bear the
expense of providing the prospectus in such format (e.g. typesetting
expenses), and the Company shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses. Furthermore, the COMPANY
shall be reimbursed for distribution expenses as provided for in the
Distribution Plan attached hereto as Appendix C under the terms and conditions
set forth in such Distribution Plan.
3.3 FUND will provide the COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after
the filing of each such document with the SEC or other regulatory authority.
The COMPANY will provide FUND with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly
after the filing of each such document with the SEC or other regulatory
authority.
Article IV. SALES MATERIALS
4.1 The COMPANY will furnish, or will cause to be furnished, to FUND
and ADVISER, each piece of sales literature or other promotional material in
which FUND or ADVISER or DISTRIBUTOR is named, at least fifteen (15) Business
Days prior to its intended use. No such material will be used if FUND,
ADVISER or DISTRIBUTOR objects to its use in writing within ten (10) Business
Days after receipt of such material.
4.2 FUND and DISTRIBUTOR will furnish, or will cause to be furnished, to
the COMPANY, each piece of sales literature or other promotional material in
which the COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if the
COMPANY objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 FUND and its affiliates and agents shall not give any information or
make any representations on behalf of the COMPANY or concerning the COMPANY,
the Separate Accounts, or the Variable Contracts issued by the COMPANY, other
than the information or representations contained in a registration statement
or prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by the COMPANY or its designee, except with the written permission of
the COMPANY.
4.4 The COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of FUND , ADVISER or
DISTRIBUTOR or concerning FUND, ADVISER or DISTRIBUTOR other than the
information or representations contained in a registration statement or
prospectus for FUND, as such registration statement and prospectus may be
amended or supplemented from time to time, or in sales literature or other
promotional material approved by FUND, ADVISER or DISTRIBUTOR or its
designee, except with the written permission of FUND, ADVISER or DISTRIBUTOR,
as the case may be.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, 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 (such as any written communication
distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, or 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 National Association of
Securities Dealers, Inc. rules, the 40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that FUND intends to file an application with
the SEC to request an order granting relief from various provisions of the '40
Act and the rules thereunder to the extent necessary to permit FUND shares to
be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans. It is anticipated that the Exemptive Order, when and if
issued, shall require FUND and each Participating Insurance Company to comply
with conditions and undertakings substantially as provided in this Section 5.
If the Exemptive Order imposes conditions materially different from those
provided for in this Section 5, the conditions and undertakings imposed by the
Exemptive Order shall govern this Agreement and the parties hereto agree to
amend this Agreement consistent with the Exemptive Order. The Fund will not
enter into a participation agreement with any other Participating Insurance
Company unless it imposes the same conditions and undertakings as are imposed
on the COMPANY hereby.
5.2 The Board will monitor FUND for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of
all separate accounts investing in FUND. An irreconcilable material conflict
may arise for a variety of reasons, which may include: (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 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 FUND are being
managed; (e) a difference in voting instructions given by variable annuity and
variable life insurance Contract owners; (f) a decision by a Participating
Insurance Company to disregard the voting instructions of Variable Contract
owners and (g) if applicable, a decision by a Qualified Plan to disregard the
voting instructions of plan participants.
5.3 The COMPANY will report any potential or existing conflicts to the
Board. The COMPANY will be responsible for assisting the Board in carrying
out its duties in this regard by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. The
responsibility includes, but is not limited to, an obligation by the COMPANY
to inform the Board whenever it has determined to disregard Variable Contract
owner voting instructions. These responsibilities of the COMPANY will be
carried out with a view only to the interests of the Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested
TRUSTEES, determines that a material irreconcilable conflict exists, affecting
the COMPANY, the COMPANY, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested
TRUSTEES), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from FUND or any Portfolio
thereof and reinvesting those assets in a different investment medium, which
may include another Portfolio of FUND, or another investment company; (b)
submitting the question as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and as appropriate,
segregating the assets of any appropriate group (i.e variable annuity or
variable life insurance Contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the
affected Variable Contract owners the option of making such a change; and (c)
establishing a new registered management investment company (or series
thereof) or managed separate account. If a material irreconcilable conflict
arises because of the COMPANY's decision to disregard Variable Contract owner
voting instructions, and that decision represents a minority position or would
preclude a majority vote, the COMPANY may be required, at the election of FUND
to withdraw the Separate Account's investment in FUND, and no charge or
penalty will be imposed as a result of such withdrawal. The responsibility to
take such remedial action shall be carried out with a view only to the
interests of the Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
FUND or ADVISER (or any other investment adviser of FUND) be required to
establish a new funding medium for any Variable Contract. Further, the
COMPANY shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely
affected by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the COMPANY.
5.6 No less than annually, the COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the
Board may fully carry out its obligations. Such reports, materials, and data
shall be submitted more frequently if deemed appropriate by the Board.
Article VI. VOTING
6.1 The COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the 40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the COMPANY, where applicable, will vote shares of the Portfolio
held in its Separate Accounts in a manner consistent with voting instructions
timely received from its Variable Contract owners. The COMPANY will be
responsible for assuring that each of its Separate Accounts that participates
in FUND calculates voting privileges in a manner consistent with other
Participating Insurance Companies. The COMPANY will vote shares for which it
has not received timely voting instructions, as well as shares it owns, in the
same proportion as its votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
40 Act or the rules thereunder with respect to mixed and shared funding on
terms and conditions materially different from any exemptions granted in the
Exemptive Order, then FUND, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule
6e-2 and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent
such Rules are applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by the COMPANY. The COMPANY agrees to indemnify and
hold harmless FUND, ADVISER and DISTRIBUTOR and each of their trustees,
directors, principals, officers, partners, employees and agents and each
person, if any, who controls FUND, ADVISER or DISTRIBUTOR within the meaning
of Section 15 of the 33 Act (collectively, the "Indemnified Parties" for
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the COMPANY, which consent shall not be unreasonably withheld) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
FUND's shares or the Variable Contracts and:
(a) 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 Variable Contracts or contained in the Variable
Contracts (or any amendment or supplement to any of the foregoing), -or arise
out of or are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and in conformity
with information furnished to the COMPANY by or on behalf of an Indemnified
Party for use in the registration statement or prospectus for the Variable
Contracts or in the Variable Contracts or sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of the
Variable Contracts or FUND shares; or
(b) 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 of FUND not supplied by the
COMPANY, or persons under its control) or wrongful conduct of the COMPANY or
persons under its control, with respect to the sale or distribution of the
Variable Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus, or sales
literature of 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 statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to FUND by or on
behalf of the COMPANY; or
(d) arise as a result of any failure by the COMPANY to provide
substantially the services and furnish the materials under the terms of this
Agreement; or
(e) 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.
7.2 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.
7.3 The COMPANY shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the COMPANY of
any such claim shall not relieve the COMPANY from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against an Indemnified Party, the COMPANY shall be entitled to
participate at its own expense in the defense of such action. The COMPANY also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from the COMPANY to such party of
the COMPANY's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the COMPANY will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.4 Indemnification by FUND. FUND agrees to indemnify and hold harmless
the COMPANY and each of its directors, officers, employees, and agents and
each person, if any, who controls the COMPANY within the meaning of Section 15
of the 33 Act (collectively, the "Indemnified Parties" for the purposes of
this Article VII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of ADVISER
which consent shall not be unreasonably withheld) 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 FUND's
shares or the Variable Contracts and:
(a) 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 of 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, pro-vided 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- FUND by or on
behalf of the COMPANY for use in the registration statement or prospectus for
FUND (or any amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or FUND shares; or
(b) 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 Variable Contracts not supplied by FUND
or persons under its control) or wrongful conduct of FUND or persons under
their control, with respect to the sale or distribution of the Variable
Contracts or FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement or prospectus covering the
Variable 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 statements therein not misleading, 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 for
inclusion therein by or on behalf of FUND; or
(d) arise as a result of (i) a failure by FUND to provide substantially
the services and furnish the materials under the terms of this Agreement; or
(ii) a failure by a Portfolio(s) invested in by the Separate Account to
comply with the diversification requirements of Section 817(h) of the Code; or
(iii) a failure by a Portfolio(s) invested in by the Separate Account to
qualify as a "regulated investment company" under Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by FUND in this Agreement or arise out of
or result from any other material breach of this Agreement by FUND.
7.5 Indemnification by ADVISER. ADVISER agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees, and
agents and each person, if any, who controls the COMPANY within the meaning of
Section 15 of the '33 Act (collectively, the "Indemnified Parties" for the
purposes of this Article VII) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
ADVISER which consent shall not be unreasonably withheld) 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 acquisitions of
FUND's shares or the Variable Contracts and:
(a) 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 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 ADVISER or
FUND by or on behalf of the COMPANY for use in the registration statement or
prospectus for FUND or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable Contracts or
FUND shares; or
(b) 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 Variable Contracts not
supplied by ADVISER or persons under its control) or wrongful conduct of FUND
of ADVISER or persons under their control, with respect to the sale or
distribution of the Variable Contracts or FUND shares; or
(c) arise out of and untrue statement or alleged untrue statement of
a material fact contained in a registration statement, prospectus, or sales
literature covering the Variable 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
statements therein not misleading, 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 for inclusion therein by or on behalf of
FUND; or
(d) arise as a result of (i) a failure by FUND to provide
substantially the services and furnish the materials under the terms of this
Agreement; or (ii) a failure by a Portfolio(s) invested in by the Separate
Account to comply with the diversification requirements of Section 817(h) of
the Code; or (iii) a failure by a Portfolio(s) invested in by the Separate
Account to qualify as a "regulated investment company" under Subchapter M of
the Code; or
(e) arise out of or result from any material breach of any
representation an/or warranty made by FUND or ADVISER in this Agreement or
arise out of or result from any other material breach of this Agreement by
FUND or ADVISER.
7.6 FUND or ADVISER shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by reason
of such Indemnified Party's reckless disregard of obligations and duties under
this Agreement.
7.7 FUND or ADVISER, as the case may be, 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 FUND or
ADVISER, as the case may be, 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 FUND or ADVISER of any such claim shall not
relieve FUND or ADVISER 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, FUND or ADVISER shall be entitled to
participate at its own expense in the defense thereof. FUND or ADVISER also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from FUND or ADVISER to such
party of FUND's or ADVISER's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and FUND or ADVISER 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.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the COMPANY or FUND at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to by the
parties;
(b) At the option of the COMPANY, if FUND shares are not reasonably
available to meet the requirements of the Variable Contracts as determined by
the COMPANY. Prompt notice of election to terminate shall be furnished by the
COMPANY, said termination to be effective ten days after receipt of notice
unless FUND makes available a sufficient number of shares to reasonably meet
the requirements of the Variable Contracts within said ten-day period;
(c) At the option of the COMPANY, upon the institution of formal
proceedings against FUND by the SEC, the National Association of Securities
Dealers, Inc., or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in the COMPANY's reasonable
judgment, materially impair FUND's ability to meet and perform FUND's
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by the COMPANY with said termination to be effective upon
receipt of notice;
(d) At the option of FUND, upon the institution of formal proceedings
against the COMPANY by the SEC, the National Association of Securities
Dealers, Inc., or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in FUND's reasonable judgment,
materially impair the COMPANY's ability to meet and perform its obligations
and duties hereunder. Prompt notice of election to terminate shall be
furnished by FUND with said termination to be effective upon receipt of
notice;
(e) In the event FUND's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the
use of such shares as the underlying investment medium of Variable Contracts
issued or to be issued by the COMPANY. Termination shall be effective upon
such occurrence without notice;
(f) At the option of FUND if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the Code,
or if FUND reasonably believes that the Variable Contracts may fail to so
qualify. Termination shall be effective upon receipt of notice by the
COMPANY;
(g) At the option of the COMPANY, upon FUND's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of the COMPANY within ten days after written notice of such
breach is delivered to FUND;
(h) At the option of FUND, upon the COMPANY's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of FUND within ten days after written notice of such breach is
delivered to the COMPANY;
(i) At the option of FUND, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or state
law. Termination shall be effective immediately upon such occurrence without
notice;
(j) In the event this Agreement is assigned without the prior written
consent of the COMPANY, FUND, and ADVISER, termination shall be effective
immediately upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, FUND at the option of the COMPANY will continue to make
available additional FUND shares, as provided below, pursuant to the terms and
conditions of this Agreement, for all Variable 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 or the COMPANY, whichever shall have legal authority to do
so, shall be permitted to reallocate investments in FUND, redeem investments
in FUND and/or invest in FUND upon the payment of additional premiums under
the Existing Contracts.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail
return receipt requested 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 FUND, or ADVISER.
Lord, Xxxxxx & Co.
The GM Building - 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxx
If to the COMPANY:
Great American Reserve Insurance Company
00000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxxx
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Indiana. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting
exemptive relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the Directors or officers of FUND
or any Portfolio shall be personally liable hereunder. No Portfolio shall be
liable for the liabilities of any other Portfolio. All persons dealing with
FUND or a Portfolio must look solely to the property of FUND or that
Portfolio, respectively, for enforcement of any claims against FUND or that
Portfolio. It is also understood that each of the Portfolios shall be deemed
to be entering into a separate Agreement with the COMPANY so that it is as if
each of the Portfolios had signed a separate Agreement with the COMPANY and
that a single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. 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.
10.7 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.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by FUND,
ADVISER and the COMPANY.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
FUND
By:_____________________________
Name:
Title:
ADVISER
By:_____________________________
Name:
Title:
GREAT AMERICAN RESERVE INSURANCE COMPANY
By:______________________________
Name:
Title:
APPENDIX A
FUND and its Portfolios
Lord Xxxxxx Series Fund, Inc. Growth and Income Portfolio
APPENDIX B
Separate Accounts Selected Portfolios
Variable Annuity Account G Growth and Income Portfolio
