EXHIBIT (8)(n)
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of October 2,
2000 by and between THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW
YORK (the "Company"), and AMERICAN CENTURY INVESTMENT SERVICES, INC.
("Distributor").
WHEREAS, the Company offers to the public certain group and individual
variable annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options under the
Contracts VP Balanced, VP Income & Growth, VP International and VP Value (the
"Funds"), each of which is a series of mutual fund shares registered under the
Investment Company Act of 1940, as amended, and issued by American Century
Variable Portfolios, Inc. (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds, and the Company is willing and able to furnish such
services;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of this
Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Accounts (defined in SECTION 7(A) below) through a single account per Fund at
the net asset value applicable to each order. The Funds' shares shall be
purchased and redeemed on a net basis in such quantity and at such time as
determined by the Company to satisfy the requirements of the Contracts for which
the Funds serve as underlying investment media. Dividends and capital gains
distributions will be automatically reinvested in full and fractional shares of
the Funds.
2. ADMINISTRATIVE SERVICES. The Company agrees to provide all administrative
services for the Contract owners, including but not limited to those services
specified in EXHIBIT A (the "Administrative Services"). Neither Distributor nor
the Issuer shall be required to provide Administrative Services for the benefit
of Contract owners. The Company agrees that it will maintain and preserve all
records as required by law to be maintained and preserved in connection with
providing the Administrative Services, and will otherwise comply with all laws,
rules and regulations applicable to the marketing of the Contracts and the
provision of the Administrative Services. Upon written request, the Company
will provide Distributor or its representatives reasonable information regarding
the quality of the Administrative Services being provided and its compliance
with the terms of this Agreement.
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3. TIMING OF TRANSACTIONS. Distributor hereby appoints the Company as agent
for the Funds for the limited purpose of accepting purchase and redemption
orders for Fund shares from the Contract owners. On each day the New York Stock
Exchange (the "Exchange") is open for business (each, a "Business Day"), the
Company may receive instructions from the Contract owners for the purchase or
redemption of shares of the Funds ("Orders"). Orders received and accepted by
the Company prior to the close of regular trading on the Exchange (the "Close of
Trading") on any given Business Day (currently, 4:00 p.m. Eastern time) and
transmitted to the Funds' transfer agent by 10:00 a.m. Eastern time on the next
following Business Day will be executed at the net asset value determined as of
the Close of Trading on the Business Day on which the Orders are received and
accepted by the Company. The day as of which an Order is executed by the Funds'
transfer agent pursuant to the provisions set forth above is referred to herein
as the "Trade Date". All orders are subject to acceptance or rejection by
Distributor or the Funds in the sole discretion of either of them.
4. PROCESSING OF TRANSACTIONS.
(a) If transactions in Fund shares are to be settled through the National
Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the FUND/SERV &
NETWORKING AGREEMENT, between Company and American Century Services
Corporation, shall apply.
(b) If transactions in Fund shares are to be settled directly with the Funds'
transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day, Distributor (or one
of its affiliates) will provide to the Company via facsimile or other
electronic transmission acceptable to the Company the Funds' net asset
value, dividend and capital gain information and, in the case of income
funds, the daily accrual for interest rate factor (mil rate), determined at
the Close of Trading.
(2) By 10:00 a.m. Eastern time on each Business Day, the Company will
provide to Distributor via facsimile or other electronic transmission
acceptable to Distributor a report stating whether the instructions
received by the Company from Contract owners by the Close of Trading on the
prior Business Day resulted in the Accounts being a net purchaser or net
seller of shares of the Funds. As used in this Agreement, the phrase "other
electronic transmission acceptable to Distributor" includes the use of
remote computer terminals located at the premises of the Company, its
agents or affiliates, which terminals may be linked electronically to the
computer system of Distributor, its agents or affiliates (hereinafter,
"Remote Computer Terminals").
(3) Upon the timely receipt from the Company of the report described in
(2) above, the Funds' transfer agent will execute the purchase or
redemption transactions (as the case
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may be) at the net asset value computed as of the Close of Trading on the
Trade Date. Payment for net purchase transactions shall be made by wire
transfer to the applicable Fund custodial account designated by the Funds
on the Business Day next following the Trade Date. Such wire transfers
shall be initiated by the Company's bank prior to 4:00 p.m. Eastern time
and received by the Funds prior to 6:00 p.m. Eastern time on the Business
Day next following the Trade Date ("T+1"). If payment for a purchase Order
is not timely received, such Order will be, at Distributor's option, either
(i) executed at the net asset value determined on the Trade Date, and the
Company shall be responsible for all costs to Distributor or the Funds
resulting from such delay, or (ii) executed at the net asset value next
computed following receipt of payment. Payments for net redemption
transactions shall be made by wire transfer by the Issuer to the account(s)
designated by the Company on T+2; provided, however, the Issuer reserves
the right to settle redemption transactions within the time period set
forth in the applicable Fund's then-current prospectus. On any Business Day
when the Federal Reserve Wire Transfer System is closed, all communication
and processing rules will be suspended for the settlement of Orders. Orders
will be settled on the next Business Day on which the Federal Reserve Wire
Transfer System is open and the original Trade Date will apply.
(4) Distributor shall provide written confirmation to the Company of the
amount of shares traded and the associated cost per share (net asset value)
total trade amount and the outstanding share balances held by the Account
as of the end of each Business Day. Such information will be furnished by
1:00 p.m. Eastern time on the next Business Day.
(5) Distributor shall use its best efforts to furnish same day notice by
6:30 p.m. Eastern time (by wire or telephone, followed by written
confirmation) to the Company of any dividends or capital gain distributions
payable on the Fund's shares. The Company hereby elects to receive all such
dividends and capital gain distributions as are payable on the Fund shares
in additional shares of the Fund. The Company reserves the right to revoke
this election and to receive all such dividends and capital gain
distributions in cash. Distributor shall notify the Company of the number
of shares so issued as payment of such dividends and distributions.
Distributor shall use its best efforts to furnish the Company with at least
ten (10) business days' advance notice of the day such dividend(s) and
distribution(s) are expected to be paid.
(c) In the event adjustments are required to correct any error in the
computation of the net asset value of any Fund's shares at the shareholder
level as a result of a pricing error that is deemed to be material under
the pricing policy of the Fund's Board of Directors or which Distributor
otherwise deems necessary to correct at the shareholder level, Distributor
shall notify the Company as soon as practicable after discovering the need
for those adjustments which result in a reimbursement to the Accounts.
Notification shall be made by telephone and by facsimile or by direct or
indirect systems access acceptable to the Company.
(1) If one or more of the Accounts received amounts from any Fund in
excess of the amounts to which it otherwise would have been entitled prior
to an adjustment for an error, the
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Company will use its best efforts to collect such excess amounts from the
applicable Accounts.
(2) If an adjustment is to be made in accordance with subsection (a)
above to correct an error which has caused an Account to receive an amount
less than that to which it is entitled, the Fund shall use its best efforts
to make all necessary adjustments to the number of shares owned in the
account and/or distribute to the Company the amount of such underpayment
for credit to the Accounts.
(3) For purposes of making adjustments as provided above, the Funds will
apply the same standards to all shareholders.
5. PROSPECTUS AND PROXY MATERIALS.
(a) Distributor shall provide the Company with copies of the Issuer's
prospectuses, proxy materials, periodic fund reports to shareholders and
other materials that are required by law to be sent to the Issuer's
shareholders. In addition, Distributor shall provide the Company with a
sufficient quantity of prospectuses of the Funds to be used in conjunction
with the transactions contemplated by this Agreement, together with such
additional copies of the Issuer's prospectuses as may be reasonably
requested by Company. If the Company provides for pass-through voting by
the Contract owners, or if the Company determines that pass-through voting
is required by law, Distributor will provide the Company with a sufficient
quantity of proxy materials for each, as directed by the Company.
(b) The cost of preparing, printing and shipping of the prospectuses, proxy
materials, periodic fund reports, statements of additional information and
other materials of the Issuer to the Company shall be paid by Distributor
or its agents or affiliates; provided, however, that if at any time
Distributor or its agent reasonably deems the usage by the Company of such
items to be excessive, it may, prior to the delivery of any quantity of
materials in excess of what is deemed reasonable, request in writing, no
later than 15 business days prior to the date that the Company and
Distributor have agreed on for delivering such material to the Company,
that the Company demonstrate the reasonableness of such usage. If
Distributor believes, in good faith, that the reasonableness of such usage
has not been adequately demonstrated, it may request that the party
responsible for such excess usage pay the cost of printing (including press
time) and delivery of any excess copies of such materials. Unless the
Company agrees to make such payments, Distributor may refuse to supply such
additional materials and Distributor shall be deemed in compliance with
this SECTION 5 if it delivers to the Company at least the number of
prospectuses and other materials as may be required by the Issuer under
applicable law.
(c) If requested by the Company, in lieu of providing printed copies of the
Fund prospectus and/or Fund reports, Distributor shall provide camera-ready
film or computer diskettes containing the Fund prospectus and/or Fund
reports and such other assistance as is reasonably necessary in order for
the Company to have the prospectus for the Contracts and the Fund
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prospectus printed together in one document or separately or have the Fund
prospectus printed in combination with other fund companies' prospectuses
and/or for the Company to have the reports for the Contracts and the Fund
reports printed together in one document or separately or have the Fund
reports printed in combination with other fund companies' reports.
(d) The cost of any distribution of prospectuses, proxy materials, periodic
fund reports and other materials of the Issuer to the Contract owners shall
be paid by the Company and shall not be the responsibility of Distributor
or the Issuer.
6. COMPENSATION AND EXPENSES.
(a) The Accounts shall be the sole shareholder of Fund shares purchased for the
Contract owners pursuant to this Agreement (the "Record Owner"). The
Record Owner shall properly complete any applications or other forms
required by Distributor or the Issuer from time to time.
(b) Distributor acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to
postage, shareholder communications and recordkeeping, by virtue of having
a single shareholder account per Fund for the Accounts rather than having
each Contract owner as a shareholder. In consideration of the
Administrative Services and performance of all other obligations under this
Agreement by the Company, Distributor will pay the Company a fee (the
"Administrative Services Fee") equal to 25 basis points (0.25%) per annum
of the average aggregate amount invested by the Company under this
Agreement.
(c) The payments received by the Company under this Agreement are for
administrative and shareholder services only and do not constitute payment
in any manner for investment advisory services or for costs of
distribution.
(d) For the purposes of computing the payment to the Company contemplated by
this SECTION 6, the average aggregate amount invested by the Company on
behalf of the Accounts in the Funds over a one month period shall be
computed by totaling the Company's aggregate investment (share net asset
value multiplied by total number of shares of the Funds held by the
Company) on each Business Day during the month and dividing by the total
number of Business Days during such month.
(e) Distributor will calculate the amount of the payment to be made pursuant to
this SECTION 6 at the end of each calendar quarter and will make such
payment to the Company within 30 days thereafter. The check for such
payment will be accompanied by a statement showing the calculation of the
amounts being paid by Distributor for the relevant months and such other
supporting data as may be reasonably requested by the Company and shall be
mailed to:
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The United States Life Insurance Company
in the City of New York
0000-X Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Variable Products Accounting
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
7. REPRESENTATIONS.
(a) The Company represents and warrants that (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established
Separate Account USL VL-R (the "Accounts"), each of which is a duly
authorized and established separate account under New York Insurance law,
and has registered each Account as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act") to serve as an investment
vehicle for the Contracts; (iii) each Contract provides for the allocation
of net amounts received by the Company to an Account for investment in the
shares of one or more specified investment companies selected among those
companies available through the Account to act as underlying investment
media; (iv) selection of a particular investment company is made by the
Contract owner under a particular Contract, who may change such selection
from time to time in accordance with the terms of the applicable Contract;
and (v) the activities of the Company contemplated by this Agreement comply
in all material respects with all provisions of federal and state
securities laws applicable to such activities.
(b) Distributor represents that (i) this Agreement has been duly authorized by
all necessary corporate action and, when executed and delivered, shall
constitute the legal, valid and binding obligation of Distributor,
enforceable in accordance with its terms; (ii) the prospectus of each Fund
complies in all material respects with federal and state securities laws,
and (iii) shares of the Issuer are registered and authorized for sale in
accordance with all federal and state securities laws.
(c) The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all material respects with all applicable federal and
state laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law.
(d) Distributor represents that the Funds are currently qualified as Regulated
Investment Companies under Subchapter M of the Internal Revenue Code of
1986, as amended, (the "Code") and that it will make every effort to
maintain such qualification (under Subchapter M or any
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successor or similar provision) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased
to so qualify or that it might not so qualify in the future.
(e) Subject to the Fund's compliance with applicable diversification
requirements, the Company represents that the Contracts are currently
treated as endowment, annuity or life insurance contracts, under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund and Distributor immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
(f) Distributor represents and warrants that all of its directors, officers,
employees, investment advisers, and other individuals/entities dealing with
the money or securities of the Fund are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid Bond shall include
coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
(g) The Company represents and warrants that all of its directors, officers,
employees, investment advisers, and other entities dealing with the money
or securities of the Fund are and shall continue to be at all times covered
by a blanket fidelity bond or similar coverage for the benefit of the Fund,
in an amount not less than five million dollars ($5 million). The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
(h) Distributor represents and warrants that the Fund will at all times invest
money from the Contracts in such a manner as to ensure that the Contracts
will be treated as variable contracts under the Code and the regulations
issued thereunder. Without limiting the scope of the foregoing,
Distributor represents and warrants that the Fund will at all times comply
with Section 817(h) of the Code of 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.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and state laws
applicable to its respective activities under this Agreement. All
obligations of each party under this Agreement are subject to compliance
with applicable federal and state laws.
(b) Each party shall promptly notify the other parties in the event that it is,
for any reason, unable to perform any of its obligations under this
Agreement.
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(c) The Company covenants and agrees that all Orders accepted and transmitted
by it hereunder with respect to each Account on any Business Day will be
based upon instructions that it received from the Contract owners, in
proper form prior to the Close of Trading of the Exchange on that Business
Day. The Company shall time stamp all Orders or otherwise maintain records
that will enable the Company to demonstrate compliance with SECTION 8(C)
hereof.
(d) The Company covenants and agrees that all Orders transmitted to the Issuer,
whether by telephone, telecopy, or other electronic transmission acceptable
to Distributor, shall be sent by or under the authority and direction of a
person designated by the Company as being duly authorized to act on behalf
of the owner of the Accounts. Distributor shall be entitled to rely on the
existence of such authority and to assume that any person transmitting
Orders for the purchase, redemption or transfer of Fund shares on behalf of
the Company is "an appropriate person" as used in Sections 8-107 and 8-401
of the Uniform Commercial Code with respect to the transmission of
instructions regarding Fund shares on behalf of the owner of such Fund
shares. The Company shall maintain the confidentiality of all passwords
and security procedures issued, installed or otherwise put in place with
respect to the use of Remote Computer Terminals and assumes full
responsibility for the security therefor. The Company further agrees to be
responsible for the accuracy, propriety and consequences of all data
transmitted to Distributor by the Company by telephone, telecopy or other
electronic transmission acceptable to Distributor.
(e) The Company agrees that, to the extent it is able to do so, it will use its
best efforts to give equal emphasis and promotion to shares of the Funds as
is given to other underlying investments of the Accounts, subject to
applicable Securities and Exchange Commission rules. In addition, the
Company shall not impose any fee, condition, or requirement for the use of
the Funds as investment options for the Contracts that operates to the
specific prejudice of the Funds vis-a-vis the other investment media made
available for the Contracts by the Company.
(f) The Company shall not, without the written consent of Distributor, make
representations concerning the Issuer or the shares of the Funds except
those contained in the then-current prospectus for the Funds and in current
printed sales literature approved by Distributor or the Issuer.
(g) Distributor shall not, without the written consent of the Company, make
representations concerning the Company or the Contracts except those
contained in the then-current prospectus for the Contracts and any other
current printed sales literature approved by the Company.
(h) Advertising and sales literature with respect to the Issuer or the Funds
prepared by the Company or its agents, if any, for use in marketing shares
of the Funds as underlying investment media to Contract owners shall be
submitted to Distributor for review and approval before such material is
used.
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9. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither Distributor nor any of its affiliates or the Funds shall use
any trademark, trade name, service xxxx or logo of the Company, or any variation
of any such trademark, trade name, service xxxx or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service xxxx or logo of the
Issuer, Distributor or any of its affiliates or any variation of any such
trademarks, trade names, service marks, or logos, without the prior written
consent of either the Issuer or Distributor, as appropriate, the granting of
which shall be at the sole option of Distributor and/or the Issuer.
10. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all Contract
owners so long as the SEC continues to interpret the 1940 Act as requiring
such privileges. The Company reserves the right to vote Fund shares held
in the Accounts in its own right, to the extent permitted by law.
Participating companies (as defined in Section 12(a) below) shall be
responsible for assuring that each of their respective separate accounts
participating in the Funds calculate voting privileges as set forth herein.
(b) The Company will distribute to Contract owners all proxy material furnished
by Distributor and will vote shares in accordance with instructions
received from such Contract owners. The Company shall vote Fund shares for
which no voting instructions are received in the same proportion as shares
for which such instructions have been received. The Company and its agents
shall not oppose or interfere with the solicitation of proxies for Fund
shares held for such Contract owners.
11. INDEMNITY.
(a) Distributor agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, affiliates and each person, if any,
who controls the Company within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this SECTION
11(A)) against any losses, claims, expenses, damages or liabilities
(including amounts paid in settlement thereof) or litigation expenses
(including legal and other expenses) (collectively, "Losses"), to which the
Indemnified Parties may become subject, insofar as such Losses result from
a breach by Distributor of a material provision of this Agreement.
Distributor will reimburse any legal or other expenses reasonably incurred
by the Indemnified Parties in connection with investigating or defending
any such Losses. Distributor shall not be liable for indemnification
hereunder if such Losses are attributable to the gross negligence or
misconduct of the Company in performing its obligations under this
Agreement.
(b) The Company agrees to indemnify and hold harmless Distributor and the
Issuer, and their respective officers, directors, employees, agents,
affiliates and each person, if any, who
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controls Issuer or Distributor within the meaning of the Securities Act of
1933 (collectively, the "Indemnified Parties" for purposes of this SECTION
11(B)) against any Losses to which the Indemnified Parties may become
subject, insofar as such Losses result from a breach by the Company of a
material provision of this Agreement or the use by any person of the Remote
Computer Terminals. The Company will reimburse any legal or other expenses
reasonably incurred by the Indemnified Parties in connection with
investigating or defending any such Losses. The Company shall not be liable
for indemnification hereunder if such Losses are attributable to the gross
negligence or misconduct of Distributor or the Issuer in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of notice of the
commencement of action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party hereunder, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this SECTION 11.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish to, assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such
indemnified party under this SECTION 11 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action, the
indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of
the indemnified parties in such action, or permit a default or consent to
the entry of any judgment in respect thereof, unless in connection with
such settlement, compromise or consent, each indemnified party receives
from such claimant an unconditional release from all liability in respect
of such claim.
12. POTENTIAL CONFLICTS
(a) The Company has received a copy of an application for exemptive relief, as
amended, filed by the Issuer on December 21, 1987, with the SEC and the
order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief
set forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will
monitor the Issuer for the existence of any material irreconcilable
conflict between the interests of the contract owners of all separate
accounts ("Participating Companies") investing in funds of the Issuer. An
irreconcilable material conflict may arise for a variety of reasons,
including: (i) an action by any state insurance regulatory authority; (ii)
a change in applicable federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar
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actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the
manner in which the investments of any portfolio are being managed; (v) a
difference in voting instructions given by variable annuity contract owners
and variable life insurance contract owners; or (vi) a decision by an
insurer to disregard the voting instructions of contract owners. The Board
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
(b) The Company will report any potential or existing conflicts of which it is
aware to the Board. The Company will assist the Board in carrying out its
responsibilities under the Shared Funding Exemptive Order by providing the
Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by
the Company to inform the Board whenever contract owner voting instructions
are disregarded.
(c) If a majority of the Board, or a majority of its disinterested Board
members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the
Company is responsible for causing or creating said conflict, the Company
shall at its sole cost and expense, and to the extent reasonably
practicable (as determined by a majority of the disinterested Board
members), take such action as is necessary to remedy or eliminate the
irreconcilable material conflict. Such necessary action may include but
shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the Fund
and reinvesting such assets in a different investment medium or
submitting the question of whether such segregation should be
implemented to a vote of all affected contract owners and as
appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract owners,
or variable contract owners of one or more Participating
Companies) that votes in favor of such segregation, or offering
to the affected contract owners the option of making such a
change; and/or
(ii) establishing a new registered management investment company or
managed separate account.
(d) If a material irreconcilable conflict arises as a result of a decision by
the Company to disregard its contract owner voting instructions and said
decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company
at its sole cost, may be required, at the Board's election, to withdraw an
Account's investment in the Issuer and terminate this Agreement; provided,
however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
(e) For the purpose of this SECTION 12, a majority of the disinterested Board
members
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shall determine whether or not any proposed action adequately remedies any
irreconcilable material conflict, but in no event will the Issuer be
required to establish a new funding medium for any Contract. The Company
shall not be required by this SECTION 12 to establish a new funding medium
for any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners materially adversely affected by the
irreconcilable material conflict.
13. TERMINATION; WITHDRAWAL OF OFFERING. This Agreement may be terminated by
either party upon 180 days' prior written notice to the other parties.
Notwithstanding the above, the Issuer reserves the right, upon less than 180
days' prior written notice, to suspend sales of shares of any Fund, in whole or
in part, or to make a limited offering of shares of any of the Funds in the
event that (A) any regulatory body commences formal proceedings against the
Company, Distributor, affiliates of Distributor, or the Issuer, which
proceedings Distributor reasonably believes may have a material adverse impact
on the ability of Distributor, the Issuer or the Company to perform its
obligations under this Agreement or (B) in the judgment of Distributor,
declining to accept any additional instructions for the purchase or sale of
shares of any such Fund is warranted by market, economic or political
conditions. Notwithstanding the foregoing, this Agreement may be terminated
immediately (i) by any party as a result of any other breach of this Agreement
by another party, which breach is not cured within 30 days after receipt of
notice from the other party, or (ii) by any party upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order.
Notwithstanding the foregoing, the Company may terminate this Agreement
immediately: (1) upon written notice to Distributor based upon the Company's
good faith determination that shares of the Fund are not reasonably available to
meet the requirements of the Contracts; (ii) upon written notice to Distributor
in the event that the Fund 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 do so qualify;
(iii) upon written notice to Distributor in the event that the Fund fails to
meet the diversification requirements set forth in the Code; or (iv) upon 60
days' written notice to Distributor that the Company will substitute Fund shares
with the shares of another investment company for the Contracts for which the
Fund shares have been selected to serve as the underlying investment medium,
subject to compliance with applicable regulations of the SEC.
Termination of this Agreement shall not affect the obligations of the
parties to make payments under SECTION 4 for Orders received by the Company
prior to such termination and shall not affect the Issuer's obligation to
maintain the Accounts as set forth by this Agreement. Following termination,
Distributor shall not have any Administrative Services payment obligation to the
Company (except for payment obligations accrued but not yet paid as of the
termination date).
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that this
Agreement
12
and the arrangement described herein are intended to be non-exclusive and that
each of the parties is free to enter into similar agreements and arrangements
with other entities.
15. SURVIVAL. The provisions of SECTION 9 (use of names) and SECTION 11
(indemnity) of this Agreement shall survive termination of this Agreement.
16. AMENDMENT. Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
The United States Life Insurance Company
in the City of New York
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: President
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
With Copy to: General Counsel
American General Life Companies
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000-0000
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
(000) 000-0000 (office number)
(000) 000-0000 (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 17 shall be deemed to have been delivered on receipt.
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18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without the
written consent of all parties to the Agreement at the time of such assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
20. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT. This Agreement, including the attachments hereto,
constitutes the entire agreement between the parties with respect to the matters
dealt with herein, and supersedes all previous agreements, written or oral, with
respect to such matters.
22. FOREIGN TAX CREDITS. Distributor agrees to consult with the Company
concerning whether the Fund qualifies to provide a foreign tax credit pursuant
to Section 853 of the Code.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
set forth above.
THE UNITED STATES LIFE INSURANCE AMERICAN CENTURY INVESTMENT
COMPANY IN THE CITY OF NEW YORK MANAGEMENT, INC.
By: ____________________________ By: _____________________________
Name: __________________________ Name: ___________________________
Title: _________________________ Title: __________________________
14
EXHIBIT A
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain separate records for each Contract owner, which records shall
reflect the units purchased and redeemed and unit balances of such Contract
owners. The Company will maintain a single master account with each Fund on
behalf of the Contract owners and such account shall be in the name of the
Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of redemptions of
shares of the Funds and all dividends and other distributions not reinvested in
shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or the
Contracts, periodic statements showing the total number of units owned by the
Contract owners as of the statement closing date, purchases and redemptions of
Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf of the
Contract owners in accordance with the procedures set forth in SECTION 4 to the
Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus, proxy
materials, periodic fund reports to shareholders and other materials that the
Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be maintained and
preserved in connection with providing the Administrative Services for the
Contracts.
A-1
