Form N-4, Item 24(b)
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EXHIBIT 8.9
Form of Participation Agreement with
X. Xxxx Price Associates, Inc. and
American United Life Insurance Company
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AGREEMENT
BETWEEN
X. XXXX PRICE ASSOCIATES, INC.
And
X. XXXX PRICE INVESTMENT SERVICES, INC.
And
AMERICAN UNITED LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 18th day of May, 2001 by
and between American United Life Insurance Company (hereinafter, the "Company"),
a legal reserve insurance company existing under the laws of the State of
Indiana, on its own behalf and on behalf of each segregated asset account of the
Company set forth on Schedule A hereto as may be amended from time to time (each
account hereinafter referred to as the "Account"); X. Xxxx Price Associates,
Inc. (hereinafter the "Adviser"), a Maryland corporation; and X. Xxxx Price
Investment Services, Inc. (hereinafter the "Underwriter"), a Maryland
corporation.
WHEREAS, the X. Xxxx Price Funds listed in Schedule A, as may be amended
from time to time by mutual written agreement (each a "Fund" and together the
"Funds"), are corporations organized under the laws of Maryland that are
registered as open-end management investment companies under the Investment
Company Act of 1940, as amended (the "1940 Act"), and shares of the Funds are
registered under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Company has issued or will issue certain group annuity
contracts (the "Contracts"); and
WHEREAS, each Account set forth on Schedule A is duly established and
maintained as a segregated asset account, established by resolution of the Board
of Directors of the Company, to set aside and invest assets attributable to the
aforesaid Contracts; and
WHEREAS, the Adviser is registered as an investment adviser with the
Securities and Exchange Commission (the "SEC") under the Investment Advisers Act
of 1940, as amended; and
WHEREAS, the Underwriter is registered as a broker dealer with the SEC
under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Funds on behalf of
the Account to fund the aforesaid Contracts, and the Underwriter is authorized
to sell such shares to the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Adviser, and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1 The Underwriter agrees to sell to the Company those shares of the Funds
which the Company orders on behalf of the Account, executing such orders on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the order for the shares of the Funds.
1.2 The Underwriter agrees to make shares of the Funds available for
purchase at the applicable net asset value per share by the Company and the
Account on those days on which the Funds calculate their net asset value
pursuant to rules of the SEC, and the Underwriter shall use its best efforts to
ensure that the Funds calculate such net asset value on each day which the New
York Stock Exchange ("NYSE") is open for trading. Notwithstanding the foregoing,
the Board of Directors of a Fund (hereinafter the "Board") may refuse to sell
shares of any Funds to any person, or suspend or terminate the offering of
shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction, or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Fund.
1.3 The Underwriter agrees to accept for redemption, on the Company's
request, any full or fractional shares of such Fund held by the Company,
ordinarily executing such requests on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the request for
redemption, except that the Fund may suspend the right of redemption or postpone
the date of payment or satisfaction upon redemption consistent with Section
22(e) of the 1940 Act and any rules thereunder, and in accordance with the
procedures and policies of the Fund as described in the then current prospectus.
1.4 For purposes of Sections 1.1 and 1.3, the Company shall be the agent of
the Fund for receipt of purchase and redemption orders from the Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Company receives the order on any Business Day by the close of the NYSE (usually
4:00 p.m. Eastern Time) on such Business Day and the Fund or its agent receives
notice of such order by 9:00 a.m. Eastern Time on the next following Business
Day. "Business Day" shall mean any day on which the NYSE is open for trading and
on which the Fund calculates its net asset value pursuant to the rules of the
SEC.
1.5 The Company agrees to purchase and redeem the shares of each Fund
offered by the then current prospectus of the Fund in accordance with the
provisions of such prospectus.
1.6 The Company shall pay for Fund shares on the same Business Day that it
notifies
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the Fund of a purchase request for such shares. Payment shall be in federal
funds transmitted by wire to the Fund by 4:00 p.m. Eastern Time on the Business
Day the Fund is notified of the purchase request for the Fund. If payment in
federal funds for any purchase is not received or is received by the Fund after
4:00 p.m. Eastern Time on such Business Day, the Underwriter, or its affiliate,
may in its discretion advance funds to the Fund for investment and Fund shares
purchased thereby will be issued as soon as practicable, and the Company shall
promptly, upon the Fund's request, reimburse the Fund for any charges, costs,
fees, interest or other expenses incurred by the Fund in connection with any
advances to, or borrowings or overdrafts by, the Fund, or any similar expenses
incurred by the Fund, as a result of portfolio transactions effected by the Fund
based upon such purchase request. Upon receipt of federal funds so wired, such
funds shall cease to be the responsibility of the Company and shall become the
responsibility of the Fund. If the Fund does not receive the funds by the
designated time, the Underwriter reserves the right to cancel the purchase and
the Company will be responsible for any losses incurred.
1.7 Subject to Section 1.3, payment for Fund shares redeemed by the Account
or the Company shall be made by the Underwriter or its agent in federal funds
transmitted by wire to the Company or any other designated person by 1:00 p.m.
Eastern Time on the same Business Day the Fund is properly notified of the
redemption order of such shares.
1.8 Issuance and transfer of each Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.9 The Underwriter shall furnish notice to the Company of any income
dividends or capital gains distributions payable on the Funds' shares as soon as
reasonably practicable on or after the payable date. The Company hereby elects
to receive all such income dividends and capital gains distributions as are
payable on Fund shares in additional shares of such Fund. The Company reserves
the right to revoke this election and to receive all such income dividends and
capital gains distributions in cash. The Underwriter shall notify the Company
promptly of the number of shares so issued as payment of such dividends and
distributions. Any error in the calculation or reporting of income dividend or
capital gains information shall be reported promptly to the Company upon
discovery. If the Fund or Underwriter provides the Company with incorrect
dividend or distribution information, the matter shall be resolved as set forth
in Schedule B.
1.10 The Underwriter shall use its best efforts to ensure that each Fund
makes its net asset value per share available to the Company by 6:30 p.m.
Eastern Time each Business Day, and in any event, as soon as reasonably
practicable after the net asset value per share for such Fund is calculated, and
that each Fund shall calculate such net asset value in accordance with the
Fund's prospectus. If the Fund or Underwriter provides the Company with
materially incorrect share net asset value information, the matter shall be
resolved as set forth in Schedule B. Any material error in the calculation of
the net asset value per share information shall be reported promptly to the
Company upon discovery.
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1.11 The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive; the Funds' shares may be sold to other
investors and the cash value of the Contracts may be invested in other
investment companies.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts and any
certificates thereunder (a) are or, prior to issuance, will be registered as
securities under the 1933 Act or, alternatively (b) are not registered because
they are properly exempt from registration under the 1933 Act or will be offered
exclusively in transactions that are properly exempt from registration under the
1933 Act. The Company further represents and warrants that the Contracts and any
certificates thereunder will be issued and sold in compliance in all material
respects with all applicable federal and state laws. The Company further
represents and warrants that it is an insurance company duly organized and in
good standing under applicable law, that it has legally and validly established
the Account prior to any issuance or sale thereof as a segregated asset account
under Indiana insurance laws, and that it (a) has registered the Account as a
unit investment trust in accordance with the provisions of the 1940 Act or,
alternatively, (b) has not registered the Account in proper reliance upon an
exclusion from registration under the 0000 Xxx.
2.2 The Underwriter makes no representations as to whether any aspect of a
Fund's operations, including but not limited to, investment policies, fees, and
expenses, complies with the insurance and other applicable laws of the various
states.
2.3 The Adviser and Underwriter represent that each Fund is lawfully
organized and validly existing under the laws of the State of Maryland and that
each Fund does and will comply in all material respects with the 1940 Act and
shall remain registered under the 1940 Act. The Adviser and Underwriter further
represent that each Fund is or will be qualified as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), and that each Fund will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provisions) and
that the Adviser and Underwriter will notify the Company immediately upon having
a reasonable basis for believing that a Fund has ceased to so qualify or that it
might not so qualify in the future.
2.4 The Adviser and Underwriter represent and warrant that each Fund shall
amend the registration statement for its shares under the 1933 Act from time to
time as required in order to effect the continuous offering of its shares, and
shall register and qualify the shares for sale in accordance with the laws of
the various states if and to the extent deemed advisable by the Fund.
2.5 The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute Fund shares in
accordance with the laws of the State of Maryland and any applicable state and
federal securities laws.
2.6 The Adviser represents and warrants that it is a registered investment
adviser with the SEC.
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2.7 The Adviser and the Underwriter represent and warrant that all of their
and the Funds' directors, officers, employees, and other individuals or entities
dealing with the money and/or securities of the Funds are and shall continue to
be at all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Funds in an amount not less than the minimum coverage as required
currently by Rule 17g-1 under 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. The
Adviser and the Underwriter agree to make all reasonable efforts to see that
this bond or another bond containing these provisions is always in effect, and
agree to notify the Company in the event that such coverage no longer applies.
2.8 The Company represents and warrants that all of its directors,
officers, employees, and investment advisers dealing with the money and/or
securities of the Funds are covered by a blanket fidelity bond or similar
coverage for the benefit of the Funds, in an amount not less than $5 million.
The aforesaid bond includes coverage for larceny and embezzlement and is issued
by a reputable bonding company. The Company agrees to make all reasonable
efforts to see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Adviser and Underwriter in the event
that such coverage no longer applies.
ARTICLE III. Voting
3.1 The Company reserves the right to vote Fund shares held in the Account
in its own right, to the extent permitted by law.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Underwriter or its designee, each piece of sales literature or other promotional
material that the Company develops or uses and in which the Funds or the
Underwriter is named, at least fifteen (15) calendar days prior to its use. No
such material shall be used if the Underwriter or its designee reasonably object
to such use within fifteen (15) calendar days after receipt of such material.
The Underwriter or its designee reserves the right to reasonably object to the
continued use of such material, and no such material shall be used if the
Underwriter or its designee so object.
4.2 The Company shall not give any information or make any representations
or statements on behalf of a Fund or concerning a Fund in connection with the
sale of the Contracts other than the information or representations contained in
the registration statement or prospectus or Statement of Additional Information
("SAI") for the Fund shares, as such registration statement and prospectus or
SAI may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional material
approved by the Fund or its designee or by the Adviser or Underwriter, except
with the permission of the Adviser, Underwriter or the Fund, or their designee.
4.3 The Adviser and the Underwriter, or their designee, shall furnish, or
shall cause to
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be furnished, to the Company, each piece of sales literature or other
promotional material that they develop or use or a Fund develops or uses and in
which the Company, and/or its Account, is named at least fifteen (15) calendar
days prior to its use. No such material shall be used if the Company reasonably
objects to such use within fifteen (15) calendar days after receipt of such
material. The Company reserves the right to reasonably object to the continued
use of such material and no such material shall be used if the Company so
objects.
4.4 The Adviser and Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, the Account,
the Contracts, or any certificates thereunder other than the information or
representations contained in the Contracts or any certificates thereunder, as
such may be amended or supplemented from time to time, or in published reports
for the Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5 The Underwriter shall provide the Company with as many printed copies
of the current prospectus, current SAI, supplements, proxy statements, and
annual or semi-annual reports of each Fund as the Company may reasonably request
to deliver to current or prospective Contract owners. The Underwriter will pay
or cause to be paid the expenses and postage associated with providing such
documentation to the Company. If requested by the Company in lieu thereof, the
Underwriter shall provide such documents (including a "camera-ready" copy of
such documents as set in type, a diskette in the form sent to the financial
printer, or an electronic copy of the documents in a format suitable for posting
on the Company's website, all as the Company may reasonably request) and such
other assistance as is reasonably necessary in order for the Company to have
prospectuses, SAIs, supplements, proxy statements, and annual or semi-annual
reports for the Contracts and the Fund printed together in a single document,
posted on the Company's website, or produced in a digital format such as CD-ROM.
The Underwriter will pay or cause to be paid a pro rata portion of the expenses
associated with such digital reproduction or printing and providing such
document, such portion to be determined with reference to the number of pages
attributable to the Fund's documents relative to the total number of pages of
the single document. The parties agree that in no event will the Underwriter's
pro rata portion of the expenses associated with digital reproduction or with
printing and providing a single document exceed the expenses incurred by the
Underwriter with printing and providing Fund documents separately.
4.6 The Underwriter will provide to the Company at least one complete copy
of all registration statements, prospectuses, SAIs, reports, proxy statements,
sales literature and other promotional materials sent to all shareholders, and
all amendments to any of the above, that relate to the Funds or their shares,
promptly after the filing of such document(s) with the SEC or other regulatory
authorities. The Underwriter will promptly notify the Company of any
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, filed with the SEC or other regulatory authorities that
relate to the Funds or their shares.
4.7 The Company will provide to the Underwriter at least one complete copy
of all reports, solicitations for voting instructions, sales literature and
other promotional materials, if
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any, and all amendments to any of the above, that relate to the Contracts or the
Account.
4.8 For purposes of this Article IV, the phrase "sales literature and other
promotional material" includes, but is not limited to advertisements (such as
material published, or designed for use in, a newspaper, magazine, or other
periodical, radio, television, telephone or tape recording, videotape display,
signs or billboards, motion pictures, telephone directories (other than routine
listings), or electronic or other public media), sales literature (i.e., any
written or electronic communication distributed or made generally available to
customers or the public, including brochures, circulars, reports, market
letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials.
ARTICLE V. Fees and Expenses
5.1 The Adviser and Underwriter shall pay no fee or other compensation to
the Company under this Agreement. All expenses incident to performance by the
Adviser and Underwriter under this Agreement shall be paid by the Adviser and
Underwriter.
5.2 All expenses incident to performance by the Company under this
Agreement shall be paid by the Company.
ARTICLE VI. Indemnification
6.1 Indemnification by the Company
6.1(a) The Company agrees to indemnify and hold harmless the Funds and
the Underwriter and each of their officers and directors and each person,
if any, who controls the Funds or the Underwriter within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 6.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent
of the Company) or litigation (including legal and other expenses), to
which the Indemnified Parties may become subject under any statute or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or
settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
offering memorandum for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Company by or on behalf
of a Fund or the
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Underwriter for use in the offering memorandum for the Contracts or in
the Contracts or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Contracts, or
(ii) arise out of or as a result of statements or representations
by or on behalf of the Company (other than statements or
representations contained in the registration statement, prospectus,
SAI, or sales literature of a Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or its
agents or persons under the Company's authorization or control, with
respect to the sale or distribution of the Contracts, or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, SAI, or sales literature of a Fund or any amendment
thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such a
statement or omission was made in reliance upon information furnished
to such Fund by or on behalf of the Company; or
(iv) arise out of the negligent act or omission in the
performance of the duties and obligations of the Company hereunder, or
which arise out of bad faith or willful misconduct; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement
or arise out of or result from any other material breach of this
Agreement by the Company;
as limited by and in accordance with the provisions of Sections 6.1(b) and
6.1(c) hereof.
6.1(b) The Company 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
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of its obligations or
duties under this Agreement.
6.1(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against 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 reasonably satisfactory to the party named in the
action and to settle
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the claim at its own expense; provided, however, that no such settlement
shall, without the Indemnified Parties' written consent, include any
factual stipulation referring to the Indemnified Parties or their conduct.
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.
6.1(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of Fund shares or the Contracts or the operation
of the Funds.
6.2 Indemnification by the Underwriter
6.2(a) The Underwriter agrees to indemnify and hold harmless the
Company and each of it directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 6.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) 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:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature of a
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of the Company
for use in the registration statement, prospectus or SAI for the Fund
or in sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts or Fund shares;
or
(ii) arise out of or as a result of statements or representations
by or on behalf of a Fund or the Underwriter (other than statements or
representations contained in the registration statement, prospectus,
SAI or sales literature for the Contracts not supplied by the Fund or
the Underwriter) or wrongful conduct of the Underwriter or a Fund with
respect to the sale or distribution of the Contracts or Fund shares;
or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the offering memorandum or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make
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the statement or statements therein not misleading, if such statement
or omission was made in reliance upon information furnished to the
Company by or on behalf of the Underwriter or a Fund; or
(iv) arise out of the negligent act or omission in the
performance of the duties and obligations of the Fund or the
Underwriter hereunder, or which arise out of bad faith or willful
misconduct; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the Underwriter
or a Fund in this Agreement or arise out of or result from any other
material breach of this Agreement by or on behalf of the Underwriter
or a Fund;
as limited by and in accordance with the provisions of Sections 6.2(b) and
6.2(c) hereof.
6.2(b) The Underwriter 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
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or the Account, whichever is
applicable.
6.2(c) The Underwriter 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 Underwriter 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 Underwriter of any such claim shall not relieve the
Underwriter 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 Party, the Underwriter will be entitled to participate, at its
own expense, in the defense thereof. The Underwriter also shall be entitled
to assume the defense thereof, with counsel reasonably satisfactory to the
party named in the action and to settle the claim at its own expense;
provided, however, that no such settlement shall, without the Indemnified
Parties' written consent, include any factual stipulation referring to the
Indemnified Parties or their conduct. After notice from the Underwriter to
such party of the Underwriter'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 Underwriter 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.
6.2(d) The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
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6.3 Indemnification by the Adviser
6.3(a) The Adviser agrees to indemnify and hold harmless the Company
and each of it directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 6.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) 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:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or SAI or sales literature of a
Fund (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that
this agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished to the Adviser or Fund by or on behalf of the Company for
use in the registration statement, prospectus or SAI for the Fund or
in sales literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
by or on behalf of a Fund or the Adviser (other than statements or
representations contained in the registration statement, prospectus,
SAI or sales literature for the Contracts not supplied by the Fund or
the Adviser) or wrongful conduct of the Adviser or a Fund with respect
to the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the offering memorandum or
sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to the Company by or on behalf of the Adviser or a Fund; or
(iv) arise out of the negligent act or omission in the
performance of the duties and obligations of the Fund or the Adviser
hereunder, or which arise out of bad faith or willful misconduct; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by or on behalf of the Adviser or
a Fund in this Agreement or arise out of or result from any other
material breach of this Agreement by or on behalf of the Adviser or a
Fund;
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as limited by and in accordance with the provisions of Sections 6.3(b) and
6.3(c) hereof.
6.3(b) The 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
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or the Account, whichever is
applicable.
6.3(c) The Adviser 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 Adviser 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
Adviser of any such claim shall not relieve the 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 Party, the Adviser
will be entitled to participate, at its own expense, in the defense
thereof. The Adviser also shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to the party named in the action and
to settle the claim at its own expense; provided, however, that no such
settlement shall, without the Indemnified Parties' written consent, include
any factual stipulation referring to the Indemnified Parties or their
conduct. After notice from the Adviser to such party of the 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 the
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.
6.3(d) The Company agrees promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
ARTICLE VII. Applicable Law
7.1 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Maryland.
7.2 This Agreement shall be subject to the provisions of the 1933, 1934 and
1940 Acts, and the rules and regulations and rulings thereunder, including such
exemptions from those statutes, rules and regulations as the SEC may grant and
the terms hereof shall be interpreted and construed in accordance therewith.
12
ARTICLE VIII. Termination
8.1 This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party, for any reason with respect to some or
all Funds, by three (3) months' advance written notice delivered to the
other parties; or
(b) termination by the Company by written notice to the Underwriter
with respect to a Fund based upon the Company's determination that shares
of the Fund are not reasonably available to meet the requirements of the
Contracts; provided that such termination shall apply only to the Fund not
reasonably available; or
(c) termination by the Company by written notice to the Underwriter in
the event any of the Funds' shares are not registered, issued or sold in
accordance with applicable state and/or federal law or such law precludes
the use of such shares as the underlying investment media of the Contracts
issued or to be issued by the Company; or
(d) termination by the Underwriter in the event that formal
administrative proceedings are instituted against the Company by the NASD,
the SEC, the Insurance Commissioner or like official of any state or any
other regulatory body regarding the Company's duties under this Agreement
or related to the sale of the Contracts or certificates, the operation of
any Account, or the purchase of Fund shares; provided, however, that the
Underwriter determines in its sole judgment exercised in good faith, that
any such administrative proceedings will have a material adverse effect
upon the ability of the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal administrative
proceedings are instituted against the Adviser, Underwriter or any Fund by
the NASD, the SEC, or any state securities or insurance department or any
other regulatory body; provided, however, that the Company determines in
its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Adviser, Underwriter or Fund to perform its obligations under this
Agreement; or
(f) termination by the Company by written notice to the Underwriter
with respect to any Fund in the event that such Fund ceases to qualify as a
Regulated Investment Company under Subchapter M or if the Company
reasonably believes that such Fund may fail to so qualify; or
(g) termination by the Underwriter by written notice to the Company in
the event that the Contract fails to meet the qualifications specified in
Article II hereof, or if the Underwriter reasonably believes that the
Contract may fail to so qualify; or
(h) termination by the Underwriter by written notice to the Company,
if the Underwriter shall determine, in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects
13
since the date of this Agreement or is the subject of material adverse
publicity; or
(i) termination by the Company by written notice to the Underwriter,
if the Company shall determine, in its sole judgment exercised in good
faith, that the Adviser, Underwriter, or any Fund has suffered a material
adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity.
8.2 Notwithstanding any termination of this Agreement, the Underwriter
shall, at the option of the Company, continue to make available additional
shares of the Funds pursuant to the terms and conditions of this Agreement, for
all Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, the owners of
the Existing Contracts may be permitted to reallocate investments in the Funds,
redeem investments in the Funds and/or invest in the Funds upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 8.2 shall not apply to any termination under Section 8.1(g) of
this Agreement.
8.3 Notwithstanding any termination of this Agreement, each party's
obligation under Article VI to indemnify the other parties shall survive.
ARTICLE IX. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Company:
American United Life Insurance Company
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
If to the Underwriter:
Xxxxx Xxxxxxx
X. Xxxx Price
Investment Services
Four Financial Center
0000 Xxxxxxxx Xxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
If to the Adviser:
Xxxxx Xxxxxxx & Xxxxx Xxxxxxx, Esq.
X. Xxxx Price
Investment Services
Four Financial Center
0000 Xxxxxxxx Xxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
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ARTICLE X. Miscellaneous
10.1 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information without the express written consent
of the affected party until such time as such information may come into the
public domain.
10.2 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.
10.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.4 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.
10.5 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10.6 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.
10.7 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto.
15
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
as of the date specified below.
COMPANY:
AMERICAN UNITED LIFE INSURANCE COMPANY
By its authorized officer
By: /s/ Xxxxxxx X. Xxxxxx, Esq.
______________________________________
Xxxxxxx X. Xxxxxx, Esq.
Title: Associate General Counsel
Date: May 18, 2001
UNDERWRITER:
X. XXXX PRICE INVESTMENT SERVICES, INC.
By its authorized officer
By: /s/ Xxxxx Xxxxxxx, Esq.
_____________________________________
Xxxxx Xxxxxxx, Esq.
Title: Vice President
Date: May 21, 2001
ADVISER:
X. XXXX PRICE ASSOCIATES, INC.
By its authorized officer
By: /s/ Xxxxx Xxxxxxx, Esq.
_____________________________________
Xxxxx Xxxxxxx, Esq.
Title: Vice President
Date: May 21, 2001
16
SCHEDULE A
Name of Separate Account and Date
Established by the AUL Executive Committee Funds
------------------------------------------ -----
AUL American Unit Trust X. Xxxx Price European Stock
(established 8/17/89)
Group Retirement Annuity Separate Account I X. Xxxx Price European Stock
(established 8/17/89)
Group Retirement Annuity Separate Account II X. Xxxx Price European Stock
(established 8/17/89)
Group Retirement Annuity Separate Account III X. Xxxx Price European Stock
(established 3/31/00)
17
SCHEDULE B
CONTRACT OWNER LOSSES CAUSED BY PRICING, INCOME DIVIDEND
AND CAPITAL GAINS DISTRIBUTION ERRORS
Compensating Contract Owners for Losses Caused by Pricing, Income Dividend and
Capital Gains Distribution Errors. In the event the Underwriter or Fund provides
a materially incorrect price for one of the Funds, or provides incorrect income
dividend or capital gains distribution information for one of the Funds, through
no fault of the Company, the Underwriter will adjust the Account with the Fund
on a net basis to correct the shares in the account. The materiality of an
incorrect price will be determined with reference to applicable SEC guidance. If
the Company adjusts the underlying Contract owners' accounts, those accounts
with gains shall be used to offset those accounts with losses, including those
Contract owners who received underpaid distributions ("Contract owner
Adjustments"). After the Contract owner Adjustments, the Company will identify
those Contract owners who received distributions or made exchanges into other
investment options during the time period affected by the incorrect price or the
incorrect dividend or distribution information. The Company will then notify the
Underwriter of the amount of losses suffered as a result of (i) for an
overstated price or overstated income dividends or capital gains distributions,
Contract owners whose accounts had a loss that could not be offset by the
overpayments (gains) made to Contract owners who took distributions; or (ii) for
an understated price or understated dividends or distributions, Contract owners
who received underpaid distributions that could not be offset by gains in other
Contract owner accounts; or (iii) for exchanges into other investment options,
Contract owners whose accounts had a loss due to the adjustment in the other
investment option (caused by market fluctuation of the other investment option)
and such loss cannot be offset by the gains received by Contract owners who
exchanged into other investment options where such fluctuation caused a gain.
Upon receipt of appropriate documentation verifying such losses, the Underwriter
shall reimburse the Account with the appropriate number of additional shares.
Should the Company fail to collect overpayments made to those Contract owners
who received distributions with a gain, the Company agrees to subrogate its
claim against such Contract owner to the Underwriter or its affiliate. Any net
gains calculated after Contract owner Adjustments will be returned by the
Company to the Underwriter.
Compensating the Company for its Expenses Incurred as a Result of Pricing,
Income Dividend or Capital Gains Distribution Errors. Set forth below is the
criteria that must be met before the Underwriter will reimburse the Company for
expenses incurred due to pricing, income dividend or capital gains distribution
errors:
* The Company must provide a full accounting of expenses;
* If the error is reported to the Company before 12:00 p.m. on the Business
Day after the incorrect price or information concerning the income dividend or
capital gains distribution is provided, no expenses will be reimbursed;
* A $10,000 cap will be imposed on each occurrence;
* Expenses may include payroll overtime, system fees, postage and
stationery (if separate
18
mailing is required);
* The Company must use its best efforts to mitigate all expenses which may
be reimbursable; and
* Expenses and payroll overtime shall not include any time spent
programming computers or otherwise customizing the Company's systems to correct
the error.
19
