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EXHIBIT 8(b)
FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the ______ day of __________________,
l994, between THE VARIABLE ANNUITY LIFE INSURANCE COMPANY ("Insurance
Company"), a life insurance company organized under the laws of the State of
Texas, and DREYFUS VARIABLE INVESTMENT FUND ("Fund"), an unincorporated
business trust, organized under the laws of the Commonwealth of Massachusetts.
ARTICLE I
DEFINITIONS
1.1 "Act" shall mean the Investment Company Act of 1940, as amended.
1.2 "Board" shall mean the Board of Trustees of the Fund having the
responsibility for management and control of the Fund.
1.3 "Business Day" shall mean any day for which the Fund calculates net
asset value per share as described in the Fund's Prospectus.
1.4 "Commission" shall mean the Securities and Exchange Commission.
1.5 "Contract" shall mean the variable annuity contract(s) issued by
Insurance Company as specified in Schedule A hereto, as it may be
amended from time to time by mutual agreement of the parties hereto,
that uses the Fund as an underlying investment medium.
1.6 "Contractholder" shall mean any owner of a Contract with a
Participating Company. Individuals who participate under a group
Contract are "Participants".
1.7 "Disinterested Board Members" shall mean those members of the Board
that are not deemed to be "interested persons" of the Fund, as defined
by the Act.
1.8 "Dreyfus" shall mean The Dreyfus Corporation and its affiliates,
including Dreyfus Service Corporation.
1.9 "Participating Companies" shall mean any insurance company (including
Insurance Company), which offers variable annuity and/or variable life
insurance contracts to the public and which has entered into an
agreement with the Fund for the purpose of making Fund shares
available to serve as the underlying investment medium for the
aforesaid Contracts.
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1.10 "Prospectus" shall mean the Fund's current prospectus and statement of
additional information, as it relates specifically and only to those
Series offering shares to the Insurance Company, as most recently
filed with the Commission.
1.11 "Separate Account" shall mean the separate investment account(s) as
specified in Schedule B hereto, as it may be amended from time to time
by mutual agreement of the parties hereto, established by Insurance
Company in accordance with the laws of the State of Texas.
1.12 "Software Program" shall mean the software program used by the Fund
for providing Fund and account balance information including net asset
value per share. Such Program may include the Lion System. In
situations where the Lion System or any other Software Program used by
the Fund is not available, such information may be provided by
telephone. The Lion System shall be provided to Insurance Company at
no charge.
1.13 "Insurance Company's General Account" shall mean the general account
of Insurance Company.
ARTICLE II
REPRESENTATIONS
2.1 Insurance Company represents and warrants that (a) it is an insurance
company duly organized and in good standing under applicable law; (b)
it has legally and validly established each Separate Account pursuant
to the Section 3.75 of the Texas Insurance Code for the purpose of
offering to the public certain variable annuity contracts; (c) it has
registered the Separate Account as a unit investment trust under the
Act to serve as the segregated investment account for the Contracts.
2.2 Insurance Company represents and warrants that (a) the Contracts will
be described in a registration statement filed under the Securities
Act of l933, as amended ("1933 Act"); (b) the Contracts will be issued
and sold in compliance in all material respects with all applicable
federal and state laws; (c) the sale of the Contracts shall comply in
all material respects with state insurance law requirements. Insurance
Company agrees to inform the Fund promptly of any investment
restrictions imposed by state insurance law and applicable to the
Fund; and (d) the Separate Account is eligible to invest in shares of
the Fund without such investment disqualifying the Fund as an
investment medium for insurance company separate accounts supporting
variable annuity contracts or variable life insurance contracts.
2.3 Insurance Company represents and warrants that the income, gains and
losses, whether or not realized, from assets allocated to the Separate
Account are, in accordance with the applicable Contracts, to be
credited to or charged against such Separate Account without
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regard to other income, gains or losses from assets allocated to any
other accounts of Insurance Company. Insurance Company represents and
warrants that the assets of each Separate Account are and will be kept
separate from Insurance Company's General Account and any other
separate accounts Insurance Company may have, and will not be charged
with liabilities from any business that Insurance Company may conduct
or the liabilities of any companies affiliated with Insurance Company
except to the extent of assets of a Separate Account in excess of the
reserves and other liabilities of that Separate Account.
2.4 Fund represents and warrants that the Fund is registered with the
Commission under the Act as an open-end management investment company
and possesses, and shall maintain, all legal and regulatory licenses,
approvals, consents and/or exemptions required for Fund to operate and
offer its shares as an underlying investment medium for Participating
Companies. The Fund has established eight series of shares (each, a
"Series") and may in the future establish other series of shares.
2.5 Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it shall be
operated and its assets shall be managed and invested so as to
maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify Insurance 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.
2.6 Insurance Company represents and warrants that the Contracts are
currently, and at the time of issuance will be, treated as life
insurance policies or annuity contracts, whichever is appropriate,
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
Dreyfus 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.
2.7 Fund represents and warrants that the Fund's assets shall be managed
and invested in a manner that complies with the requirements of
Section 817(h) of the Code. The Fund also represents and warrants
that the Series specified in Schedule C shall be managed and invested
in a manner that complies with the requirements of Section 5(b)(1) of
the Act.
2.8 Insurance Company agrees that the Fund shall be permitted (subject to
the other terms of this Agreement) to make Series shares available to
other Participating Companies and Contractholders.
2.9 Fund represents and warrants that any of its trustees, officers,
employees, investment advisers, and other individuals/entities who
deal with the money and/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 that required, treating each
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Series of the Fund as a separate investment company, by Rule 17g-1
under the Act. The aforesaid Bond shall include coverage for larceny
and embezzlement and shall be issued by a reputable bonding company.
2.10 Insurance Company represents and warrants that all of its employees
and agents who deal with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage in an amount not less than the coverage
required to be maintained by the Fund. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
2.11 Insurance Company agrees that Dreyfus shall be deemed a third party
beneficiary under this Agreement and may enforce any and all rights
conferred by virtue of this Agreement.
ARTICLE III
FUND SHARES
3.1 The Contracts funded through the Separate Account will provide for the
investment of certain amounts in the Series' shares.
3.2 Fund agrees to make the shares of its Series specified in Schedule C
available through its principal underwriter for purchase by Insurance
Company and each Separate Account at the then applicable net asset
value per share on each Business Day pursuant to rules of the
Commission. Notwithstanding the foregoing and subject to Section 10.3
of this Agreement, it is understood and agreed that the Fund may
refuse to sell the shares of any Series to any person, or suspend or
terminate the offering of the shares of any Series 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 and in the best interests of the shareholders of such
Series.
3.3 Fund agrees that, except for any shares sold to Dreyfus in connection
with the establishment of a series, shares of the Fund will be sold
only to Participating Companies and their separate accounts and to the
general accounts of those Participating Companies and their
affiliates. No shares of any Series will be sold to the general
public.
3.4 Fund shall use its best efforts to make closing net asset value,
dividend and capital gain information for each Series available on a
per-share and Series basis to Insurance Company by 6:00 p.m. Eastern
Time on each Business Day. If the Fund provides Insurance Company with
the incorrect share net asset value information for any Series through
no fault of Insurance Company, Insurance Company, on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of
shares purchased or
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redeemed to reflect the correct share net asset value. Any error in
the calculation of net asset value, dividend and capital gain
information for a Series greater than or equal to $.01 per share of
such Series, shall be reported immediately upon discovery to Insurance
Company. Any error of a lesser amount shall be corrected in the next
Business Day's net asset value per share for the Series in question.
3.5 At the end of each Business Day for which Insurance Company computes
unit values for a Separate Account, Insurance Company will use the
information described in Sections 3.2 and 3.4 to calculate the
Separate Account unit values for the day. Using this unit value,
Insurance Company will process the day's Separate Account transactions
received by it by the close of trading on the floor of the New York
Stock Exchange (currently 4:00 p.m. Eastern time) to determine the net
dollar amount of Series shares which will be purchased or redeemed at
that day's closing net asset value per share for such Series. The net
purchase or redemption orders will be transmitted to the Fund by
Insurance Company by 11:00 a.m. Eastern Time on the Business Day next
following Insurance Company's receipt of that information. Subject to
Sections 3.6 and 3.8, all purchase and redemption orders for Insurance
Company's General Accounts shall be effected at the net asset value
per share of the relevant Series next calculated after receipt of the
order by the Fund or its Transfer Agent.
3.6 Fund appoints Insurance Company as its agent for the limited purpose
of accepting orders for the purchase and redemption of shares of each
Series for the Separate Account. Fund will execute orders for any
Series at the applicable net asset value per share determined as of
the close of trading on the day of receipt of such orders by Insurance
Company acting as agent ("effective trade date"), provided that the
Fund receives notice of such orders by 11:00 a.m. Eastern Time on the
next following Business Day and, if such orders request the purchase
of Series shares, the conditions specified in Section 3.8, as
applicable, are satisfied. A redemption or purchase request for any
Series that does not satisfy the conditions specified above and in
Section 3.8, as applicable, will be effected at the net asset value
computed for such Series on the Business Day immediately preceding the
next following Business Day upon which such conditions have been
satisfied.
3.7 Insurance Company will make its best efforts to notify Fund in advance
of any unusually large purchase or redemption orders.
3.8 If Insurance Company's order requests the purchase of Series shares,
Insurance Company will pay for such purchases by wiring Federal Funds
to Fund or its designated custodial account on the day the order is
transmitted. Insurance Company shall make all reasonable efforts to
transmit to the Fund payment in Federal Funds by 12:00 noon Eastern
Time on the Business Day the Fund receives the notice of the order
pursuant to Section 3.5. Fund will execute such orders at the
applicable net asset value per share determined as of the close of
trading on the effective trade date if Fund receives payment in
Federal Funds by 12:00 midnight Eastern Time on the Business Day the
Fund receives the notice of the
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order pursuant to Section 3.5. If payment in Federal Funds for any
purchase is not received or is received by the Fund after 12:00 noon
Eastern Time on such Business Day, Insurance 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.
If Insurance Company's order requests a net redemption resulting in a
payment of redemption proceeds to Insurance Company, the Fund shall
wire the redemption proceeds to Insurance Company by the next Business
Day, unless doing so would require the Fund or a Series to dispose of
portfolio securities or otherwise incur additional costs, but in such
event, proceeds shall be wired to Insurance Company within seven days
and the Fund shall notify the person designated in writing (in
accordance with Article XII of this Agreement) by Insurance Company as
the recipient for such notice, of such delay by 3:00 p.m. Eastern Time
the same Business Day that Insurance Company transmits the redemption
order to the Fund. If Insurance Company's order requests the
application of redemption proceeds from the redemption of shares of a
Series to the purchase of shares of another Series or another fund
managed or distributed by Dreyfus, the Fund shall so apply such
proceeds the same Business Day that Insurance Company transmits such
order to the Fund. If, however, such redemption of shares would
require the redeeming Series to dispose of portfolio securities or
otherwise incur additional costs, the Fund shall have until seven days
after the receipt of the order to apply the redemption proceeds to the
purchase of shares of another Series or another fund, provided that at
such time there is no prohibition or other formal objection of the SEC
or applicable state insurance regulatory authority to such a delay in
the application of redemption proceeds by the Fund or Insurance
Company and provided further that the Fund notifies Insurance Company
of such delay within the same time and in the same manner as in the
case of a delay in the payment of redemption proceeds.
3.9 Fund has the obligation to ensure that Series shares are registered
with applicable federal agencies at all times.
3.10 Fund shall confirm each purchase or redemption order made by Insurance
Company. Transfer of Series shares shall be by book entry only. No
share certificates shall be issued to Insurance Company. Insurance
Company shall record shares ordered from Fund in an appropriate title
for the corresponding account.
3.11 Fund shall credit Insurance Company with the appropriate number of
shares.
3.12 On each ex-dividend date of the Fund or, if not a Business Day, on the
first Business Day thereafter, Fund shall communicate to Insurance
Company the amount of dividend and capital gain, if any, per share of
each Series. All dividends and capital gains of any Series shall be
automatically reinvested in additional shares of the relevant Series
at the applicable net asset value per share of such Series on the
payable date. Fund shall, on the day after
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the payable date or, if not a Business Day, on the first Business Day
thereafter, notify Insurance Company of the number of shares so
issued.
ARTICLE IV
STATEMENTS AND REPORTS
4.1 Fund shall provide monthly statements of account as of the end of each
month for all of Insurance Company's accounts by the fifteenth (15th)
Business Day of the following month.
4.2 Upon request and subject to Article V hereof, Fund shall distribute to
Insurance Company copies of the Fund's Prospectuses, proxy
solicitation materials, notices, periodic reports and other printed
materials (which the Fund customarily provides to its shareholders) in
quantities as Insurance Company may reasonably request, to permit
timely distribution to each Contractholder and Participant. Insurance
Company agrees to make timely distribution of such materials to each
Contractholder and Participant to the extent required by law.
4.3 Fund will provide to Insurance Company at least one complete copy of
all registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the Commission or other
regulatory authorities.
4.4 Insurance Company will provide to the Fund at least one copy of all
registration statements, Prospectuses, reports, proxy statements,
sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any
of the above, that relate to the Contracts or the Separate Account,
contemporaneously with the filing of such document with the
Commission.
4.5 Each party hereto shall cooperate with the 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.
ARTICLE V
EXPENSES
5.1 The charge to the Fund for all expenses and costs of each Series,
including but not limited
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to management fees, administrative expenses and legal and regulatory
costs, shall be made in the determination of the relevant Series'
daily net asset value per share so as to accumulate to an annual
charge at the rate set forth in the Fund's Prospectus. Brokerage
commissions, transaction fees and extraordinary expenses will be
charged to the appropriate Series, but will be excluded from the
calculation of expenses and costs described in the immediately
preceding sentence.
5.2 The Fund shall not be charged for the costs of printing and
distributing to prospective Contractholders or for use in the
marketing of the Contracts, copies of the Prospectus or supplements
thereto, notices, proxy solicitation materials, periodic reports or
other printed materials. However, the Fund shall be charged for the
costs of printing such materials for existing Contractholders who have
Contract values allocated to the Fund.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 23,
1987 of the Securities and Exchange Commission under Section 6(c) of
the Act and, in particular, has reviewed the conditions to the relief
set forth in the related Notice. As set forth therein, Insurance
Company agrees to report any potential or existing conflicts promptly
to the Board, and in particular whenever contract voting instructions
are disregarded, and recognizes that it will be responsible for
assisting the Board in carrying out its responsibilities under such
application. Insurance Company agrees to carry out such
responsibilities with a view to the interests of existing
Contractholders.
6.2 If a majority of the Board, or a majority of Disinterested Board
Members, determines that a material irreconcilable conflict exists
with regard to Contractholder investments in the Fund, the Board shall
give prompt notice to all Participating Companies. If the Board
determines that Insurance Company is responsible for causing or
creating said conflict, Insurance Company shall at no cost and expense
to the Fund, 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:
(a) Withdrawing the assets allocable to the Separate Account from
the Series 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
Contractholders; and/or
(b) Establishing a new registered management investment company.
6.3 If a material irreconcilable conflict arises as a result of a decision
by Insurance Company to disregard Contractholder voting instructions
and said decision represents a minority
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position or would preclude a majority vote by all Contractholders
having an interest in the Fund, Insurance Company may be required, at
the Board's election, to withdraw the Separate Account's investment in
the Fund.
6.4 For the purpose of this Article, a majority of the Disinterested Board
Members shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no event will
the Fund be required to bear the expense of establishing a new funding
medium for any Contract. Insurance Company shall not be required by
this Article 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
Contractholders materially adversely affected by the irreconcilable
material conflict.
6.5 No action by Insurance Company taken or omitted, and no action by the
Separate Account or the Fund taken or omitted as a result of any act
or failure to act by Insurance Company pursuant to this Article VI
shall relieve Insurance Company of its obligations under, or otherwise
affect the operation of, this Article VI.
ARTICLE VII
VOTING OF FUND SHARES
7.1 Fund shall provide Insurance Company with copies, subject to Article V
of this Agreement, of the Fund's proxy solicitation materials, reports
to shareholders and other communications to shareholders in a timely
manner and in such quantity as Insurance Company shall reasonably
require for distributing to Contractholders or Participants.
Insurance Company shall:
(a) solicit voting instructions from Contractholders or
Participants on a timely basis and in accordance with
applicable law;
(b) vote the Series shares in accordance with instructions
received from Contractholders or Participants; and
(c) vote Series shares for which no instructions have been
received in the same proportion as Series shares for which
instructions have been received.
Insurance Company agrees at all times to vote its General Account
shares in the same proportion as Series shares for which instructions
have been received from Contractholders or Participants. Insurance
Company further agrees to be responsible for assuring that voting Fund
shares for the Separate Account is conducted in a manner consistent
with other Participating Companies.
7.2 Except to the extent otherwise prohibited or required by applicable
federal or state law,
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Insurance Company agrees that it shall not, without the prior written
consent of the Fund and Dreyfus, solicit, induce or encourage
Contractholders to (a) change or supplement the Fund's current
investment adviser or (b) change, modify, substitute, add to or delete
the Fund from the current investment media for the Contracts.
ARTICLE VIII
MARKETING AND REPRESENTATIONS
8.1 The Fund or its underwriter shall periodically furnish Insurance
Company with the following documents, in quantities as Insurance
Company may reasonably request:
(a) Current Prospectus and any supplements thereto;
(b) other marketing materials.
Expenses for the production of such documents shall be charged in
accordance with Article V of this Agreement.
8.2 Insurance Company shall authorize certain persons or entities which
shall have the requisite licenses to solicit applications for the sale
of Contracts. No representation is made as to the number or amount of
Contracts that are to be sold by Insurance Company. Insurance Company
shall require of each person authorized to solicit applications for
the sale of the Contracts that such person make reasonable efforts to
market the Contracts and to comply with applicable federal and state
laws in connection therewith.
8.3 Insurance Company shall furnish, or shall cause to be furnished, to
the Fund, each piece of sales literature or other promotional material
in which the Fund, its investment adviser or the administrator is
named, at least fifteen Business Days prior to its use. No such
material shall be used unless the Fund approves such material. Such
approval (if given) must be in writing and shall be presumed not given
if not received by Insurance Company within ten Business Days after
receipt by the Fund of such material. The Fund shall use all
reasonable efforts to respond within ten days of receipt. The Fund
shall hold confidential all sales literature and other promotional
material furnished by Insurance Company pursuant to this section
except (a) as reasonably requested by court or administrative agency
(provided the Fund gives Insurance Company sufficient prior notice to
contest any request for disclosure) or (b) to designated employees who
require it solely and only for the purpose of approving such sales
literature or and other promotional material for use. The Fund may
not use or employ the sales literature or promotional material,
directly or indirectly, for any other purpose. All sales literature
or promotional material acquired by the Fund pursuant to this section
shall be and remain the property of Insurance Company.
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8.4 Insurance Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the
Fund or any Series in connection with the sale of the Contracts other
than the information or representations contained in the
then-effective registration statement or Prospectus, as 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.
8.5 Fund shall furnish, or shall cause to be furnished, to Insurance
Company, each piece of the Fund's sales literature or other
promotional material in which Insurance Company or the Separate
Account is named, at least fifteen Business Days prior to its use. No
such material shall be used unless Insurance Company approves such
material. Such approval (if given) must be in writing and shall be
presumed not given if not received by the Fund within ten Business
days after receipt of such material by Insurance Company. Insurance
Company shall use all reasonable efforts to respond within ten days of
receipt by Insurance Company.
8.6 Fund shall not, in connection with the sale of Series shares, give any
information or make any representations on behalf of Insurance Company
or concerning Insurance Company, the Separate Account, or the
Contracts other than the information or representations contained in a
registration statement or prospectus for the Contracts, as it may be
amended or supplemented from time to time, or in published reports for
the Separate Account which are in the public domain or approved by
Insurance Company for distribution to Contractholders or Participants,
or in sales literature or other promotional material approved by
Insurance Company.
8.7 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed
for use, in a newspaper, magazine or other periodical, radio,
television, telephone or tape recording, videotape display, signs or
billboards, motion pictures or other public media), sales literature
(such as any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or all
agents or employees, registration statements, prospectuses, statements
of additional information, shareholder reports and proxy materials,
and any other material constituting sales literature or advertising
under National Association of Securities Dealers, Inc. rules, the Act
or the 1933 Act.
ARTICLE IX
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless the Fund,
Dreyfus, any
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sub-investment adviser of a Series, and their affiliates, and each of
their directors, trustees, officers, employees, agents and each
person, if any, who controls or is associated with any of the
foregoing entities or persons within the meaning of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of Section 9.1),
against any and all losses, claims, damages or liabilities, joint or
several (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in
settlement of, any action, suit or proceeding or any claims asserted)
for which the Indemnified Parties may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect to thereof) (a) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained in information furnished by Insurance Company
for use in the registration statement or Prospectus or sales
literature or advertisements of the Fund or with respect to the
Separate Account or Contracts, 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; (b) arise out of or as a result of conduct,
statements or representations (other than statements or
representations contained in the Prospectus and sales literature or
advertisements prepared by the Fund) of Insurance Company or its
agents, with respect to the sale and distribution of Contracts for
which Series' shares are an underlying investment; (c) arise out of
the wrongful conduct of Insurance Company or persons under its control
with respect to the sale or distribution of the Contracts or Series'
shares; (d) arise out of Insurance Company's incorrect calculation
and/or untimely reporting of net purchase or redemption orders; or (e)
arise out of any breach by Insurance Company of a material term of
this Agreement or as a result of any failure by Insurance Company to
provide the services and furnish the materials or to make any payments
provided for in this Agreement. Insurance Company will reimburse any
Indemnified Party in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
with respect to clauses (a) and (b) above Insurance Company will not
be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in such registration
statement, prospectus, sales literature, or advertisement in
conformity with written information furnished to Insurance Company by
the Fund or by Dreyfus or any of its affiliates specifically for use
therein. This indemnity agreement shall be in addition to any
liability which Insurance Company may otherwise have.
9.2 The Fund agrees to indemnify and hold harmless Insurance Company and
its affiliates, and each of their respective directors, officers,
employees, agents and each person, if any, who controls or is
associated with any of the foregoing entities or persons within the
meaning of the 1933 Act against any losses, claims, damages or
liabilities, joint or several (including any investigative, legal and
other expenses reasonably incurred in connection with, and any amounts
paid in settlement of, any action, suit or proceeding or any claims
asserted) for which Insurance Company or any such director, officer,
employee, agent or controlling person may become subject, under the
1933 Act or otherwise, insofar as such
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losses, claims, damages or liabilities (or actions in respect thereof)
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or Prospectus or sales literature or advertisements prepared
by the Fund; (b) arise out of or are based upon the omission to state
in the registration statement or Prospectus or sales literature or
advertisements prepared by the Fund any material fact required to be
stated therein or necessary to make the statements therein not
misleading; or (c) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the
registration statement or Prospectus or sales literature or
advertisements with respect to the Separate Account or the Contracts
and such statements were based on written information provided to
Insurance Company by the Fund; and the Fund will reimburse any legal
or other expenses reasonably incurred by Insurance Company or any such
director, officer, employee, agent or controlling person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Fund will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement,
Prospectus, sales literature or advertisements in conformity with
written information furnished to the Fund by Insurance Company or its
affiliates specifically for use therein. This indemnity agreement will
be in addition to any liability which the Fund may otherwise have.
9.3 The Fund shall indemnify and hold Insurance Company harmless against
any and all liability, loss, damages, costs or expenses which
Insurance Company may incur, suffer or be required to pay due to the
Fund's (a) incorrect calculation of the daily net asset value,
dividend rate or capital gain distribution rate of a Series; (b)
incorrect reporting of the daily net asset value, dividend rate or
capital gain distribution rate; and (c) untimely reporting of the net
asset value, dividend rate or capital gain distribution rate; provided
that the Fund shall have no obligation to indemnify and hold harmless
Insurance Company if the incorrect calculation or incorrect or
untimely reporting was the result of incorrect information furnished
by Insurance Company or information furnished untimely by Insurance
Company or otherwise as a result of or relating to a breach of this
Agreement by Insurance Company.
9.4 Promptly after receipt by an indemnified party under this Article of
notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under this Article, notify the indemnifying party of the
commencement thereof. The omission to so notify the indemnifying party
will not relieve the indemnifying party from any liability under this
Article IX, except to the extent that the omission results in a
failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of the failure to
give such notice. In case any such action is brought against any
indemnified party, and it notified the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, assume the
defense thereof, with counsel satisfactory to such indemnified party,
and to the extent that the indemnifying party has
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given notice to such effect to the indemnified party and is performing
its obligations under this Article, the indemnifying party shall not
be liable for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof, other
than reasonable costs of investigation. Notwithstanding the
foregoing, in any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (a)
the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (b) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent.
A successor by law of the parties to this Agreement shall be entitled
to the benefits of the indemnification contained in this Article IX.
ARTICLE X
COMMENCEMENT AND TERMINATION
10.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions
herein.
10.2 This Agreement shall terminate without penalty as to one or more
Series at the option of the terminating party in accordance with the
following provisions:
a. At the option of Insurance Company or the Fund at any time
from the date hereof upon 180 days' notice, unless a shorter
time is agreed to by the parties;
b. At the option of Insurance Company, if shares of any Series
are not reasonably available to meet the requirements of the
Contracts as determined by Insurance Company. Prompt notice of
election to terminate shall be furnished by Insurance Company,
said termination to be effective ten days after receipt of
notice unless the Fund makes available a sufficient number of
shares to meet the requirements of the Contracts within said
ten-day period;
c. At the option of Insurance Company, upon the institution of
formal proceedings against the Fund by the Commission,
National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment
or outcome of which would, in Insurance Company's reasonable
judgment, materially impair the Fund's ability to meet and
perform the Fund's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by
Insurance Company with said termination to be effective upon
receipt of notice;
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d. At the option of the Fund, upon the institution of formal
proceedings against Insurance Company by the Commission,
National Association of Securities Dealers or any other
regulatory body, the expected or anticipated ruling, judgment
or outcome of which would, in the Fund's reasonable judgment,
materially impair Insurance Company's ability to meet and
perform Insurance Company's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by
the Fund with said termination to be effective upon receipt of
notice;
e. At the option of the Fund, if the Fund shall determine, in its
sole judgment reasonably exercised in good faith, that
Insurance Company has suffered a material adverse change in
its business or financial condition or is the subject of
material adverse publicity and such material adverse change or
material adverse publicity is likely to have a material
adverse impact upon the business and operation of the Fund or
Dreyfus, the Fund shall have notified Insurance Company in
writing of such determination and its intent to terminate this
Agreement, and after consideration on the actions taken by
Insurance Company and any other changes in circumstances since
the giving of such notice, such determination of the Fund
shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the
effective date of termination;
f. At the option of Insurance Company after having been notified
by the Fund of a termination or proposed termination of the
Investment Advisory Agreement between the Fund and Dreyfus or
its successors, which notice the Fund shall provide promptly
to Insurance Company, the effective date of termination of
this Agreement to be as determined by Insurance Company;
g. In the event the Fund's shares are not registered, issued or
sold in accordance with applicable federal law, or such law
precludes the use of such shares as the underlying investment
medium of Contracts issued or to be issued by Insurance
Company. Termination shall be effective immediately upon such
occurrence without notice;
h. At the option of the Fund upon a reasonable determination by
the Board in good faith that it is no longer advisable and in
the best interests of shareholders for the Fund to continue to
operate pursuant to this Agreement. Termination pursuant to
this Subsection (h) shall be effective upon notice by the Fund
to Insurance Company of such termination;
i. At the option of the Fund if the Contracts cease to qualify as
annuity contracts under the Code, or if the Fund reasonably
believes that the Contracts may fail to so qualify;
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j. At the option of any party to this Agreement, upon another
party's breach of any material provision of this Agreement,
which breach has not been cured to the satisfaction of the
other parties within ten days after written notice of such
breach is delivered to the party committing the breach;
k. At the option of the Fund, if the Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law;
l. At the option of Insurance Company, if Insurance Company shall
determine, in its sole judgment reasonably exercised in good
faith, that the investment adviser to the Fund has suffered a
material adverse change in its business or financial
condition, or the Fund or the investment adviser to the Fund
is the subject of material adverse publicity, and such
material adverse change or material adverse publicity is
likely to have a material adverse impact on the sale of the
Contracts and/or the operations or business reputation of
Insurance Company, the Insurance Company shall have notified
the Fund in writing of such determination and its intent to
terminate this Agreement, and after consideration on the
actions taken by the Fund or the investment adviser to the
Fund and any other changes in circumstances since the giving
of such notice, such determination of Insurance Company shall
continue to apply on the sixtieth (60th) day following the
giving of such notice, which sixtieth day shall be the
effective date of termination; or
m. Upon assignment of this Agreement, unless made with the
written consent of the non-assigning party.
Any such termination pursuant to Section 10.2a, 10.2d, 10.2e, 10.2f or
10.2k herein shall not affect the operation of Article V of this
Agreement. Any termination of this Agreement shall not affect the
operation of Article IX of this Agreement.
10.3 Notwithstanding any termination of this Agreement pursuant to Section
10.2 hereof, the Fund may, at its option, continue to make available
additional Series shares for so long as the Fund desires pursuant to
the terms and conditions of this Agreement as provided below, for all
Contracts in effect on the effective date of termination of this
Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if the Fund so elects to make
additional Series shares available, the owners of the Existing
Contracts or Insurance Company, whichever shall have legal authority
to do so, shall be permitted to reallocate investments in the Series,
redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts.
In the event of a termination of this Agreement pursuant to Section
10.2 hereof, the Fund and Dreyfus, as promptly as is practicable under
the circumstances, shall notify Insurance Company whether the Fund
shall elect to continue to make Series shares available after such
termination. If Series shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect
and thereafter either
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the Fund or Insurance Company may terminate the Agreement, as so
continued pursuant to this Section 10.3, upon prior written notice to
the other party, such notice to be for a period that is reasonable
under the circumstances but, if given by the Fund, need not be more
than six months prior to termination. In determining whether to elect
to continue to make available additional Fund shares, the Fund shall
act in good faith, giving due consideration to the interests of
existing shareholders, including holders of Existing Contracts.
ARTICLE XI
AMENDMENTS
11.1 Any other changes in the terms of this Agreement shall be made by
agreement in writing between Insurance Company and Fund.
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ARTICLE XII
NOTICE
12.1 Each notice required by this Agreement shall be given by certified
mail, return receipt requested, to the appropriate parties at the
following addresses:
Insurance Company: The Variable Annuity Life Insurance Company
0000 Xxxxx Xxxxxxx, X0-00
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxx, Secretary
Fund: Dreyfus Variable Investment Fund
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Secretary
with copies to: Stroock & Stroock & Xxxxx
0 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII
MISCELLANEOUS
13.1 This Agreement has been executed on behalf of the Fund by the
undersigned officer of the Fund in his capacity as an officer of the
Fund. The obligations of this Agreement shall only be binding upon the
assets and property of the Fund and shall not be binding upon any
Trustee, officer or shareholder of the Fund individually.
ARTICLE XIV
LAW
14.1 This Agreement shall be construed in accordance with the internal laws
of the State of New York, without giving effect to principles of
conflict of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By:
--------------------------------------
Its:
--------------------------------------
Attest:
--------------------------------
DREYFUS VARIABLE INVESTMENT FUND
By:
---------------------------------------
Its:
--------------------------------------
Attest:
---------------------------------
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Schedule A
VALIC Variable Annuity Contracts
Form Number Name
----------- ----
UITG-194 Group Fixed and Variable Deferred Annuity Contract
UIT-194 Individual Fixed and Variable Deferred Annuity Contract
UTN-194 Individual Fixed and Variable Nonqualified Deferred
Annuity Contract
UIT-XXX-194 Individual Fixed and Variable Deferred Retirement
Annuity Contract
XXX-SEP-194 Individual Fixed and Variable Simplified Employee Pension
Annuity Contract
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Schedule B
VALIC Segregated Asset Accounts
Date of Resolution of Company's Board
Name of Account which Established the Account
--------------- --------------------------------------
The Variable Annuity Life Insurance Company
Separate Account A April 18, 1979
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Schedule C
Series of Dreyfus Variable Investment Fund
Available Under the Contracts:
Small Cap Portfolio
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