FUND PARTICIPATION AGREEMENT
This Agreement is entered into as of the 14th day of September, 2001, between
American Equity Investment Life Insurance Company ("Insurance Company"), a life
insurance company organized under the laws of the State of Iowa, and X.X. Xxxxxx
Series Trust II ("Fund"), a business trust organized under the laws of Delaware,
with respect to the Fund's portfolio or portfolios set forth on Schedule 1
hereto, as such Schedule may be revised from time to time (the "Series"; if
there are more than one Series to which this Agreement applies, the provisions
herein shall apply severally to each such Series).
ARTICLE I 1.
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 and
Insurance Company is open for business.
1.4. "Commission" shall mean the Securities and Exchange Commission.
1.5. "Contract" shall mean a variable annuity or variable life insurance
contract that uses the Fund as an underlying investment medium.
Individuals who participate under a group Contract are "Participants".
1.6. "Contractholder" shall mean any entity that is a party to a Contract
with a Participating Company.
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. "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.
1.9. "Plans" shall mean qualified pension and retirement benefit plans.
1.10. "Prospectus" shall mean the Fund's current prospectus and statement of
additional information, as most recently filed with the Commission,
with respect to the Series.
1.11. "Separate Account" shall mean the separate accounts listed on Schedule
II hereto as such Schedule may be revised from time to time. Each
separate account is established by Insurance Company in accordance
with the laws of the State of Iowa.
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.
1.13. "Insurance Company's General Account(s)" shall mean the general
account(s) of Insurance Company and its affiliates which invest in the
Fund.
ARTICLE II 2.
REPRESENTATIONS
2.1 Insurance Company represents 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
Iowa Insurance Code for the purpose of offering to the public certain
variable annuity contracts and variable life insurance contracts; (c)
each Separate Account is registered as a unit investment trust under
the Act (or exempt therefrom) and will serve as a segregated
investment account for the Contracts; (d) each 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; and (e) each Separate Account shall comply
with all applicable legal requirements.
2.2 Insurance Company represents that (a) the Contracts will be registered
as securities under the Securities Act of 1933, as amended ("1933
Act") (or exempt therefrom); (b) the Contracts will be issued and sold
in compliance in all material respects with all applicable federal and
state laws; and (c) the sale of the Contracts shall comply in all
material respects with applicable 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.
2.3 Insurance Company represents that the income, gains and losses,
whether or not realized, from assets allocated to the Separate Account
are, in accordance with the applicable Contracts and applicable state
insurance law, to be credited to or charged against such Separate
Account without regard to other income, in accordance with applicable
state insurance law, gains or losses from assets allocated to any
other accounts of Insurance Company. Insurance Company represents, in
accordance with applicable state insurance law, that the assets of the
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.
2.4 Fund represents 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 the Fund to operate and offer
its shares as an underlying investment medium for Participating
Companies. The Fund has established five portfolios and may in the
future establish other portfolios.
2.5 Fund represents 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 will make every effort 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 Subject to the Fund's compliance with Section 817(h) of the Code,
Insurance Company represents and agrees 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
its investment adviser 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. Insurance Company agrees that
any prospectus offering a Contract that is a "modified endowment
contract," as that term is defined in Section 7702A of the Code, will
identify such Contract as a modified endowment contract (or policy).
2.7 "Fund represents and agrees that each Series currently complies with
the diversification requirements of Section 817(h) of the Code and the
regulations issued thereunder relating to the diversification
requirements for variable life insurance contracts and variable
annuity contracts, that it will make every effort to comply with those
requirements and that it will notify the Insurance Company immediately
upon having a reasonable basis for believing that any Series has
ceased to so qualify or that a Series might not so qualify in the
future."
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 and to Plans.
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 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 it maintains
comprehensive general liability coverage and a fidelity bond covering
it and each of its employees and agents who deal with the money and/or
securities of the Fund with limits of not less than those considered
commercially reasonable and appropriate under current industry
practices. 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 the Fund's investment adviser 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 3.
FUND SHARES
3.1 The Contracts funded through each Separate Account will provide for
the investment in Series shares.
3.2 Fund agrees to make the shares of its Series available for purchase at
the then applicable net asset value per share by Insurance Company and
each Separate Account on each Business Day pursuant to rules of the
Commission. Notwithstanding the foregoing, 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
(it being understood that for this purpose shareholders means
Contractholders). Notice of election to suspend or terminate shall be
furnished by the Fund, if or where practicable and if such suspension
or termination is in the sole discretion of the Board, said
termination to be effective 10 business days after receipt of such
notice by the Insurance Company in order to give the Insurance Company
sufficient time to take appropriate steps in response to such
suspension or termination.
3.3 Fund agrees that 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 and to Plans. No
shares of any Series will be sold to the general public.
3.4 Fund shall use its best efforts to provide closing net asset value,
dividend and capital gain information for each Series available on a
per-share and Series basis to Insurance Company by 7:00 p.m. Eastern
Time on each Business Day. Any material errors in the calculation of
net asset value, dividend and capital gain information shall be
reported immediately upon discovery to Insurance Company. Non-material
errors will 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, 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 10:00 a.m. Eastern Time on the Business Day next
following Insurance Company's receipt of that information provided,
however, that the Fund shall provide additional time to the Insurance
Company in the event that the Fund is unable to meet the 7:00 p.m.
Eastern Time stated in Section 3.4. Such additional time shall be
equal to the additional time that the Fund takes to make net asset
available to the Insurance Company. 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 Accounts. 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 10:00 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 transmit to the Fund payment in
Federal Funds by the close of the Federal Reserve wire system 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 the close of
the Federal Reserve wire system on the Business Day the Fund receives
the notice of the order pursuant to Section 3.5. If payment in Federal
Funds for any purchase is not received 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 the redemption
of Series shares valued at or greater than $1 million dollars, the
Fund may wire such amount to the Insurance Company within five days of
the
order to enable the Insurance Company to pay redemption proceeds
within the time specified in Section 22(e) of the Act or such shorter
period of time as may be required by law.
3.9 Fund has the obligation to ensure that Series shares are registered
with applicable federal agencies at all times.
3.10 Fund will confirm each purchase or redemption order made by Insurance
Company. Transfer of Series shares will be by book entry only. No
share certificates will be issued to Insurance Company. Insurance
Company will 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 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 4.
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. Statements will include
transaction detail for the statement period of each Series in which
shares were purchased, redeemed or exchanged, and a summary of the
number of Series shares owned and net asset value thereof as of the
statement date.
4.2 Fund shall distribute to Insurance Company copies of the Fund's
Prospectuses, proxy materials, notices, periodic reports and other
printed materials (which the Fund customarily provides to its
shareholders) in quantities as Insurance Company may reasonably
request for distribution to each Contractholder and Participant.
4.3 Fund will provide to Insurance Company at least one complete copy of
all registration statements, Prospectuses, reports, proxy statements
and other voting solicitation materials, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments and supplements 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 and
other voting solicitation materials, sales literature and other
promotional materials, applications for exemptions, requests for
no-action letters, and all amendments and supplements to any of the
above, that relate to the Contracts or the Separate Accounts,
contemporaneously with the filing of such document with the
Commission.
4.5 The Fund will provide the Insurance Company with as much notice as is
reasonably practicable of any proxy solicitation for any Series, and of
any change in the Fund's registration statement or prospectus,
particularly any change resulting in a change to the registration
statement or prospectus for any Separate Account. The Fund will work
with the Insurance Company so as to enable the Insurance Company to
solicit proxies from Contractholders, or to make changes to its
registration statement or prospectus, in an orderly manner. The Fund
will make reasonable efforts to attempt to have changes affecting
Contract prospectuses become effective simultaneously with the annual
updates for such prospectuses.
ARTICLE V 5.
EXPENSES
5.1 The charge to the Fund for all expenses and costs of the Series,
including but not limited to management fees, administrative expenses
and legal and regulatory costs, will 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. Excluded from the expense limitation described herein
shall be brokerage commissions and transaction fees and extraordinary
expenses.
5.2 Except as provided in this Article V and, in particular in the next
sentence, Insurance Company shall not be required to pay directly any
expenses of the Fund or expenses relating to the distribution of its
shares. Insurance Company shall pay the following expenses or costs:
a. The cost of printing the Fund's Prospectus, or marketing
materials for prospective Insurance Company Contractholders
and Participants as the Fund's investment adviser and
Insurance Company shall agree from time to time.
b. Distribution expenses of any Fund materials or marketing
materials for prospective Insurance Company Contractholders
and Participants.
c. Distribution expenses of Fund materials or marketing
materials for Insurance Company Contractholders and
Participants.
Except as provided herein, all other Fund expenses shall not be borne
by Insurance Company.
ARTICLE VI
EXEMPTIVE RELIEF
6.1 Insurance Company has reviewed a copy of the order dated December 1996
of the Securities and Exchange Commission under Section 6(c) of the
Act granting the Fund the exemptive relief necessary to permit the
Fund to engage in mixed and shared funding as that term is defined in
the corresponding application for exemptive relief 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 its sole cost and
expense, and to the extent reasonably practicable (as determined by a
majority of the Disinterested Board Members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict.
Such necessary action may include, but shall not be limited to:
a. Withdrawing the assets allocable to a 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 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 a
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, Article V.
ARTICLE VII 7.
VOTING OF FUND SHARES
7.1 Fund shall provide Insurance Company with copies at no cost to
Insurance Company, of the Fund's proxy material, reports to
shareholders and other communications to shareholders 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
Series shares for the Separate Account is conducted in a manner
consistent with other Participating Companies.
ARTICLE VIII 8.
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 borne by
Insurance Company, if applicable, in accordance with Section 5.2 of
this Agreement.
8.2 Insurance Company shall designate 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 make reasonable efforts to market the Contracts and shall comply
with all 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 within ten Business Days after receipt of such
material. The Fund shall use all reasonable efforts to respond within
ten days of receipt. Fund reserves the right to reasonably object to
the continued use of any such sales literature or other promotional
material in which the Fund, its investment adviser or administrator is
named, and no such material shall be used if the Fund so objects.
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 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 except
with the permission of 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, a Separate Account or
the Contract 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 within ten Business Days after
receipt of such material. Insurance
Company shall use all reasonable efforts to respond within ten days
of receipt. The Insurance Company reserves the right to reasonably
object to the continued use of any such sales literature or other
promotional material in which the Insurance Company, a Separate
Account or the Contracts is named, and no such material shall be
used if the Insurance Company so objects.
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 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, except with the permission of the 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, telephone directories (other than routine
listings), electronic media, computerized media, or other public
media), sales literature (such as any written or electronic
communication distributed or made generally available to customers or
the public, including, but not limited to brochures, circulars,
research reports, market letters, performance reports or summaries,
form letters, telemarketing scripts, 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.
ARTICLE IX 9.
INDEMNIFICATION
9.1 Insurance Company agrees to indemnify and hold harmless the Fund, its
investment adviser, any 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 (but not any participating Insurance Company)
(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 claim 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) (i) 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; (ii) 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 of 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; (iii) 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; (iv)
arise out of Insurance Company's incorrect calculation and/or untimely
reporting of net purchase or redemption orders; or (v) 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 (i) and (ii) 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 information furnished to Insurance Company by the Fund
or any other Indemified Party for use therein; and provided, further,
that Insurance Company shall not be liable for special, consequential
or incidental damages. This indemnity agreement will 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
each of its directors, officers, employees, agents and each person, if
any, who controls Insurance Company within the meaning of the 1933 Act
against any losses, claims, damages or liabilities to 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 losses, claims, damages or liabilities (or actions in respect
thereof) (1) 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 of the Fund; (2) arise out of or are based upon the
omission to state in the registration statement or Prospectus or sales
literature or advertisements of the Fund any material fact required to
be stated therein or necessary to make the statements therein not
misleading; (3) 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 information provided to Insurance
Company by the Fund or any of its affiliates; or (4) arises out of any
breach by the Fund of a material term of this Agreement or as a result
of any failure by the Fund to provide the services and furnish the
materials under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to comply with
the diversification requirements specified in Section 2.7 of this
Agreement, or to qualify as a Regulated Investment Company under
Subchapter M of the Code), 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
information furnished to the Fund by Insurance Company or any other
indemnified party for use therein; and provided, further, that the
Fund shall not be liable for special, consequential or incidental
damages. 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 (1) incorrect calculation of the daily net asset value,
dividend rate or capital gain distribution rate of a Series; (2)
incorrect reporting of the daily net asset value, dividend rate or
capital gain distribution rate; and (3) 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; and provided, further, that the Fund
shall not be liable for special, consequential or incidental damages.
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 reasonably satisfactory to such
indemnified party, and to the extent that the indemnifying party has
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 (i) the
indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) 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 10.
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:
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;
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 its investment adviser, the Fund shall notify Insurance
Company in writing of such determination and its intent to
terminate this Agreement, and after considering 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 the Insurance Company, if the Insurance
Company shall determine, in its sole judgement reasonably
exercised in good faith, that the Fund or its investment
adviser 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
Insurance Company or a Separate Account or the sale of or
retention of assets under the Contracts, the Insurance
Company shall notify the Fund in writing of such
determination and its intent to terminate this Agreement,
and after considering the actions taken by the Fund and any
other changes in circumstances since the giving of such
notice, such determination of the 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;
g. At the option of the Insurance Company, if the Fund ceases
to qualify as a Regulated Investment Company under
Subchapter M of the Code, or under any successor or similar
provision, or if the Company reasonably believes that the
Fund may fail to so qualify;
h. At the option of the Insurance Company, if the Fund fails to
meet the diversification requirements of Section 817(h) of
the Code or if the Company reasonably believes that the Fund
will fail to meet such requirements;
i. Upon termination of the Investment Advisory Agreement
between the Fund and its investment adviser or its
successors unless Insurance Company specifically approves
the selection of a new Fund investment adviser. The Fund
shall promptly furnish notice of such termination to
Insurance Company;
j. 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;
k. At the option of the Fund upon a 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;
l. At the option of the Fund if the Contracts cease to qualify
as annuity contracts or life insurance policies, as
applicable, under the Code, or if the Fund reasonably
believes that the Contracts may fail to so qualify;
m. At the option of either party to this Agreement, upon
another party's breach of any material provision of this
Agreement;
n. At the option of the Fund, if the Contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law; or
o. 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, 10.2l or
10.2n 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 and its investment adviser shall, at the option
of the Insurance Company, continue to make available additional Series
shares 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, without limitation, based upon instructions from 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. If the Series shares continue to be made
available after a termination of this Agreement pursuant to Section
10.2, the provisions of this Agreement shall remain in effect and
thereafter either 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 longer than the greater of (i) six months or (ii) the period
required by Insurance Company to obtain any necessary approval from
the Commission or any state insurance regulatory authority provided
that Insurance Company makes a reasonable good faith effort to obtain
such approvals in a reasonable period of time.
ARTICLE XI 11.
AMENDMENTS
11.1 Any other changes in the terms of this Agreement shall be made by
agreement in writing between Insurance Company and Fund.
ARTICLE XII 12.
NOTICE
12.1 Any notice required by this Agreement shall be sufficiently given by
overnight, registered or certified mail, to the appropriate parties at
the following addresses:
Insurance Company:
American Equity Investment Life
Insurance Company
0000 Xxxxxxx Xxxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx
Chief Financial Officer
AND
Farm Bureau Life Insurance Company
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Vice President-Investment
Administration
Fund:
X.X. Xxxxxx Series Trust II
c/x Xxxxxx Guaranty Trust Company
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mutual Funds - Legal
Notice shall be deemed to be given on the date of receipt by the
addresses as evidenced by the return receipt.
ARTICLE XIII 13.
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.
13.2 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
of Contractholders and Participants and all information reasonably
identified as confidential in writing by any other party hereto and,
except as permitted by this Agreement, shall not disclose, disseminate
or utilize such names and addresses and other confidential information
until such time as it may come into the public domain without the
express written consent of the affected party.
13.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
13.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
13.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.6 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.
ARTICLE XIV 14.
LAW
14.1 This Agreement shall be construed in accordance with the internal laws
of the State of Delaware, without giving effect to principles of
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be duly
executed and attested as of the date first above written.
American Equity Investment Life
Insurance Company
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Its: Executive Vice President/Treasurer
------------------------------------
X.X.XXXXXX SERIES TRUST II
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------
Its: Vice President & Assistant Secretary
------------------------------------
SCHEDULE I
NAME OF SERIES
X.X. Xxxxxx Small Company Portfolio
X.X. Xxxxxx Mid Cap Value Portfolio
SCHEDULE II
SEPARATE ACCOUNTS
America Equity Life Annuity Account
