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EXHIBIT 8(n)(i)
PARTICIPATION AGREEMENT
AMONG
INVESCO STOCK FUNDS, INC.
INVESCO DISTRIBUTORS, INC.
AND
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this ____ day of
__________, 2000 by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY,
(hereinafter the "Company"), organized under the laws of the State of Texas, on
its own behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A hereto as such schedule may be amended from time to time
(each such account hereinafter referred to as the "Account"), and the INVESCO
STOCK FUNDS, INC., a Maryland corporation (hereinafter the "Fund") and INVESCO
DISTRIBUTORS, INC., (hereinafter the "Underwriter"), a Delaware corporation.
WHEREAS, the Fund engages in business as an open-end management
investment company and is available to act as the investment vehicle for
separate accounts established for variable life insurance policies and variable
annuity contracts (the "Contract") to be offered by insurance companies which
have entered into participation agreements with the Fund and the Underwriter
(hereinafter "Participating Insurance Companies"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, as set forth on Schedule C, beneficial interests in the Fund
are divided into series of shares, each representing the interest in a
particular managed portfolio of securities and other assets (individually a
"Portfolio" and collectively the "Portfolio"), as may be amended from time to
time by mutual agreement of the parties hereto, to the Accounts of the Company;
and
WHEREAS, INVESCO Funds Group, Inc. (the "Adviser") is duly registered
as an investment adviser under the Investment Advisers Act of 1940 and any
applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable
life insurance policies and/or variable annuity contracts under the 1933 Act;
and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such
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Account on Schedule hereto, to set aside and invest assets attributable to one
or more variable life insurance policies and/or variable annuity contracts; and
WHEREAS, the Underwriter is registered as a broker-dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended (hereinafter the "1934 Act"), and is a member in good standing
of the National Association of Securities Dealers, Inc. (hereinafter "NASD");
and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Fund at net asset
value on behalf of each Account to fund certain of the aforesaid variable life
insurance policies and/or variable annuity contracts; and
NOW THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to make available to the Company those shares of
the Portfolio which each Account orders, executing such orders on a daily basis
at the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Portfolio. For purposes of this Section 1.1,
the Company shall be the designee of the Fund for receipt of such orders from
each Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 10:15 a.m. Eastern time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Fund calculates
its net asset value pursuant to the rules of the SEC. The Fund may net the
notice of redemptions it receives from the Company against the notice of
purchases it receives from the Company.
1.2 The Fund agrees to make Portfolio shares available continuously for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates Portfolio's net asset value
pursuant to rules of the SEC and the Fund shall use reasonable efforts to
calculate such net asset value on each day which the New York Stock Exchange is
open for trading. Notwithstanding the foregoing, the Board of Directors of the
Fund (hereinafter the "Board") may refuse to sell Portfolio shares to any
person, or suspend or terminate the offering of its shares if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board, acting in good faith and in light of its fiduciary
duties under federal and any applicable state laws, necessary in the best
interests of the shareholders of a Portfolio. Notice of election to suspend or
terminate shall be furnished in writing, by the Fund, said termination to be
effective 10 Business Days after receipt of such notice by the Company in order
to give the Company sufficient time to take appropriate steps in response to
such suspension or termination.
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1.3 The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the request for redemption. For purposes of this
Section 1.3, the Company shall be the designee of the Fund for receipt of
requests for redemption from each Account and receipt by such designee shall
constitute receipt by the Fund; provided that the Fund receives notice of such
request for redemption by 10:15 a.m. Eastern time on the next following Business
Day. Proceeds shall be wired to Company within three (3) Business Days or such
longer period permitted by the Investment Company Act of 1940, as amended (the
"1940 Act") or the rules, orders or regulations thereunder, and the Fund shall
notify the person designated in writing by Company as the recipient for such
notice of such delay by 3:00 p.m. Central time the same Business Day that
Company transmits the redemption order to the Fund. The Company alone shall be
responsible for proper disbursement or crediting of redemption proceeds; the
Fund will not bear any responsibility whatsoever for each action.
1.4 The Company agrees to purchase and redeem the shares of the Fund in
accordance with the provisions of this Agreement and the provisions the Fund's
then-_________ prospectus. The Company agrees that all net amounts available
under the variable life insurance policies and/or variable annuity contracts
with the form number(s) which are listed on Schedule B attached hereto and
incorporated herein by this reference, as such Schedule B may be amended from
time to time hereafter by mutual written agreement of all the parties hereto,
(the "Contracts") shall be invested in the Fund, in such other Funds advised by
the Adviser as may be mutually agreed to in writing by the parties hereto, in
the Company's general account, or in an investment company other than the Fund.
1.5 The Company shall pay for Fund shares on the next Business Day
after an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire.
For purpose of Section 2.10 and 2.11, upon receipt by the Fund of the federal
funds so wired, such funds shall cease to be the responsibility of the Company
and shall become the responsibility of the Fund.
1.6 Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.7 The Fund shall furnish same day notice (by facsimile) to the
Company of the declaration of any income, dividends or capital gain
distributions payable on Portfolio shares. Notwithstanding this Section 1.7, the
Fund shall utilize its best efforts to provide the Company with at least ten
(10) Business Days advance notice of any forthcoming dividend or capital gain
distributions. The Company hereby elects to receive all such income dividends
and capital gain distributions as are payable on the Portfolio shares in
additional shares of the applicable Portfolio. The Company reserves the right to
revoke this election and to receive all such income dividends and capital gain
distributions in cash. The Fund shall notify the Company of the number of shares
so issued as payment of such dividends and distributions.
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1.8 The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 7:00 p.m.
Eastern time.
1.9 If the Fund provides the Company with materially incorrect net
asset value information through no fault of the Company, the Company shall be
entitled to an adjustment with respect to the number of shares purchased or
redeemed to reflect the correct net asset value per share. The determination of
materiality of any net asset value pricing error shall be based on the SEC's
recommended guidelines regarding such errors. Any material error in the
calculation or reporting of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery by the Fund to the
Company.
1.10 The Fund shall provide written confirmation to the Company of the
amount of shares traded and the associated net asset value total trade amount
and the outstanding share balances held in the Account(s) as of the end of each
Business Day. Such information shall be furnished by 1:00 p.m. Eastern time on
the next Business Day.
ARTICLE II. Representations and Warranties
2.1 The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and that the sale of the Contracts shall comply in all material respects with
state insurance suitability requirements. The Company further represents and
warrants that it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly established each
Account prior to any issuance or sale thereof as a segregated asset account
under the Insurance Code of the State of Texas and has registered or, prior to
any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts, and that it will maintain such
registration for so long as any Contracts are outstanding, as applicable. The
Company will amend the registration statement under the 1933 Act for the
Contracts and the registration statement under the 1940 Act for the account from
time to time as required to effect the continuous offering of the Contracts or
as may otherwise be required by applicable law. The company represents that the
contracts are, and will be at the time of issuance, treated as annuity contracts
and/or life insurance policies under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and that it will make every
effort to continue such treatment.
2.2 The Fund represents and warrants that Portfolio shares sold
pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the State of
Maryland, and all applicable federal and state securities laws and that the Fund
is and shall remain registered under the 0000 Xxx. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and
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qualify Portfolio shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Fund or the
Underwriter.
2.3 The Fund represents that, under the terms of its investment
advisory agreements with Adviser, the Adviser will use its best efforts to
manage the Portfolio in compliance with the Portfolio's investment objectives,
policies and restrictions as set forth in the Portfolio Prospectus. The Fund
represents that these objectives, policies and restrictions do and will include
operating as a Regulated Investment Company ("RIC") in compliance with
Subchapter M of the Code and regulations thereunder. The Fund has adopted and
will maintain procedures for ensuring that the Portfolio is managed in
compliance with Subchapter M and regulations thereunder. On request, the Fund
shall also provide the Company with such materials, cooperation and assistance
as may be reasonably necessary for the Company or any appropriate person
designated by the Company to review from time to time the procedures and
practices of the Adviser or each sub-investment adviser to the Fund for ensuring
that the Portfolio is managed in compliance with Subchapter M and regulations
thereunder. In the event of any noncompliance regarding its status as a RIC, the
Fund shall notify the Company immediately upon having a reasonable basis for
believing that it has ceased to so qualify, and shall pursue those efforts
necessary to enable each affected Portfolio of the Fund to qualify once again
for treatment as a RIC in compliance with Subchapter M, including cooperation in
good faith with the Company.
2.4 The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. To the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to
have its board of directors, a majority of whom are not interested persons of
the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.5 The Fund represents that the Fund's investment policies, fees and
expenses are and shall at all times remain in compliance with the laws of the
State of Maryland, and the Fund and the Underwriter represent that their
respective operations are and shall at all times remain in material compliance
with the laws of the State of Maryland to the extent required to perform this
Agreement.
2.6 The Fund represents that it is lawfully organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act.
2.7 The Underwriter represents and warrants that it is duly organized
and in good standing under the laws of the State of Delaware. The Underwriter
represents and warrants that it is a member in good standing of the NASD and is
registered as a broker-dealer with the SEC. The Underwriter further represents
that it will sell and distribute the Fund shares in accordance with the laws of
the State of Delaware and all applicable state and federal securities laws,
including without limitation the 1933 Act, the 1934 Act and the 0000 Xxx.
2.8 The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal or state securities laws and that the
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Adviser shall perform its obligations for the Fund in compliance in all material
respects with the laws of the State of Delaware and any applicable state and
federal securities laws.
2.9 The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money or securities of the Fund are and
shall continue to be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Fund in an amount not less than the minimal
coverage as required currently by Rule 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. The aforesaid Bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.10 The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other entities dealing with the
money or securities of the Fund are and shall continue to be at all times
covered by a blanket fidelity bond or similar coverage for the benefit of the
Fund, in an amount not less than two million dollars ($2 million). The aforesaid
Bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company.
2.11 The Company represents that it will not purchase shares of the
Portfolios with assets derived from tax-qualified retirement plans except,
indirectly, through Contracts purchased in connection with such plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1 The Fund shall provide the Company with as many copies of the
Fund's current prospectus as the Company may reasonably request. If requested by
the Company in lieu thereof, the Fund shall provide camera-ready film containing
the Fund's prospectus and Statement of Additional Information, and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus and/or Statement of Additional Information
for the Fund is amended during the year) to have the prospectus for the
Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other fund companies' prospectuses
and statements of additional information or place the Fund's Prospectus and
Statement of Additional Information on the Company's internet website or other
electronic media. All expenses of printing and distributing Fund prospectuses
and Statements of Additional Information shall be the expense of the Fund. For
Fund prospectuses and Statements of Additional Information provided by the
Company to its existing owners of Contracts in order to update disclosure as
required by the 1933 Act and/or the 1940 Act, the cost of printing shall also be
borne by the Fund. If the Company chooses to receive camera-ready film in lieu
of receiving printed copies of the Fund's prospectus, the Fund will reimburse
the Company in an amount equal to the product of A and B where A is the number
of such prospectuses distributed to owners of the Contracts, and B is the Fund's
per unit cost of typesetting and printing the Fund's prospectus. The same
procedures shall be followed with respect to the Fund's Statement of Additional
Information.
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3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Fund; The Fund
shall provide the Company, at the Fund's expense, with as many such copies as
the Company may reasonably request.
3.3 The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to shareholders, and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to Contract owners.
3.4 If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Portfolio shares in accordance with
instructions received from Contract owners; and
(iii) vote Portfolio shares for which no instructions have
been received in the same proportion as shares of
such Portfolio for which instructions have been
received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. The Company
reserves the right to vote Fund shares held in any segregated asset account in
its own right, to the extent permitted by law. Participating Insurance Companies
shall be responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner consistent
with the above standards and all legal requirements, including the Proxy Voting
Procedures set forth in Schedule D.
ARTICLE IV. Sales Material and Information
4.1 The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund, the Adviser or the Underwriter is named, at least
fifteen Business Days prior to its use. No such material shall be used if the
Fund or its designee object to such use within fifteen Business Days after
receipt of such material. The Fund, the Adviser, the Underwriter, or its
designee reserves the right to reasonably object to the continued use of any
such sales literature or other promotional material in which the Fund, the
Adviser or the Underwriter is named, and no such material shall be used if the
Fund, the Adviser, the Underwriter, or its designee so object.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Fund shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
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4.3 The Fund, the Adviser, or its designee shall furnish, or shall
cause to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company or its Account(s),
is named at least fifteen Business Days prior to its use. No such material shall
be used if the Company or its designee object to such use within fifteen
Business Days after receipt of such material. The Company reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Company is named, and no such material shall
be used thereafter if the Company so objects.
4.4 The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material provided by the Company or its
designee, except with the permission of the Company. The Company agrees to
respond to any request for approval on a prompt and timely basis.
4.5 The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and notices, orders
or responses relating thereto and all supplements and amendments to any of the
above, that relate to the Fund or its shares, contemporaneously with the filing
of such document with, or the issuance of such documents by, the SEC or other
regulatory authorities.
4.6 The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional Information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and notices, orders or responses relating thereto and all supplements
and amendments to any of the above, that relate to the Contracts or each
Account, contemporaneously with the filing of such document with, or the
issuance of such documents by, the SEC or other regulatory authorities. In
addition, the Company shall provide to the Fund at least one complete copy of
(i) a registration statement that relates to the Contracts or each Account,
containing representative and relative disclosure concerning the Fund; and (ii)
any post-effective amendments to any registration statements relating to the
Contracts or such Account that refer or relate to the Fund.
4.7 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, telephone directories (other than
routine listings), electronic or other public media), sales literature (i.e.,
any written or electronic communication distributed or made generally available
to customers or the public, including brochures, circulars, research reports,
market letters, performance reports or
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summaries, form letters, telemarketing scripts, seminar texts, reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, and registration
statements, prospectuses, Statements of Additional Information, shareholder
reports, and proxy materials, and any other material constituting sales
literature or advertising under the NASD rules, the 1933 Act or the 0000 Xxx.
4.8 The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for the Fund, and of any
material change in the Fund's registration statement or prospectus, particularly
any change resulting in a change to the registration statement or prospectus for
any Account. The Fund will work with the Company so as to enable the Company to
solicit proxies from Contract owners, consistent with Schedule D, or to make
changes to its registration statement, in an orderly manner.
4.9 The Fund, the Adviser and the Underwriter hereby consent to the
Company's use of the names of the INVESCO, AMVESCAP and INVESCO Funds Group,
Inc. as well as the names of the Designated Funds set forth in Schedule C of
this Agreement, in connection with marketing the Contracts, subject to the terms
of Sections 4.1 of this Agreement. Company acknowledges and agrees that Adviser
and Underwriter and/or their affiliates own all right, title and interest in an
to the name INVESCO and the INVESCO open circle design, and covenants not, at
any time, to challenge the rights of Adviser and Underwriter and/or their
affiliates to such name or design, or the validity or distinctiveness thereof.
The Fund, the Adviser and the Underwriter hereby consent to the use of any
trademark, trade name, service xxxx or logo used by the Fund, the Adviser and
the Underwriter, subject to the Fund's, the Adviser's and/or the Underwriter's
approval of such use and in accordance with reasonable requirements of the Fund,
the Adviser or the Underwriter. Such consent will terminate with the termination
of this Agreement. Adviser or Underwriter may withdraw this consent as to any
particular use of any such name or identifying marks at any time (i) upon
Adviser's or Underwriter's reasonable determination that such use would have a
material adverse effect on the reputation or marketing efforts of Adviser,
Underwriter or such Funds or (ii) if no investment company, or series or class
of shares of any investment company advised by Adviser or distributed by
Underwriter continues to be offered through variable insurance contracts issued
by Company; provided however, that Adviser or Underwriter may, in either's
individual discretion, continue to use materials prepared or printed prior to
the withdrawal of such authorization. The Company agrees and acknowledges that
all use of any designation comprised in whole or in part of the name, trademark,
trade name, service xxxx and logo under this Agreement shall inure to the
benefit of the Fund, Adviser and/or the Underwriter.
4.10 The Fund, the Adviser, the Underwriter and the Company agree to
adopt and implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Underwriter, respectively,
and their respective affiliated companies, that is intended for use only by
brokers or agents selling the Contracts is properly marked as "Not For Use With
The Public" and that such information is only so used.
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ARTICLE V. Fees and Expenses
5.1 The Fund and Underwriter shall pay no fee or other compensation to
the Company under this Agreement, except that if the Fund adopts and implements
a plan pursuant to Rule 12b-1 to finance distribution expenses, then the Fund
may make payments to the Company or to the underwriter for the Contracts if and
in amounts agreed to by the Fund in writing. No such payments shall be made
directly by the Fund. Currently, no such payments are contemplated. The Fund may
pay fees to the Company for administrative services provided to Contract owners
that are not primarily intended to result in the sale of shares of the Portfolio
or of the underlying Contracts.
5.2 All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund, to the extent permitted by law. The Fund
shall be responsible for ensuring that all Portfolio shares are registered and
authorized for issuance in accordance with applicable federal law and, if and to
the extent deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, all taxes on the issuance or transfer of
the Fund's shares.
5.3 The Fund shall bear the expenses of printing and distributing the
Fund's Prospectus and of printing and distributing the Fund's proxy materials
and reports to such Contract owners.
ARTICLE VI. Foreign Tax Credits
6.1 The Fund agrees to consult in advance with the Company concerning
any decision to elect or not to elect pursuant to Section 853 of the Code to
pass through the benefit of any foreign tax credits to its shareholders.
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ARTICLE VII. Indemnification
7.1 Indemnification By The Company
7.1(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, the Underwriter, and each person who controls or is associated with the
Fund, the Adviser, or the Underwriter within the meaning of such terms under the
federal securities laws, and each director, trustee, officer, employee or agent
of the foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 7.1) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Company) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement, prospectus or statement of
Additional Information for the Contracts or contained in the
Contracts or advertisements or sales literature for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission
was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use
in the Registration Statement or prospectus for the Contracts
or in the Contracts or advertisements or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or persons under
its control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, advertisements or sales literature of the Fund or
any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading if such a statement or omission was made in
reliance upon information furnished to the Fund by or on
behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
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(v) arise out of or result from any material breach of any
representation or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company, as limited by and in
accordance with the provisions of Sections 7.1 (b) and 7.1 (c)
hereof.
7.1(b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Fund, whichever is applicable.
7.1(c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate.
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.1(d) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
7.2 Indemnification by the Underwriter
7.2(a) The Underwriter agrees to indemnify and hold harmless the
Company and (not a party hereto) each of its respective directors and officers,
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this
Section 7.2) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Fund's
shares or the Contracts and:
Page 12 of 25
13
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or advertisements or
sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Fund by or on
behalf of the Company for use in the Registration Statement or
prospectus for the Fund or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Underwriter or persons under its
control) or wrongful conduct of the Fund, Adviser or
Underwriter or persons under their control, with respect to
the sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement,
prospectus, advertisements or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund; or
(iv) arise 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 to qualify as a regulated
investment company under Subchapter M of the Code); or
(v) arise out of or result from any material breach of any
representation or warranty made by the Fund or the Underwriter
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Fund or the
Underwriter; as limited by and in accordance with the
provisions of Section 7.2(b) and 7.2(c) hereof.
7.2(b) The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
each Company or the Account, whichever is applicable.
Page 13 of 25
14
7.2(c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Underwriter also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Underwriter to such party of the Underwriter's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Underwriter
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
7.2(d) The Indemnified Party will promptly notify the Underwriter of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Contracts or the operation of each Account.
7.3 Indemnification By the Fund
7.3(a) The Fund agrees to indemnify and hold harmless the Company and
each of its respective directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.3)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are related to the operations of the Fund and:
(i) arise 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 to qualify as a regulated
investment company under Subchapter M of the Code); or
(ii) arise out of or result from any material breach of any
representations or warranty made by the Fund in this Agreement
or arise out of or result from any other material breach of
this Agreement by the Fund; as limited by and in accordance
with the provisions of Sections 7.3(b) and 7.3(c) hereof.
7.3(b) The Fund shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against on Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Company, the Fund, the Underwriter or each Account, whichever is applicable.
Page 14 of 25
15
7.3(c) The Fund shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent). but failure to notify the Fund of any
such claim shall not relieve the Fund from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Fund will be entitled to participate, at
its own expense, in the defense thereof. The Fund also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Fund will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.3(d) The Company and the Underwriter agree promptly to notify the
Fund of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE VIII. Applicable Law
8.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Delaware.
8.2 This Agreement shall be subject to the provisions of the 1933 Act,
1934 Act and 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant not applicable Public Funds, and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE IX. Termination
9.1 This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason with respect
to one, some, or all of the Portfolios, upon one
hundred eighty (180) day's advance written notice
delivered to the other parties or, if later, upon
receipt of any required exemptive relief or orders
from the SEC, unless otherwise agreed in a separate
written agreement among the parties; or
(b) termination by the Company by written notice to the
Fund and Underwriter with respect to any Portfolio,
based upon the Company's
Page 15 of 25
16
good faith determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts; or
(c) termination by the Company by written notice to the
Fund and the Underwriter with respect to any
Portfolio, in the event the Portfolio's shares are
not registered, issued or sold in accordance with
applicable state or federal law or such law precludes
the use of such shares as the underlying investment
media of the Contracts issued or to be issued by the
Company; or
(d) termination by the Company by written notice to the
Fund and the Underwriter in the event that the Fund
ceases to qualify as a Regulated Investment Company
under Subchapter M of the Code or under any successor
or similar provision, or if the Company reasonably
and in good faith believes that the Fund may fail to
do so qualify; or
(e) termination by either the Fund or the Underwriter by
written notice to the Company, if either one or both
of the Fund or the Underwriter respectively, shall
determine, in their sole judgment exercised in good
faith, that the Company or its affiliated companies
has suffered a material adverse change in its
business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity such
termination to be effective sixty (60) days after
receipt by the Company of written notice of the
election to terminate; or
(f) termination by the Company by written notice to the
Fund and the Underwriter, if the Company shall
determine, in its sole judgment exercised in good
faith, that either the Fund, the Adviser or the
Underwriter has suffered a material adverse change in
its business, operations, financial condition or
prospects since the date of this Agreement or is the
subject of material adverse publicity; or
(g) termination by any party by written notice upon the
institution of formal proceedings against the
Company, the Fund, the Adviser or the Underwriter by
the NASD, the SEC or other applicable regulatory
body; or
(h) termination by any party by advance written notice
upon the "assignment" of the Agreement (as defined
under the 0000 Xxx) unless made with the written
consent of each party to the Agreement; or
(i) termination by the Company by written notice upon the
sale, acquisition or change of control of the
Adviser; or
(j) termination by the Company or the Fund arising from
the substitution of Fund shares with the shares of
another investment company for the
Page 16 of 25
17
Contracts for which the Fund shares have been
selected to serve as the underlying investment
medium, subject to compliance with applicable
regulations of the SEC and subject to receipt of any
necessary regulatory approvals and/or the vote of
Contract owners having an interest in the Account (or
sub-account), Company will give sixty (60) day's
written notice to the Fund and the Underwriter of any
proposed action to replace Fund shares; or
(k) termination by the Company, the Fund or the
Underwriter by written notice to the other parties
upon a material breach of the Agreement by the other
party; or
(l) termination by the Fund in the event any of the
Contract are not issued in accordance with applicable
federal and/or state law; such termination to be
effective immediately without notice.
9.2. Effect of Termination. Notwithstanding any termination of
this Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund 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. the owners of the Existing
Contracts shall be permitted to reallocate investments in the designated
Portfolio, redeem investments in the Fund or invest in the Fund upon the making
of additional purchase payments under the Existing Contracts. The parties agree
that this Section 9.2 shall not apply to any terminations under Article VII and
the effect of such Article VII terminations shall be governed by Article VII of
this Agreement.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered
or certified mail, overnight delivery or facsimile to the other party at the
address of such party set forth below or at such other address as such party may
from time to time specify in writing to the other party.
If to the Fund:
INVESCO Stock Funds, Inc.
--------------------------
0000 X. Xxxxx Xxx.
--------------------------
Xxxxxx, XX 00000-0000
--------------------------
Attention: General Counsel
---------------
Fax No.
-------------------
Page 17 of 25
18
If to the Underwriter:
INVESCO Distributors, Inc.
--------------------------
0000 X. Xxxxx Xxx.
--------------------------
Xxxxxx, XX 00000-0000
--------------------------
Attention: General Counsel
---------------
Fax No.
-------------------
If to the Company:
0000 Xxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Fax No. (000) 000-0000
ARTICLE XI. Miscellaneous
11.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither the
directors, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
11.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
11.3 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.
11.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5 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.
11.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit each other and 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 to the extent practicable and except where a party's
respective interests are adverse to or in conflict with another party's
interests.
Page 18 of 25
19
11.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
11.8 This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior consent of all parties hereto.
11.9 The parties hereto acknowledge and agree that this Agreement shall
not be exclusive in any respect.
IN WITNESS HEREOF, each of the parties has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed as of the date specified below.
THE VARIABLE ANNUITY LIFE INVESCO STOCK FUNDS, INC.
INSURANCE COMPANY
By: By:
---------------------------- ----------------------------
Title: Title:
------------------------- -------------------------
Date: Date:
------------------------- -------------------------
INVESCO DISTRIBUTORS, INC.
By:
----------------------------
Title:
-------------------------
Date:
-------------------------
Page 19 of 25
20
Schedule A
Accounts
Date of Resolution of Company's Board
Name of Account which Established the Account
--------------- -------------------------------------
The Variable Annuity Life Insurance April 18, 1979
Company Separate Account A
Page 20 of 25
21
Schedule B
Contracts
o Portfolio Director Series
Page 21 of 25
22
Schedule C
Series of the Fund
o INVESCO Blue Chip Growth Fund
Page 22 of 25
23
Schedule D
Proxy Voting Procedures
This following is a list of procedures and corresponding responsibilities for
the handling of proxies and voting instructions relating to the fund. The
defined terms herein shall have the meaning assigned in the Participation
Agreement except that the term "Company: shall also include the department or
third party assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the company by the Fund as early as
possible before the date set by the fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of
voting instructions from owners of the contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will
inform the Company of the Record, Mailing and Meeting dates. This will
be done verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number
of units that are attributed to each contract owner/policy (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
NOTE: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to
call in the number of Customers to the Fund, as soon as possible, but
no later than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the company
either before or together with the Customer's receipt of voting,
instruction solicitation material. The Fund will provide the last
Annual Report to the company pursuant to the terms of Section 6.2 of
the Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
o name (legal name as found on account registration)
o address
o Fund or account number
o coding to state number of units
o individual Card number for use in tracking and verification of
votes (already on Cards as printed by the Fund).
Page 23 of 25
24
(This and related steps may occur later in the chronological process
due to possible uncertainties relating to the proposals.)
5. During this time, the Fund will develop, produce and pay for the Notice
of Proxy and the Proxy Statement (one document). Printed and folder
notices an statements will be sent to Company for insertion into
envelopes (envelopes and return envelopes are provided and paid for by
the Company). Contents of envelope sent to Customers by the Company
will include.
o Voting Instruction Card(s)
o one proxy notice and statement (one document)
o return envelope (postage pre-paid by company) addressed to the
Company or its tabulation agent
o "urge buckslip" - optional, but recommended. (This is a small,
single sheet of paper that request Customers to vote as
quickly as possible and that their vote is important. One copy
will be supplied by the Fund.)
o cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness
and completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but NOT
including,) the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process
used. An often used procedure is to sort Cards on arrival by proposal
into vote categories of all yes, no, or mixed replies, and to begin
data entry.
NOTE: Postmarks are not generally needed. A need to postmark
information would be due to an insurance company's internal procedure
and has not been required by the fund in the past.
9. Signatures on Card checked against legal name on account registration
that was printed on the Card.
NOTE: For example, if the account registration is under "Xxxx X. Xxxxx,
Trustee," then that is the exact legal name to be printed on the Card
and is the signature needed on the Card.
Page 24 of 25
25
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory
letter and a new Card and return envelope. The mutilated or illegible
Card is disregarded and considered to be NOT RECEIVED for purposes of
vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to
why they did not complete the system. Any questions on those Cards are
usually remedied individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may then be
calculated. If the initial estimates and the actual vote do not
coincide, then an internal audit of that vote should occur. This may
entail a recount.
12. The actual tabulation of votes is done in units that are then converted
to shares. (It is very important that the Fund receives the tabulation
stated in terms of a percentage and the number of SHARES.) The Fund
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the company to the Fund
on the morning of the meeting no later than 10:00 a.m. Eastern time.
The Fund may request an earlier deadline if reasonable and if required
to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote shares will be
required from the company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote in challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will
be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
Page 25 of 25
