PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS
(INVESCO VARIABLE INSURANCE FUNDS),
INVESCO DISTRIBUTORS, INC.,
AND
FORETHOUGHT LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the day of , 2013
("Agreement"), by and among AIM Variable Insurance Funds (Invesco Variable
Insurance Funds), a Delaware Trust ("AVIF"), Invesco Distributors, Inc., a
Delaware corporation ("INVESCO"), and Forethought Life Insurance Company, an
Indiana life insurance company ("LIFE COMPANY"), on behalf of itself and each of
its segregated asset accounts listed in Schedule A hereto, as the parties hereto
may amend from time to time (each, an "Account," and collectively, the
"Accounts"). AVIF, INVESCO and LIFE COMPANY are collectively referred to herein
as the "Parties".
WITNESSETH THAT:
WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC")
as an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, AVIF currently consists of separate series portfolios ("Series"),
offering shares ("Shares") each of which are registered under the Securities Act
of 1933, as amended (the "1933 Act") and are currently sold to one or more
separate accounts of life insurance companies to fund benefits under variable
annuity contracts and variable life insurance contracts; and
WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the
Parties hereto may amend from time to time (each a "Fund"; reference herein to
"AVIF" includes reference to each Fund, to the extent the context requires)
available for purchase by the Accounts; and
WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity contracts
and variable life insurance contracts ("Contracts") as set forth on Schedule A
hereto, as the Parties hereto may amend from time to time, which Contracts
(hereinafter collectively, the "Contracts"), if required by applicable law, will
be registered under the 1933 Act; and
WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each of
which may be divided into two or more subaccounts ("Subaccounts"; reference
herein to an "Account" includes reference to each Subaccount thereof to the
extent the context requires); and
WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of which
is registered as a unit investment trust investment company under the 1940 Act
(or exempt therefrom), and the security interests deemed to be issued by the
Accounts under the Contracts will be registered as securities under the 1933 Act
(or exempt therefrom); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of
the Accounts to fund the Contracts; and
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WHEREAS, INVESCO is a broker-dealer registered with the SEC under the Securities
Exchange Act of 1934 Act (the "1934 Act") and a member in good standing of the
Financial Services Regulatory Authority ("FINRA");
NOW, THEREFORE, in consideration of the mutual benefits and promises contained
herein, the Parties hereto agree as follows:
SECTION 1. AVAILABLE FUNDS
1.1 AVAILABILITY
AVIF will make Shares of each Fund available to LIFE COMPANY for purchase and
redemption at net asset value and with no sales charges, subject to the terms
and conditions of this Agreement. The Board of Trustees of AVIF (the "Board")
may refuse to sell Shares of any Fund to any person, or suspend or terminate the
offering of Shares of any Fund (a) if such action is required by law or by
regulatory authorities having jurisdiction, (b) if, in the sole discretion of
the Trustees acting in good faith and in light of their fiduciary duties under
federal and any applicable state laws, such action is deemed in the best
interests of the shareholders of such Fund, or (c) if such action is required by
any policies that the Board has adopted and that apply to all Participating
Insurance Companies (as defined in Section 5.3 herein).
1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS
The Parties hereto may agree, from time to time, to add other Funds to provide
additional funding media for the Contracts, or to delete, combine, or modify
existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule
A, any applicable reference to a Fund, AVIF, or its Shares herein shall include
a reference to any such additional Fund. Schedule A, as amended from time to
time, is incorporated by reference and is a part hereof.
1.3 NO SALES TO THE GENERAL PUBLIC
AVIF represents and warrants that no Shares of any Fund have been or will be
sold to the general public.
SECTION 2. PROCESSING TRANSACTIONS
2.1 TIMELY PRICING AND ORDERS
(a) AVIF or its designated agent will use its best efforts to provide LIFE
COMPANY with the net asset value per Share for each Fund by 6:00 p.m. Central
Time on each Business Day. As used herein, "Business Day" shall mean any day on
which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF
calculates the Fund's net asset value, and (iii) LIFE COMPANY is open for
business.
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(b) LIFE COMPANY will use the data provided by AVIF each Business Day pursuant
to paragraph (a) immediately above to calculate Account unit values and to
process transactions that receive that same Business Day's Account unit values.
LIFE COMPANY will perform such Account processing the same Business Day, and
will place corresponding orders to purchase or redeem Shares with AVIF by 9:00
a.m. Central Time the following Business Day; PROVIDED, however, that AVIF shall
provide additional time to LIFE COMPANY in the event that AVIF is unable to meet
the 6:00 p.m. time stated in paragraph (a) immediately above. Such additional
time shall be equal to the additional time that AVIF takes to make the net asset
values available to LIFE COMPANY.
(c) With respect to payment of the purchase price by LIFE COMPANY and of
redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and
redemption orders with respect to each Fund and shall transmit one net payment
per Fund in accordance with Section 2.2, below.
(d) If AVIF provides materially incorrect Share net asset value information (as
determined under SEC guidelines), LIFE COMPANY shall be entitled to an
adjustment to the number of Shares purchased or redeemed to reflect the correct
net asset value per Share. 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 to LIFE COMPANY. Materiality and reprocessing
cost reimbursement shall be determined in accordance with standards established
by the Parties as provided in Schedule B, attached hereto and incorporated
herein (except that for any money market fund, materiality shall be determined
in a manner consistent with Rule 2a-7 under the 1940 Act).
"Notwithstanding the provisions of paragraph (b) of this Section 2.1, the
Parties agree to communicate, process and settle purchase and redemption
transactions for Shares (collectively, "Share transactions") via the
Fund/SERV and Networking systems of the National Securities Clearing
Corporation (hereinafter, "NSCC"). Forethought and AVIF (IVIF) each
represents and warrants that it: (a) has entered into an agreement with
NSCC, (b) has met and will continue to meet all of the requirements to
participate in Fund/SERV and Networking, and (c) intends to remain at all
times in compliance with the then current rules and procedures of NSCC, all
to the extent necessary or appropriate to facilitate such communications,
processing, and settlement of Share transactions. AVIF (IVIF) agrees to
provide Forethought with account positions and activity data relating to
Share transactions via Networking. Forethought shall place trades for the
previous Business Day with NSCC using Defined Contribution Clearance &
Settlement (hereinafter, "DCC&S") indicators, no later than 8:00 a.m.
Central Time, and Forethought shall pay for Shares by the scheduled close
of federal funds transmissions on the same Business Day on which it places
an order to purchase Shares in accordance with this section. Payment shall
be in federal funds transmitted by wire from the designated NSCC Settling
Bank (on behalf of Forethought).
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For purposes of this Agreement, "Fund/SERV" shall mean NSCC's system for
automated, centralized processing of mutual fund purchase and redemption
orders, settlement, and account registration; "Networking" shall mean
NSCC's (Level Three) system that allows mutual funds and life insurance
companies to exchange account level information electronically; "DCC&S"
shall refer to an NSCC program that facilitates the automated processing
and reporting of defined contribution transactions among asset managers,
plan trustees, and plan administrators, including third-party
administrators; and "Settling Bank" shall mean the entity appointed by AVIF
(IVIF) to perform such settlement services on behalf of AVIF (IVIF), which
agrees to abide by NSCC's then current rules and procedures insofar as they
relate to same day funds settlement. In all cases, processing and
settlement of Share transactions shall be done in a manner consistent with
applicable law.
In the event that any Party is prohibited from communicating, processing or
settling Share transactions via Fund/SERV or Networking, such Party shall
notify the other Parties by 9:00 a.m. Central Time. After all Parties have
been notified, the provisions of paragraphs (b) and (c) of this Section 2.1
shall apply."
2.2 TIMELY PAYMENTS
LIFE COMPANY will wire payment for net purchases to a custodial account
designated by AVIF by 1:00 p.m. Central Time on the same day as the order for
Shares is placed, to the extent practicable. AVIF will wire payment for net
redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time
on the same day as the Order is placed, to the extent practicable, but in any
event within five (5) calendar days after the date the order is placed in order
to enable LIFE COMPANY to pay redemption proceeds within the time specified in
Section 22(e) of the 1940 Act or such shorter period of time as may be required
by law.
2.3 APPLICABLE PRICE
(a) Share purchase payments and redemption orders that result from purchase
payments, premium payments, surrenders and other transactions under Contracts
(collectively, "Contract transactions") and that LIFE COMPANY receives prior to
the close of regular trading on the New York Stock Exchange (or such other time
set by the Board for purposes of determining the current net asset value of a
Fund in accordance with Rule 22c-1 under the 0000 Xxx) on a Business Day will be
executed at the net asset values of the appropriate Funds next computed after
receipt by AVIF or its designated agent of the orders. For purposes of this
Section 2.3(a), LIFE COMPANY shall be the designated agent of AVIF for receipt
of orders relating to Contract transactions, in accordance with Section 22(c)
and Rule 22c-1 under the 1940 Act, on each Business Day and receipt by such
designated agent shall constitute receipt by AVIF; PROVIDED that AVIF receives
notice of such orders by 9:00 a.m. Central Time on the next following Business
Day or such later time as computed in accordance with Section 2.1(b) hereof. In
connection with this Section 2.3(a), LIFE COMPANY represents and warrants that
it will not submit any order for Shares or engage in any practice, nor will it
allow or suffer any person acting on its behalf to submit any order for Shares
or engage in any practice, that would violate or cause a violation of applicable
law or regulation including, without limitation Section 22 of the 1940 Act and
the rules thereunder.
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(b) All other Share purchases and redemptions by LIFE COMPANY will be effected
at the net asset values of the appropriate Funds next computed after receipt by
AVIF or its designated agent of the order therefor, and such orders will be
irrevocable.
(c) Without limiting the scope or effect of Section 1.1 hereof, pursuant to
which the Board may reject a Share purchase order by or on behalf of LIFE
COMPANY under the circumstances described therein, LIFE COMPANY agrees to
cooperate with the Fund and INVESCO to prevent any person exercising, or
purporting to exercise, rights or privileges under one or more Contracts
(including, but not limited to Contract owners, annuitants, insureds or
participants, as the case may be (collectively, "Participants")) from engaging
in any trading practices in any Fund that the Board or INVESCO determines, in
good faith and in their sole discretion, to be detrimental or potentially
detrimental to the other shareholders of the Fund, or to be in contravention of
any applicable law or regulation including, without limitation, Section 22 of
the 1940 Act and the rules thereunder. Such cooperation may include, but shall
not be limited to, identifying the person or persons engaging in such trading
practices, facilitating the imposition of any applicable redemption fee on such
person or persons, limiting the telephonic or electronic trading privileges of
such person or persons, and taking such other remedial steps, all to the extent
permitted or required by applicable law.
2.4 DIVIDENDS AND DISTRIBUTIONS
AVIF will furnish notice by written confirmation on or prior to the payment date
to LIFE COMPANY of any income dividends or capital gain distributions payable on
the Shares of any Fund. LIFE COMPANY hereby elects to reinvest all dividends and
capital gains distributions in additional Shares of the corresponding Fund at
the ex-dividend date net asset values until LIFE COMPANY otherwise notifies AVIF
in writing, it being agreed by the Parties that the ex-dividend date and the
payment date with respect to any dividend or distribution will be the same
Business Day. LIFE COMPANY reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash.
2.5 BOOK ENTRY
Issuance and transfer of AVIF Shares will be by book entry only. Stock
certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will
be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account.
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SECTION 3. COSTS AND EXPENSES
3.1 GENERAL
Except as otherwise specifically provided in Schedule C, attached hereto and
made a part hereof, each Party will bear, or arrange for others to bear, all
expenses incident to its performance under this Agreement.
3.2 PARTIES TO COOPERATE
Each Party agrees to cooperate with the others, as applicable, in arranging to
print, mail and/or deliver, in a timely manner, combined or coordinated
prospectuses or other materials of AVIF and the Accounts.
SECTION 4. LEGAL COMPLIANCE
4.1 TAX LAWS
(a) AVIF represents and warrants that each Fund is currently qualified as a
regulated investment company ("RIC") under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), and represents that it will use its best
efforts to qualify and to maintain qualification of each Fund as a RIC. AVIF
will notify LIFE COMPANY immediately upon having a reasonable basis for
believing that a Fund has ceased to so qualify or that it might not so qualify
in the future.
(b) AVIF represents that it will use its best efforts to comply and to maintain
each Fund's compliance with the diversification requirements set forth in
Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the
Code. AVIF will notify LIFE COMPANY immediately upon having a reasonable basis
for believing that a Fund has ceased to so comply or that a Fund might not so
comply in the future. In the event of a breach of this Section 4.1(b) by AVIF,
it will take all reasonable steps to adequately diversify the Fund so as to
achieve compliance within the grace period afforded by Section 1.817-5 of the
regulations under the Code.
(c) Notwithstanding any other provision of this Agreement, but without limiting
the ability of AVIF and/or INVESCO to assume the defense of any action pursuant
to Section 12.2(d) hereof, LIFE COMPANY agrees that if the Internal Revenue
Service ("IRS") asserts in writing in connection with any governmental audit or
review of LIFE COMPANY or, to LIFE COMPANY's knowledge, of any Participants,
that any Fund has failed to comply with the diversification requirements of
Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts
that could give rise to any claim against AVIF or its affiliates as a result of
such a failure or alleged failure:
(i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential
claim (subject to the Confidentiality provisions of Section 18 as to any
Participant);
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(ii) LIFE COMPANY shall consult with AVIF as to how to minimize any
liability that may arise as a result of such failure or alleged failure;
(iii) LIFE COMPANY shall use its best efforts to minimize any liability of
AVIF or its affiliates resulting from such failure, including, without
limitation, demonstrating, pursuant to Treasury Regulations Section
1.817-5(a)(2), to the Commissioner of the IRS that such failure was
inadvertent;
(iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and
accounting advisors to participate in any conferences, settlement
discussions or other administrative or judicial proceeding or contests
(including judicial appeals thereof) with the IRS, any Participant or any
other claimant regarding any claims that could give rise to liability to
AVIF or its affiliates as a result of such a failure or alleged failure;
PROVIDED, however, that LIFE COMPANY will retain control of the conduct of
such conferences discussions, proceedings, contests or appeals;
(v) any written materials to be submitted by LIFE COMPANY to the IRS, any
Participant or any other claimant in connection with any of the foregoing
proceedings or contests (including, without limitation, any such materials
to be submitted to the IRS pursuant to Treasury Regulations Section
1.817-5(a)(2)), (a) shall be provided by LIFE COMPANY to AVIF (together
with any supporting information or analysis); subject to the
confidentiality provisions of Section 18, at least ten (10) business days
or such shorter period to which the Parties hereto agree prior to the day
on which such proposed materials are to be submitted, and (b) shall not be
submitted by LIFE COMPANY to any such person without the express written
consent of AVIF which shall not be unreasonably withheld;
(vi) LIFE COMPANY shall provide AVIF or its affiliates and their
accounting and legal advisors with such cooperation as AVIF shall
reasonably request (including, without limitation, by permitting AVIF and
its accounting and legal advisors to review the relevant books and records
of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of
any written submissions provided to it pursuant to the preceding clause or
its assessment of the validity or amount of any claim against its arising
from such a failure or alleged failure;
(vii) LIFE COMPANY shall not with respect to any claim of the IRS or any
Participant that would give rise to a claim against AVIF or its affiliates
(a) compromise or settle any claim, (b) accept any adjustment on audit, or
(c) forego any allowable administrative or judicial appeals, without the
express written consent of AVIF or its affiliates, which shall not be
unreasonably withheld, PROVIDED that LIFE COMPANY shall not be required,
after exhausting all administrative remedies, to appeal any adverse
judicial
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decision unless AVIF or its affiliates shall have provided an opinion of
independent counsel to the effect that a reasonable basis exists for taking
such appeal; and PROVIDED FURTHER that the costs of any such appeal shall
be borne equally by the Parties hereto; and
(viii) AVIF and its affiliates shall have no liability as a result of such
failure or alleged failure if LIFE COMPANY fails to comply with any of the
foregoing clauses (i) through (vii), and such failure could be shown to
have materially contributed to the liability.
Should AVIF or any of its affiliates refuse to give its written consent to any
compromise or settlement of any claim or liability hereunder, LIFE COMPANY may,
in its discretion, authorize AVIF or its affiliates to act in the name of LIFE
COMPANY in, and to control the conduct of, such conferences, discussions,
proceedings, contests or appeals and all administrative or judicial appeals
thereof, and in that event AVIF or its affiliates shall bear the fees and
expenses associated with the conduct of the proceedings that it is so authorized
to control; PROVIDED, that in no event shall LIFE COMPANY have any liability
resulting from AVIF's refusal to accept the proposed settlement or compromise
with respect to any failure caused by AVIF. As used in this Agreement, the term
"affiliates" shall have the same meaning as "affiliated person" as defined in
Section 2(a)(3) of the 1940 Act.
(d) LIFE COMPANY represents and warrants that the Contracts currently are and
will be treated as annuity contracts or life insurance contracts under
applicable provisions of the Code and that it will use its best efforts to
maintain such treatment; LIFE COMPANY will notify AVIF immediately upon having a
reasonable basis for believing that any of the Contracts have ceased to be so
treated or that they might not be so treated in the future.
(e) LIFE COMPANY represents and warrants that each Account is a "segregated
asset account" and that interests in each Account are offered exclusively
through the purchase of or transfer into a "variable contract," within the
meaning of such terms under Section 817 of the Code and the regulations
thereunder. LIFE COMPANY will use its best efforts to continue to meet such
definitional requirements, and it will notify AVIF immediately upon having a
reasonable basis for believing that such requirements have ceased to be met or
that they might not be met in the future.
4.2 INSURANCE AND CERTAIN OTHER LAWS
(a) AVIF will use its best efforts to comply with any applicable state
insurance laws or regulations, to the extent specifically requested in writing
by LIFE COMPANY, which efforts shall include, without limitation, the furnishing
of information that is not otherwise available to LIFE COMPANY and that is
required by state insurance law to enable LIFE COMPANY to obtain the authority
needed to issue the Contracts in any applicable state.
(b) LIFE COMPANY represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the laws of the
State of Indiana and has full corporate power, authority and legal right to
execute, deliver and perform its duties and comply with its obligations under
this Agreement, (ii) it has legally and validly established and maintains each
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Account as a segregated asset account under Section IC 27-1-5-1of the Indiana
Insurance Law and the regulations thereunder, and (iii) the Contracts comply in
all material respects with all other applicable federal and state laws and
regulations.
(c) AVIF represents and warrants that it is lawfully organized, validly
existing, and in good standing under the laws of the State of Delaware and has
full power, authority, and legal right to execute, deliver, and perform its
duties and comply with its obligations under this Agreement.
4.3 SECURITIES LAWS
(a) LIFE COMPANY represents and warrants that (i) interests in each Account
pursuant to the Contracts will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Contracts will be duly authorized for
issuance and sold in compliance with all applicable federal and state laws,
including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and the
law(s) of LIFE COMPANY's state(s) of organization and domicile, (iii) each
Account is and will remain registered under the 1940 Act, to the extent required
by the 1940 Act, (iv) each Account does and will comply in all material respects
with the requirements of the 1940 Act and the rules thereunder, to the extent
required, (v) each Account's 1933 Act registration statement relating to the
Contracts, together with any amendments thereto, will at all times comply in all
material respects with the requirements of the 1933 Act and the rules
thereunder, (vi) LIFE COMPANY will amend the registration statement for its
Contracts under the 1933 Act and for its Accounts under the 1940 Act from time
to time as required in order to effect the continuous offering of its Contracts
or as may otherwise be required by applicable law, and (vii) each Account
Prospectus, Statement of Additional Information, and then-current stickers
(collectively referred to herein as "Account Prospectus"), will at all times
comply in all material respects with the requirements of the 1933 Act and the
rules thereunder.
(b) AVIF represents and warrants that (i) Shares sold pursuant to this
Agreement will be registered under the 1933 Act to the extent required by the
1933 Act and duly authorized for issuance and sold in compliance with Delaware
law, (ii) AVIF is and will remain registered under the 1940 Act to the extent
required by the 1940 Act, (iii) AVIF will amend the registration statement for
its Shares under the 1933 Act and itself under the 1940 Act from time to time as
required in order to effect the continuous offering of its Shares, (iv) AVIF
does and will comply in all material respects with the requirements of the 1940
Act and the rules thereunder, (v) AVIF's 1933 Act registration statement,
together with any amendments thereto, will at all times comply in all material
respects with the requirements of the 1933 Act and rules thereunder, and (vi)
AVIF's Prospectus, Statement of Additional Information, and then-current
stickers (collectively referred to herein as "AVIF Prospectus"), will at all
times comply in all material respects with the requirements of the 1933 Act and
the rules thereunder.
(c) AVIF will at its expense register and qualify its Shares for sale in
accordance with the laws of any state or other jurisdiction if and to the extent
reasonably deemed advisable by AVIF.
(d) AVIF represents and warrants that all of its trustees, officers, employees,
investment advisers, and other individuals/entities having access to the funds
and/or securities of the Fund are and continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit
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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 includes coverage for larceny
and embezzlement and is issued by a reputable bonding company.
4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES
(a) AVIF or INVESCO will immediately notify LIFE COMPANY of (i) the issuance by
any court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to AVIF's registration statement under the 1933 Act
or AVIF Prospectus, (ii) any request by the SEC for any amendment to such
registration statement or AVIF Prospectus that may affect the offering of Shares
of AVIF, (iii) the initiation of any proceedings for that purpose or for any
other purpose relating to the registration or offering of AVIF's Shares, or (iv)
any other action or circumstances that may prevent the lawful offer or sale of
Shares of any Fund in any state or jurisdiction, including, without limitation,
any circumstances in which (a) such Shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law, or (b) such law precludes the use of such Shares as an underlying
investment medium of the Contracts issued or to be issued by LIFE COMPANY. AVIF
and INVESCO will make every reasonable effort to prevent the issuance, with
respect to any Fund, of any such stop order, cease and desist order or similar
order and, if any such order is issued, to obtain the lifting thereof at the
earliest possible time.
(b) LIFE COMPANY will immediately notify AVIF of (i) the issuance by any court
or regulatory body of any stop order, cease and desist order, or other similar
order with respect to each Account's registration statement under the 1933 Act
relating to the Contracts or each Account Prospectus, (ii) any request by the
SEC for any amendment to such registration statement or Account Prospectus that
may affect the offering of Shares of AVIF, (iii) the initiation of any
proceedings for that purpose or for any other purpose relating to the
registration or offering of each Account's interests pursuant to the Contracts,
or (iv) any other action or circumstances that may prevent the lawful offer or
sale of said interests in any state or jurisdiction, including, without
limitation, any circumstances in which said interests are not registered and, in
all material respects, issued and sold in accordance with applicable state and
federal law. LIFE COMPANY will make every reasonable effort to prevent the
issuance of any such stop order, cease and desist order or similar order and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF
(a) LIFE COMPANY will provide to AVIF or its designated agent at least one (1)
complete copy of all SEC registration statements, Account Prospectuses, reports,
any preliminary and final voting instruction solicitation material, applications
for exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to each Account or the Contracts, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
(b) LIFE COMPANY will provide to AVIF or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which AVIF or any of its affiliates is named, at least five (5) Business Days
prior to its use or such shorter period as the Parties hereto may, from time to
time, agree upon. No such material shall be used if AVIF or its
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designated agent objects to such use within five (5) Business Days after receipt
of such material or such shorter period as the Parties hereto may, from time to
time, agree upon. AVIF hereby designates INVESCO as the entity to receive such
sales literature, until such time as AVIF appoints another designated agent by
giving notice to LIFE COMPANY in the manner required by Section 9 hereof.
(c) Neither LIFE COMPANY nor any of its affiliates, will give any information
or make any representations or statements on behalf of or concerning AVIF or its
affiliates in connection with the sale of the Contracts other than (i) the
information or representations contained in the registration statement,
including the AVIF Prospectus contained therein, relating to Shares, as such
registration statement and AVIF Prospectus may be amended from time to time; or
(ii) in reports or proxy materials for AVIF; or (iii) in published reports for
AVIF that are in the public domain and approved by AVIF for distribution; or
(iv) in sales literature or other promotional material approved by AVIF, except
with the express written permission of AVIF.
(d) LIFE COMPANY shall adopt and implement procedures reasonably designed to
ensure that information concerning AVIF and its affiliates that is intended for
use only by brokers or agents selling the Contracts (i.e., information that is
not intended for distribution to Participants) ("broker only materials") is so
used, and neither AVIF nor any of its affiliates shall be liable for any losses,
damages or expenses relating to the improper use of such broker only materials.
(e) For the purposes of this Section 4.5, 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, or other public media, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, registration statements, prospectuses,
statements of additional information, shareholder reports, and proxy materials
and any other material constituting sales literature or advertising under FINRA
rules, the 1933 Act, or the 0000 Xxx.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY
(a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of all SEC
registration statements, AVIF Prospectuses, reports, any preliminary and final
proxy material, applications for exemptions, requests for no-action letters, and
all amendments to any of the above, that relate to AVIF or the Shares of a Fund,
contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
(b) AVIF will provide to LIFE COMPANY a camera ready copy of all AVIF
prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF
statements of additional information, proxy materials, periodic reports to
shareholders and other materials required by law to be sent to Participants who
have allocated any Contract value to a Fund. AVIF will provide such copies to
LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as
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the case may be, to print and distribute such materials within the time required
by law to be furnished to Participants.
(c) AVIF will provide to LIFE COMPANY or its designated agent at least one (1)
complete copy of each piece of sales literature or other promotional material in
which LIFE COMPANY, or any of its respective affiliates is named, or that refers
to the Contracts, at least five (5) Business Days prior to its use or such
shorter period as the Parties hereto may, from time to time, agree upon. No such
material shall be used if LIFE COMPANY or its designated agent objects to such
use within five (5) Business Days after receipt of such material or such shorter
period as the Parties hereto may, from time to time, agree upon. LIFE COMPANY
shall receive all such sales literature until such time as it appoints a
designated agent by giving notice to AVIF in the manner required by Section 9
hereof.
(d) AVIF or its designee will provide LIFE COMPANY 60 days' advance notice of
any material change for a Series, including but not limited to (i) fund
objective changes, (ii) anticipated fund mergers/substitutions, (iii) no-action
or exemptive relief granted by the SEC, (iv) fund name changes, (v) fund adviser
or sub-adviser changes; and/or (vi) conditions or undertakings that affect LIFE
COMPANY'S rights or obligations hereunder. INVESCO will provide all registration
statements to LIFE COMPANY as soon as reasonably practicable before the
effective date thereof.
(e) Neither AVIF nor any of its affiliates will give any information or make
any representations or statements on behalf of or concerning LIFE COMPANY, each
Account, or the Contracts other than (i) the information or representations
contained in the registration statement, including each Account Prospectus
contained therein, relating to the Contracts, as such registration statement and
Account Prospectus may be amended from time to time; or (ii) in published
reports for the Account or the Contracts that are in the public domain and
approved by LIFE COMPANY for distribution; or (iii) in sales literature or other
promotional material approved by LIFE COMPANY or its affiliates, except with the
express written permission of LIFE COMPANY.
(f) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning LIFE
COMPANY, and its respective affiliates that is intended for use only by brokers
or agents selling the Contracts (i.e., information that is not intended for
distribution to Participants) ("broker only materials") is so used, and neither
LIFE COMPANY, nor any of its respective affiliates shall be liable for any
losses, damages or expenses relating to the improper use of such broker only
materials.
(g) For purposes of this Section 4.6, 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, or other public media, (e.g., on-line
networks such as the Internet or other electronic messages), sales literature
(i.e., any written communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other
12
communications distributed or made generally available to some or all agents or
employees, registration statements, prospectuses, statements of additional
information, shareholder reports, and proxy materials and any other material
constituting sales literature or advertising under FINRA rules, the 1933 Act, or
the 1940 Act.
SECTION 5. MIXED AND SHARED FUNDING
5.1 GENERAL
The SEC has granted an order to AVIF exempting it from certain provisions of the
1940 Act and rules thereunder so that AVIF may be available for investment by
certain other entities, including, without limitation, separate accounts funding
variable annuity contracts or variable life insurance contracts, separate
accounts of insurance companies unaffiliated with LIFE COMPANY, and trustees of
qualified pension and retirement plans (collectively, "Mixed and Shared
Funding"). The Parties recognize that the SEC has imposed terms and conditions
for such orders that are substantially identical to many of the provisions of
this Section 5. Sections 5.2 through 5.8 below shall apply pursuant to the
exemptive order granted to AVIF. AVIF hereby notifies LIFE COMPANY that, in the
event that AVIF implements Mixed and Shared Funding, it may be appropriate to
include in the prospectus pursuant to which a Contract is offered disclosure
regarding the potential risks of Mixed and Shared Funding.
5.2 DISINTERESTED TRUSTEES
AVIF agrees that its Board shall at all times consist of trustees a majority of
whom (the "Disinterested Trustees") are not interested persons of AVIF within
the meaning of Section 2(a)(19) of the 1940 Act and the rules thereunder and as
modified by any applicable orders of the SEC, except that if this condition is
not met by reason of the death, disqualification, or bona fide resignation of
any director, then the operation of this condition shall be suspended (a) for a
period of forty-five (45) days if the vacancy or vacancies may be filled by the
Board; (b) for a period of sixty (60) days if a vote of shareholders is required
to fill the vacancy or vacancies or (c) for such longer period as the SEC may
prescribe by order upon application.
5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS
AVIF agrees that its Board will monitor for the existence of any material
irreconcilable conflict between the interests of the Participants in all
separate accounts of life insurance companies utilizing AVIF ("Participating
Insurance Companies"), including each Account, and participants in all qualified
retirement and pension plans investing in AVIF ("Participating Plans"). LIFE
COMPANY agrees to inform the Board of AVIF of the existence of or any potential
for any such material irreconcilable conflict of which it is aware. The concept
of a "material irreconcilable conflict" is not defined by the 1940 Act or the
13
rules thereunder, but the Parties recognize that such a conflict may arise for a
variety of reasons, including, without limitation:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax or securities
regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Fund are being managed;
(e) a difference in voting instructions given by variable annuity contract and
variable life insurance contract Participants or by Participants of different
Participating Insurance Companies;
(f) a decision by a Participating Insurance Company to disregard the voting
instructions of Participants; or
(g) a decision by a Participating Plan to disregard the voting instructions of
Plan participants.
Consistent with the SEC's requirements in connection with exemptive orders of
the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the Board
in carrying out its responsibilities by providing the Board with all information
reasonably necessary for the Board to consider any issue raised, including
information as to a decision by LIFE COMPANY to disregard voting instructions of
Participants. LIFE COMPANY's responsibilities in connection with the foregoing
shall be carried out with a view only to the interests of Participants.
5.4 CONFLICT REMEDIES
(a) It is agreed that if it is determined by a majority of the members of the
Board or a majority of the Disinterested Trustees that a material irreconcilable
conflict exists, LIFE COMPANY will, if it is a Participating Insurance Company
for which a material irreconcilable conflict is relevant, at its own expense and
to the extent reasonably practicable (as determined by a majority of the
Disinterested Trustees), take whatever steps are necessary to remedy or
eliminate the material irreconcilable conflict, which steps may include, but are
not limited to:
(i) withdrawing the assets allocable to some or all of the Accounts from
AVIF or any Fund and reinvesting such assets in a different investment
medium, including another Fund of AVIF, or submitting the question whether
such segregation should be implemented to a vote of all affected
Participants and, as appropriate, segregating the assets of any particular
group (e.g., annuity Participants, life insurance Participants or all
Participants) that votes in favor of such segregation, or offering to the
affected Participants the option of making such a change; and
14
(ii) establishing a new registered investment company of the type defined
as a "management company" in Section 4(3) of the 1940 Act or a new separate
account that is operated as a management company.
(b) If the material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, LIFE COMPANY
may be required, at AVIF's election, to withdraw each Account's investment in
AVIF or any Fund. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six (6) months after AVIF
gives notice to LIFE COMPANY that this provision is being implemented, and until
such withdrawal AVIF shall continue to accept and implement orders by LIFE
COMPANY for the purchase and redemption of Shares of AVIF.
(c) If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to LIFE COMPANY conflicts with the
majority of other state regulators, then LIFE COMPANY will withdraw each
Account's investment in AVIF within six (6) months after AVIF's Board informs
LIFE COMPANY that it has determined that such decision has created a material
irreconcilable conflict, and until such withdrawal AVIF shall continue to accept
and implement orders by LIFE COMPANY for the purchase and redemption of Shares
of AVIF. No charge or penalty will be imposed as a result of such withdrawal.
(d) LIFE COMPANY agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Trustees will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict. In no event, however, will AVIF or any of its
affiliates be required to establish a new funding medium for any Contracts. LIFE
COMPANY will not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 NOTICE TO LIFE COMPANY
AVIF will promptly make known in writing to LIFE COMPANY the Board's
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
15
5.6 INFORMATION REQUESTED BY BOARD
LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit
to the Board of AVIF such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon it by
the provisions hereof or any exemptive order granted by the SEC to permit Mixed
and Shared Funding, and said reports, materials and data will be submitted at
any reasonable time deemed appropriate by the Board. All reports received by the
Board of potential or existing conflicts, and all Board actions with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies and Participating Plans of a conflict, and determining whether any
proposed action adequately remedies a conflict, will be properly recorded in the
minutes of the Board or other appropriate records, and such minutes or other
records will be made available to the SEC upon request.
5.7 COMPLIANCE WITH SEC RULES
If, at any time during which AVIF is serving as an investment medium for
variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to Mixed and Shared Funding, AVIF agrees that it will comply with the
terms and conditions thereof and that the terms of this Section 5 shall be
deemed modified if and only to the extent required in order also to comply with
the terms and conditions of such exemptive relief that is afforded by any of
said rules that are applicable.
5.8 OTHER REQUIREMENTS
AVIF will require that each Participating Insurance Company and Participating
Plan enter into an agreement with AVIF that contains in substance the same
provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a),
5, and 10 of this Agreement.
SECTION 6. TERMINATION
6.1 EVENTS OF TERMINATION
Subject to Section 6.4 below, this Agreement will terminate as to a Fund:
(a) at the option of any party, with or without cause with respect to the Fund,
upon three (63 months advance written notice to the other parties, or, if later,
upon receipt of any required exemptive relief from the SEC, unless otherwise
agreed to in writing by the parties; or
(b) at the option of AVIF upon institution of formal proceedings against LIFE
COMPANY or its affiliates by FINRA, the SEC, any state insurance regulator or
any other regulatory body regarding LIFE COMPANY's obligations under this
Agreement or related to the sale of the Contracts, the operation of each
Account, or the purchase of Shares, if, in each case, AVIF reasonably determines
that such proceedings, or the facts on which such proceedings would be based,
have a material likelihood of imposing material adverse consequences on the Fund
with respect to which the Agreement is to be terminated; or
16
(c) at the option of LIFE COMPANY upon institution of formal proceedings
against AVIF, its principal underwriter, or its investment adviser by FINRA, the
SEC, or any state insurance regulator or any other regulatory body regarding
AVIF's obligations under this Agreement or related to the operation or
management of AVIF or the purchase of AVIF Shares, if, in each case, LIFE
COMPANY reasonably determines that such proceedings, or the facts on which such
proceedings would be based, have a material likelihood of imposing material
adverse consequences on LIFE COMPANY, or the Subaccount corresponding to the
Fund with respect to which the Agreement is to be terminated; or
(d) at the option of any Party in the event that (i) the Fund's Shares are not
registered and, in all material respects, issued and sold in accordance with any
applicable federal or state law, or (ii) such law precludes the use of such
Shares as an underlying investment medium of the Contracts issued or to be
issued by LIFE COMPANY; or
(e) upon termination of the corresponding Subaccount's investment in the Fund
pursuant to Section 5 hereof; or
(f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under
Subchapter M of the Code or under successor or similar provisions, or if LIFE
COMPANY reasonably believes that the Fund may fail to so qualify; or
(g) at the option of LIFE COMPANY if the Fund fails to comply with Section
817(h) of the Code or with successor or similar provisions, or if LIFE COMPANY
reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by LIFE COMPANY cease to
qualify as annuity contracts or life insurance contracts under the Code (other
than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M
of the Code) or if interests in an Account under the Contracts are not
registered, where required, and, in all material respects, are not issued or
sold in accordance with any applicable federal or state law; or
(i) upon another Party's material breach of any provision of this Agreement.
6.2 NOTICE REQUIREMENT FOR TERMINATION
No termination of this Agreement will be effective unless and until the Party
terminating this Agreement gives prior written notice to the other Party to this
Agreement of its intent to terminate, and such notice shall set forth the basis
for such termination. Furthermore:
(a) in the event that any termination is based upon the provisions of Sections
6.1(a) or 6.1(e) hereof, such prior written notice shall be given at least three
(3) months in advance of the effective date of termination unless a shorter time
is agreed to by the Parties hereto;
(b) in the event that any termination is based upon the provisions of Sections
6.1(b) or 6.1(c) hereof, such prior written notice shall be given at least
ninety (90) days in advance of the effective date of termination unless a
shorter time is agreed to by the Parties hereto; and
17
(b) in the event that any termination is based upon the provisions of Sections
6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written notice shall
be given as soon as possible after the terminating Party learns of the event
causing termination to be required.
6.3 FUNDS TO REMAIN AVAILABLE
Notwithstanding any termination of this Agreement by LIFE COMPANY, AVIF will, at
the option of LIFE 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"), unless INVESCO or the Board determines
that doing so would not serve the best interests of the shareholders of the
affected Funds or would be inconsistent with applicable law or regulation.
Specifically, without limitation, the owners of the Existing Contracts will be
permitted to reallocate investments in the Fund (as in effect on such date),
redeem investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 6.3 will not apply to any (i) terminations under Section 5 and
the effect of such terminations will be governed by Section 5 of this Agreement
or (ii) any rejected purchase and/or redemption order as described in Section
2.3(c) hereof.
6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS
All warranties and indemnifications will survive the termination of this
Agreement.
6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES
If any Party terminates this Agreement with respect to any Fund pursuant to
Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this
Agreement shall nevertheless continue in effect as to any Shares of that Fund
that are outstanding as of the date of such termination (the "Initial
Termination Date"). This continuation shall extend to the earlier of the date as
of which an Account owns no Shares of the affected Fund or a date (the "Final
Termination Date") six (6) months following the Initial Termination Date, except
that LIFE COMPANY may, by written notice shorten said six (6) month period in
the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or
6.1(i).
SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION
The Parties hereto agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that an Account owns no Shares of a Fund after the Final Termination
Date with respect thereto, or, in the case of a termination pursuant to Section
6.1(a), the termination date specified in the notice of termination. Such steps
may include combining the affected Account with another Account, substituting
other mutual fund shares for those of the affected Fund, or otherwise
terminating participation by the Contracts in such Fund.
18
SECTION 8. ASSIGNMENT
This Agreement may not be assigned by any Party, except with the written consent
of each other Party.
SECTION 9. NOTICES
Notices and communications required or permitted will be given by means mutually
acceptable to the Parties concerned. Each other notice or communication required
or permitted by this Agreement will be given to the following persons at the
following addresses and facsimile numbers, or such other persons, addresses or
facsimile numbers as the Party receiving such notices or communications may
subsequently direct in writing:
AIM VARIABLE INSURANCE FUNDS
(INVESCO VARIABLE INSURANCE FUNDS)
INVESCO DISTRIBUTORS, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxxxx, Esq.
FORETHOUGHT LIFE INSURANCE COMPANY
000 Xxxxx Xxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx, EVP, Chief Investment Officer
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE
COMPANY will distribute all proxy material furnished by AVIF to Participants to
whom pass-through voting privileges are required to be extended and will solicit
voting instructions from Participants. LIFE COMPANY will vote Shares in
accordance with timely instructions received from Participants. LIFE COMPANY
will vote Shares that are (a) not attributable to Participants to whom
pass-through voting privileges are extended, or (b) attributable to
Participants, but for which no timely instructions have been received, in the
same proportion as Shares for which said instructions have been received from
Participants, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass through voting privileges for Participants. Neither
LIFE COMPANY nor any of its affiliates will in any way recommend action in
connection with or oppose or interfere with the solicitation of proxies for the
Shares held for such Participants. LIFE COMPANY reserves the right to vote
shares held in any Account in its own right, to the extent permitted by law.
LIFE COMPANY shall be responsible for assuring that each of its Accounts holding
Shares calculates
19
voting privileges in a manner consistent with that of other Participating
Insurance Companies or in the manner required by the Mixed and Shared Funding
exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY of any changes
of interpretations or amendments to Mixed and Shared Funding exemptive order it
has obtained. AVIF will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular, AVIF either will provide for annual
meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not
to require such meetings) or will comply with Section 16(c) of the 1940 Act
(although AVIF is not one of the trusts described in Section 16(c) of that Act)
as well as with Sections 16(a) and, if and when applicable, 16(b). Further, AVIF
will act in accordance with the SEC's interpretation of the requirements of
Section 16(a) with respect to periodic elections of trustees and with whatever
rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with LIFE 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.
SECTION 12. INDEMNIFICATION
12.1 OF AVIF AND INVESCO BY LIFE COMPANY
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE
COMPANY agree to indemnify and hold harmless AVIF, INVESCO, their affiliates,
and each person, if any, who controls AVIF, INVESCO, or their affiliates within
the meaning of Section 15 of the 1933 Act and each of their respective trustees
and officers, (collectively, the "Indemnified Parties" for purposes of this
Section 12.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of LIFE COMPANY)
or actions in respect thereof (including, to the extent reasonable, legal and
other expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise; PROVIDED, the Account owns
shares of the Fund and insofar as such losses, claims, damages, liabilities or
actions:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Account's 1933 Act
registration statement, any Account Prospectus, the Contracts, or sales
literature or advertising 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 LIFE
20
COMPANY by or on behalf of AVIF or INVESCO for use in any Account's 1933
Act registration statement, any Account Prospectus, the Contracts, or sales
literature or advertising or otherwise for use in connection with the sale
of Contracts or Shares (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in
AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of LIFE COMPANY or
its respective affiliates and on which such persons have reasonably relied)
or the negligent, illegal or fraudulent conduct of LIFE COMPANY, or their
respective affiliates or persons under their control (including, without
limitation, their employees and "persons associated with a member," as that
term is defined in paragraph (q) of Article I of FINRA's By-Laws), in
connection with the sale or distribution of the Contracts or Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in AVIF's 1933 Act
registration statement, AVIF Prospectus, sales literature or advertising of
AVIF, or any amendment or supplement to any of the foregoing, 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 and in
conformity with information furnished to AVIF, INVESCO or its affiliates by
or on behalf of LIFE COMPANY, or their respective affiliates for use in
AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature
or advertising of AVIF, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by LIFE COMPANY to perform the
obligations, provide the services and furnish the materials required of
them under the terms of this Agreement, or any material breach of any
representation and/or warranty made by LIFE COMPANY in this Agreement or
arise out of or result from any other material breach of this Agreement by
LIFE COMPANY or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by LIFE COMPANY
to qualify as annuity contracts or life insurance contracts under the Code,
otherwise than by reason of any Fund's failure to comply with Subchapter M
or Section 817(h) of the Code.
(b) LIFE COMPANY shall not be liable under this Section 12.1 with respect to
any losses, claims, damages, liabilities or actions to which an Indemnified
Party would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance by that
21
Indemnified Party of its duties or by reason of that Indemnified Party's
reckless disregard of obligations or duties (i) under this Agreement, or (ii) to
AVIF or INVESCO.
(c) LIFE COMPANY shall not be liable under this Section 12.1 with respect to
any action against an Indemnified Party unless AVIF or INVESCO shall have
notified LIFE COMPANY in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the action 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 LIFE COMPANY of any such action shall not relieve LIFE COMPANY from
any liability which they may have to the Indemnified Party against whom such
action is brought otherwise than on account of this Section 12.1. Except as
otherwise provided herein, in case any such action is brought against an
Indemnified Party, LIFE COMPANY shall be entitled to participate, at their own
expense, in the defense of such action and also shall be entitled to assume the
defense thereof, with counsel approved by the Indemnified Party named in the
action, which approval shall not be unreasonably withheld. After notice from
LIFE COMPANY or UNDERWRITER to such Indemnified Party of LIFE COMPANY's election
to assume the defense thereof, the Indemnified Party will cooperate fully with
LIFE COMPANY shall bear the fees and expenses of any additional counsel retained
by it, and LIFE COMPANY will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
12.2 OF LIFE COMPANY AND UNDERWRITER BY AVIF AND INVESCO
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e),
below, AVIF and INVESCO agree to indemnify and hold harmless LIFE COMPANY ,
their respective affiliates, and each person, if any, who controls LIFE COMPANY
or their respective affiliates within the meaning of Section 15 of the 1933 Act
and each of their respective trustees and officers, (collectively, the
"Indemnified Parties" for purposes of this Section 12.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of AVIF and/or INVESCO) or actions in respect thereof
(including, to the extent reasonable, legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law, or otherwise; PROVIDED, the Account owns shares of the Fund and insofar as
such losses, claims, damages, liabilities or actions:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in AVIF's 1933 Act registration
statement, AVIF Prospectus or sales literature or advertising of AVIF (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 AVIF or its affiliates by
or on behalf of LIFE
22
COMPANY or their respective affiliates for use in AVIF's 1933 Act
registration statement, AVIF Prospectus, or in sales literature or
advertising or otherwise for use in connection with the sale of Contracts
or Shares (or any amendment or supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in any
Account's 1933 Act registration statement, any Account Prospectus, sales
literature or advertising for the Contracts, or any amendment or supplement
to any of the foregoing, not supplied for use therein by or on behalf of
AVIF, INVESCO or their affiliates and on which such persons have reasonably
relied) or the negligent, illegal or fraudulent conduct of AVIF, INVESCO or
their affiliates or persons under their control (including, without
limitation, their employees and "persons associated with a member" as that
term is defined in Section (q) of Article I of FINRA By-Laws), in
connection with the sale or distribution of AVIF Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's 1933 Act
registration statement, any Account Prospectus, sales literature or
advertising covering the Contracts, or any amendment or supplement to any
of the foregoing, 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 statement or omission was made
in reliance upon and in conformity with information furnished to LIFE
COMPANY, or their respective affiliates by or on behalf of AVIF or INVESCO
for use in any Account's 1933 Act registration statement, any Account
Prospectus, sales literature or advertising covering the Contracts, or any
amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by AVIF to perform the obligations,
provide the services and furnish the materials required of it under the
terms of this Agreement, or any material breach of any representation
and/or warranty made by AVIF in this Agreement or arise out of or result
from any other material breach of this Agreement by AVIF.
(b) The parties agree that the foregoing indemnification by AVIF shall not
apply to any acts or omissions of INVESCO. Except to the extent provided in
Sections 12.2(c), 12.2(d) and 12.2(e) hereof, AVIF and INVESCO agree to
indemnify and hold harmless the Indemnified Parties from and against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
thereof with, the written consent of AVIF and/or INVESCO) or actions in respect
thereof (including, to the extent reasonable, legal and other expenses) to which
the Indemnified Parties may become subject directly or indirectly under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions directly or indirectly result from or arise out of the
failure of any Fund to operate as a regulated investment company in compliance
with (i) Subchapter M
23
of the Code and regulations thereunder, or (ii) Section 817(h) of the Code and
regulations thereunder, including, without limitation, any income taxes and
related penalties, rescission charges, liability under state law to Participants
asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of
any ruling and closing agreement or other settlement with the IRS, and the cost
of any substitution by LIFE COMPANY of Shares of another investment company or
portfolio for those of any adversely affected Fund as a funding medium for each
Account that LIFE COMPANY reasonably deems necessary or appropriate as a result
of the noncompliance.
(c) Neither AVIF nor INVESCO shall be liable under this Section 12.2 with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of such Indemnified Party's reckless disregard of its
obligations and duties (i) under this Agreement, or (ii) to LIFE COMPANY each
Account or Participants.
(d) Neither AVIF nor INVESCO shall be liable under this Section 12.2 with
respect to any action against an Indemnified Party unless the Indemnified Party
shall have notified AVIF and/or INVESCO in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the action 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 AVIF or INVESCO of any such action shall not
relieve AVIF or INVESCO from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
Section 12.2. Except as otherwise provided herein, in case any such action is
brought against an Indemnified Party, AVIF and/or INVESCO will be entitled to
participate, at its own expense, in the defense of such action and also shall be
entitled to assume the defense thereof (which shall include, without limitation,
the conduct of any ruling request and closing agreement or other settlement
proceeding with the IRS), with counsel approved by the Indemnified Party named
in the action, which approval shall not be unreasonably withheld. After notice
from AVIF and/or INVESCO to such Indemnified Party of AVIF's or INVESCO's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with AVIF and INVESCO and shall bear the fees and expenses of any
additional counsel retained by it, and AVIF and INVESCO will not be liable to
such Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such Indemnified Party independently in connection with
the defense thereof, other than reasonable costs of investigation.
(e) In no event shall AVIF or INVESCO be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, LIFE COMPANY or any other Participating Insurance Company or
any Participant, with respect to any losses, claims, damages, liabilities or
expenses that arise out of or result from (i) a breach of any representation,
warranty, and/or covenant made by LIFE COMPANY hereunder or by any other
Participating Insurance Company under an agreement containing substantially
similar representations, warranties and covenants; (ii) the failure by LIFE
COMPANY or any other Participating Insurance Company to maintain its segregated
asset account (which invests in any Fund) as a legally and validly established
segregated asset account under applicable state law and as a duly registered
unit investment trust under the provisions of the 1940 Act (unless exempt
24
therefrom); or (iii) the failure by LIFE COMPANY or any other Participating
Insurance Company to maintain its variable annuity or life insurance contracts
(with respect to which any Fund serves as an underlying funding vehicle) as
annuity contracts or life insurance contracts under applicable provisions of the
Code.
12.3 EFFECT OF NOTICE
Any notice given by the indemnifying Party to an Indemnified Party referred to
in Sections 12.1(c) or 12.2(d) above of participation in or control of any
action by the indemnifying Party will in no event be deemed to be an admission
by the indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 SUCCESSORS
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted under and
in accordance with Delaware law, without regard for that state's principles of
conflict of laws.
SECTION 14. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in two or more counterparts, each
of which taken together will constitute one and the same instrument.
SECTION 15. SEVERABILITY
If any provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby.
SECTION 16. RIGHTS CUMULATIVE
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, that the Parties are entitled to under federal and state laws.
25
SECTION 17. HEADINGS
The Table of Contents and headings used in this Agreement are for purposes of
reference only and shall not limit or define the meaning of the provisions of
this Agreement.
SECTION 18. CONFIDENTIALITY
AVIF acknowledges that the identities of the customers of LIFE COMPANY or any of
its affiliates (collectively, the "LIFE COMPANY Protected Parties" for purposes
of this Section 18), information maintained regarding those customers, and all
computer programs and procedures or other information developed by the LIFE
COMPANY Protected Parties or any of their employees or agents in connection with
LIFE COMPANY's performance of its duties under this Agreement are the valuable
property of the LIFE COMPANY Protected Parties. AVIF agrees that if it comes
into possession of any list or compilation of the identities of or other
information about the LIFE COMPANY Protected Parties' customers, or any other
information or property of the LIFE COMPANY Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the LIFE COMPANY Protected Parties' customers who
also maintain accounts directly with AVIF, AVIF will hold such information or
property in confidence and refrain from using, disclosing or distributing any of
such information or other property except: (a) with LIFE COMPANY's prior written
consent; or (b) as required by law or judicial process. LIFE COMPANY
acknowledges that the identities of the customers of AVIF or any of its
affiliates (collectively, the "AVIF Protected Parties" for purposes of this
Section 18), information maintained regarding those customers, and all computer
programs and procedures or other information developed by the AVIF Protected
Parties or any of their employees or agents in connection with AVIF's
performance of its duties under this Agreement are the valuable property of the
AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of
any list or compilation of the identities of or other information about the AVIF
Protected Parties' customers or any other information or property of the AVIF
Protected Parties, other than such information as may be independently developed
or compiled by LIFE COMPANY from information supplied to it by the AVIF
Protected Parties' customers who also maintain accounts directly with LIFE
COMPANY, LIFE COMPANY will hold such information or property in confidence and
refrain from using, disclosing or distributing any of such information or other
property except: (a) with AVIF's prior written consent; or (b) as required by
law or judicial process. Each party acknowledges that any breach of the
agreements in this Section 18 would result in immediate and irreparable harm to
the other parties for which there would be no adequate remedy at law and agree
that in the event of such a breach, the other parties will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
SECTION 19. TRADEMARKS AND FUND NAMES
(a) LIFE COMPANY is hereby granted a license to use, print, or otherwise
display in print or electronic medium the AVIF and INVESCO service marks, trade
names and logos in sales
26
literature or other promotional material. For the purposes of this Agreement,
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,
Internet, or tape recording, videotape display, signs, video streams,
computerized media, websites or other public media), sales literature or other
promotional material (i.e., any written communication distributed or made
generally available to key firms, customers or the public, including brochures,
circulars, pitch books, information provided on a website, research reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sale literature or other promotional material), educational or
training materials or other communications distributed or made generally
available to some or all agents, wholesalers or employees. Any use objected to
by Invesco shall not be used by LIFE Company.
(b) Except as otherwise expressly provided in this Agreement, neither AVIF, its
investment adviser, its principal underwriter, or any affiliates thereof shall
use any trademark, trade name, service xxxx or logo of LIFE COMPANY or any of
their affiliates, or any variation of any such trademark, trade name, service
xxxx or logo, without LIFE COMPANY's prior written consent, the granting of
which shall be at LIFE COMPANY's sole option.
SECTION 20. PARTIES TO COOPERATE
Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including, without limitation, the SEC,
FINRA and state insurance regulators) and will permit each other and such
authorities reasonable access to its books and records (including copies
thereof) in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby.
SECTION 21. AMENDMENTS; NEED FOR
No provision of this Agreement may be amended or modified in any manner except
by mutual written agreement executed by all parties hereto. The Parties shall,
from time to time, review this Agreement to determine the extent to which an
amendment thereto may be necessary or appropriate to reflect changes in
applicable law or regulation, and shall cooperate in implementing any such
amendment in a timely manner, it being understood and agreed to that no such
amendment shall take effect except upon mutual written agreement of all Parties
as stated above.
SECTION 22. FORCE MAJEURE
Each Party shall be excused from the performance of any of its obligations to
the other where such nonperformance is occasioned by any event beyond its
control which shall include, without limitation, any applicable order, rule or
regulation of any federal, state or local body, agency or instrumentality with
jurisdiction, work stoppage, accident, natural disaster, war, acts of terrorism
or civil disorder, provided that the Party so excused shall use all reasonable
efforts to minimize its
27
nonperformance and overcome, remedy, cure or remove such event as soon as is
reasonably practicable, and such performance shall be excused only for so long
as, in any given case, the force or circumstances making performance impossible
shall exist.
28
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in
their names and on their behalf by and through their duly authorized officers
signing below.
AIM VARIABLE INSURANCE FUNDS
(INVESCO VARIABLE INSURANCE FUNDS)
Attest: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
INVESCO DISTRIBUTORS, INC.
Attest: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
FORETHOUGHT LIFE INSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: By:
------------------------------ ------------------------------
Name: Name:
Title: Title:
29
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
SERIES II OF THE FOLLOWING FUNDS:
Invesco V.I. Balanced Risk Allocation Fund
Invesco V.I. International Growth Fund
Invesco V.I. Small Cap Equity Fund
Invesco V.I. Mid Cap Core Equity Fund
Invesco V.I. Core Equity Fund
SERIES I OF THE FOLLOWING FUNDS:
Invesco V.I. Money Market Fund
SEPARATE ACCOUNTS UTILIZING THE FUNDS
Forethought Life Insurance Company Separate Account A
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
All Contracts Funded by the Separate Accounts
30
SCHEDULE B
INVESCO'S PRICING ERROR POLICIES
Determination of Materiality
In the event that Invesco discovers an error in the calculation of the Fund's
net asset value, the following policies will apply:
If the amount of the error is less than $.01 per share, it is considered
immaterial and no adjustments are made.
If the amount of the error is $.01 per share or more, then the following
thresholds are applied:
a. If the amount of the difference in the erroneous net asset value and
the correct net asset value is greater than .5% of the correct net
asset value, Invesco will make an adjustment, either in shares or by
way of a payment to the Fund, so long as the impact of the
correction itself exceeds $25.00 per contract. If the impact is less
than $25.00 per contract, no adjustment will be made.
b. If an overstatement of the net asset value per share is detected
quickly and LIFE COMPANY has not mailed redemption checks to
Participants, LIFE COMPANY and Invesco agree to examine the extent of
the error to determine the feasibility of reprocessing such
redemption transaction (for purposes of reimbursing the Fund to the
extent of any such overpayment).
31
