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EXHIBIT 8(k)
FORM OF
PARTICIPATION AGREEMENT
THIS AGREEMENT is made by and between, Evergreen Equity Trust, a
Delaware trust, and such other funds or portfolios of series-type mutual funds
set forth on Schedule A attached hereto as amended from time to time, ("FUND"),
_________________________. ("ADVISER"), ___________________________ and The
Variable Annuity Life Insurance Company ("VALIC"), a life insurance company
organized under the laws of the State of Texas, on its own behalf and on behalf
of each segregated asset account set forth on Schedule B hereto as amended from
time to time (each such account hereinafter referred to as "ACCOUNT").
WHEREAS, FUND is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940 (the "1940 Act") as
an open-end, diversified, management investment company; and
WHEREAS, FUND shares are issued to the general public and to the
separate accounts of insurance companies ("Participating Insurance Companies")
to fund variable insurance products and certain qualified pension and
retirement plans; and
WHEREAS, ADVISER is registered as an investment adviser under the
Investment Advisers Act of 1940 and any applicable state securities law; and
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WHEREAS, VALIC has established ACCOUNT to offer variable contracts
(the "Contracts") and is desirous of having FUND as one of the underlying
funding vehicles for the Contracts; and
WHEREAS, FUND and ADVISER know of no reason why FUND shares may not be
sold to Participating Insurance Companies to fund variable insurance products
and qualified pension and retirement plans; and
WHEREAS, VALIC intends to purchase shares of other open-end,
management investment companies that offer shares to the general public to fund
the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, VALIC intends to purchase shares of FUND to fund the Contracts and
FUND is or will be authorized to sell such shares to VALIC at net asset value;
WHEREAS, VALIC and affiliates of VALIC will provide subcustodian,
record keeping, account maintenance and/or other administrative services for
Contract owners and participants, employee benefit plans and participants, and
other investors;
NOW, THEREFORE, in consideration of their mutual promises, VALIC, FUND
and ADVISER agree as follows:
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1. FUND and ADVISER agree to make FUND shares available for purchase
by VALIC and ACCOUNT at the applicable net asset value per share on those days
on which FUND calculates its net asset value pursuant to SEC rules. 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
FUND or Adviser, as the Fund's designee may refuse to sell shares to any
person, or suspend or terminate the offering of shares, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the FUND or Adviser acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary
in the best interests of the shareholders of the FUND.
2. Issuance and transfer of FUND's shares will be by book entry only.
Stock certificates will not be issued to VALIC or ACCOUNT. Shares ordered from
FUND will be recorded in an appropriate title for ACCOUNT or the appropriate
subaccount of ACCOUNT.
3. FUND shall furnish same day notice (by wire, telecopier, or
telephone followed by written confirmation) to VALIC of any income, dividends
or capital gain distributions payable on FUND's shares. VALIC hereby elects to
receive all such income, dividends and capital gain distributions of a FUND in
the form of additional shares of that FUND. VALIC reserves the right to revoke
this election and to receive all such income, dividends and capital gain
distributions in cash. FUND shall notify VALIC of the number of shares so
issued as payment of such dividends and distributions.
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4. (a) FUND agrees to sell to VALIC shares of the FUND which VALIC
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by FUND or its designee in proper form of the order for
the shares of FUND. For purposes of this Section 4(a), VALIC shall be the
designee of FUND for receipt of such orders from VALIC and receipt by such
designee shall constitute receipt by FUND; provided that FUND receives notice
of such order by 9:00 a.m. Eastern time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which FUND calculates its net asset value pursuant to the
rules of the SEC. "Proper form" means that amounts to be invested or redeemed
are identified on VALIC's computer system by Participant, Contract and Fund in
accordance with VALIC's standard procedures for processing transactions.
(b) FUND agrees to redeem for cash (or in kind to the limited
extent disclosed in the Fund's prospectus), on VALIC's request, any full or
fractional shares of FUND held by VALIC, executing such requests on a daily
basis at the net asset value next computed after receipt by FUND or its
designee of the request for redemption in proper form. For purposes of this
Section 4(b), VALIC shall be the designee of FUND for receipt of requests for
redemption from VALIC and receipt by such designee shall constitute receipt by
FUND; provided that FUND receives notice of such request for redemption by 9:00
a.m. Eastern time on the next following Business Day.
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(c) FUND shall make the net asset value per share available to
VALIC on a daily basis as soon as reasonably practical after the net asset
value per share is calculated but shall use its best efforts to make such net
asset value available by 6:30 p.m. Eastern time. If FUND provides VALIC with
the incorrect share net asset value information through no fault of VALIC,
VALIC on behalf of the Separate Accounts, shall be entitled to an adjustment to
the number of shares purchased or redeemed to reflect the correct share net
asset value. Any error in the calculation of net asset value, dividend and
capital gain information greater than or equal to $.01 per share of FUND, shall
be reported immediately upon discovery to VALIC. Any error of a lesser amount
shall be corrected in the next Business Day's net asset value per share for
FUND.
(d) If VALIC requests the purchase of FUND shares, VALIC shall pay
for such purchase by wiring federal funds to FUND or its designated custodial
account on the day the order is transmitted by VALIC. If VALIC requests a net
redemption resulting in a payment of redemption proceeds to VALIC, FUND shall
wire the redemption proceeds to VALIC on the day the order is transmitted by
VALIC, unless doing so would require FUND to dispose of portfolio securities or
otherwise incur additional costs, but in such event, proceeds shall be wired to
VALIC within three business days and FUND shall notify the person designated in
writing by VALIC as the recipient for such notice of such delay by 3:00 p.m.
Eastern time the same Business Day that VALIC transmits the redemption order to
FUND. If VALIC's order requests the application of redemption proceeds from the
redemption of shares of one FUND to the purchase of shares of another FUND,
FUND shall so apply such proceeds the same Business Day that VALIC transmits
such order to FUND.
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5. (a) FUND or ADVISER shall provide VALIC with as many copies of
FUND's current prospectus as VALIC may reasonably request. If requested by
VALIC in lieu thereof, FUND shall provide such documentation (including a copy
of the new prospectus in computer form) and other assistance as is reasonably
necessary in order for VALIC once each year (or more frequently if the
prospectus for FUND is amended) to have the prospectuses for the Contracts and
for the FUND printed together in one document. FUND or ADVISER shall provide
VALIC with as many copies of any prospectus supplement as VALIC may reasonably
request.
(b) Unless otherwise provided herein, all parties to this Agreement
shall bear all expenses incident to the performance of their respective duties
under this Agreement. FUND will bear the printing costs (or duplicating costs
with respect to the statement of additional information) and mailing costs
associated with the delivery, to the extent legally required, of the following
FUND (or individual portfolio) documents, and any supplements thereto, to
existing variable contract owners of VALIC:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
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VALIC will submit any bills for printing, duplicating and/or mailing costs,
relating to FUND documents described above, to FUND for reimbursement by FUND.
VALIC shall monitor such costs and shall use its best efforts to control these
costs. VALIC will provide FUND on a semi-annual basis, or more frequently as
reasonably requested by FUND, with a current tabulation of the number of
existing variable contract owners of VALIC whose variable contract values are
invested in FUND. This tabulation will be sent to FUND in the form of a letter
signed by a duly authorized officer of VALIC attesting to the accuracy of the
information contained in the letter.
(c) At its expense FUND or ADVISER will provide VALIC with the
following FUND documents, and any supplements thereto, with respect to
prospective variable contract owners of VALIC:
(i) camera ready copy of the current prospectus for printing
by VALIC;
(ii) a copy of the statement of additional information
suitable for duplication;
(iii) camera ready copy of proxy material suitable for
printing; and
(iv) camera ready copy of the annual and semi-annual reports
for printing by VALIC.
6. (a) VALIC will furnish, or will cause to be furnished, to FUND or
its designee, each piece of sales literature or other promotional material in
which FUND or ADVISER is named at least fifteen days prior to its intended use.
No such material will be used if FUND or its designee objects to its use in
writing within ten days after receipt of such material.
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(b) FUND or its designee will furnish, or will cause to be
furnished, to VALIC, each piece of sales literature or other promotional
material in which VALIC is named at least fifteen days prior to its intended
use. No such material will be used if VALIC objects to its use in writing
within ten days after receipt of such material.
(c) FUND and its affiliates and agents shall not give any
information or make any representations on behalf of VALIC or concerning VALIC,
ACCOUNT, or the Contracts issued by VALIC, other than the information or
representations contained in a registration statement or prospectus for such
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports for ACCOUNT or prepared for
distribution to owners of the Contracts, or in sales literature or other
promotional material approved by VALIC or its designee, except with the
permission of VALIC.
(d) VALIC and its affiliates and agents shall not give any
information or make any representations on behalf of FUND or ADVISER or
concerning FUND or ADVISER other than the information or representations
contained in a registration statement or prospectus for FUND, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in sales literature or other promotional material approved by FUND
or its designee, except with the permission of FUND.
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(e) For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, computer
facility or service including the Internet, or other public media), sales
literature (such as any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, or reprints or excerpts
or any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers,
Inc. ("NASD") rules or the 1933 or 1940 Acts. Notwithstanding the foregoing,
the fifteen-day notice requirement of this Section 6 does not apply to FUND
registration statements, prospectuses, statements of additional information,
reports to shareholders, proxy materials, and any other document filed with the
SEC, provided that the reference to VALIC in those documents is limited to: (1)
disclosing that VALIC and ACCOUNT are shareholders of FUND; (2) information
about the amount of shares held by VALIC and ACCOUNT; (3) disclosing that VALIC
purchased seed money shares and information about those shares; and (4) basic
information about VALIC such as its address and state of organization.
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7. Compensation and Expenses. In consideration of its providing the
administrative and record-keeping services below, VALIC shall be entitled to
receive from ADVISER, or the FUND, the fees set forth in Exhibit C hereto. The
obligation of ADVISER or FUND to pay VALIC fees and expenses shall continue,
notwithstanding the termination of this Agreement, as long as the ACCOUNT holds
shares of the FUNDS on behalf of any Contract owner. The administrative and
record-keeping services include:
(a) responding to inquiries from Contract owners using one or more
of the FUNDs as an investment vehicle regarding the services performed by VALIC
as they relate to a FUND;
(b) providing information to ADVISER and to Contract owners with
respect to shares attributable to Contract owner accounts;
(c) developing and maintaining a means of identifying and analyzing
information relating to contract owners using one or more of the FUNDS as an
investment vehicle through computer databases or similar approaches;
(d) printing and mailing of shareholder communications from each
FUND as may be required;
(e) serving as the designee of the FUND for the receipt of orders
to purchase and redeem shares of the FUND pursuant to Section 4;
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(f) cooperating with the FUND, ADVISER and governmental authorities
in connection with the regulation of the FUNDS and the sale of the shares of
the FUNDS;
(g) providing data and materials to the FUND needed to maintain the
compliance of the FUND with the securities laws; and
(h) communicating directly with Contract owners concerning FUND
operations. FUND or ADVISER shall pay all reasonable out-of-pocket expenses
actually incurred by VALIC in connection with the transfer of proxy statements
and reports to shareholders.
8. (a) Except as limited by and in accordance with the provisions of
Sections 8(b) and 8(c) hereof, VALIC agrees to indemnify and hold harmless FUND
and ADVISER and each director of the Board of FUND and officers of FUND and
each person, if any, who controls FUND and each of the directors and officers
of ADVISER and each person, if any, who controls ADVISER within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 8) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
VALIC) 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 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
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registration statement or prospectus or sales literature
for the Contracts or contained in 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 of 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 VALIC by or on behalf of FUND
for use in the registration statement or prospectus for
the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or 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 FUND not supplied by VALIC, or
persons under its control) or wrongful conduct of VALIC
or persons under its control, with respect to the sale or
distribution of the Contracts or FUND shares; or
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(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, or sales literature of 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 statement
or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to FUND by or on behalf of VALIC; or
(iv) arise as a result of any failure by VALIC to
substantially provide the services and furnish the
materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by VALIC in this
Agreement or arise out of or result from any other
material breach of this Agreement by VALIC.
(b) VALIC shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party is 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 or duties under this Agreement or to FUND.
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(c) VALIC 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 VALIC 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 VALIC of any such claim shall not relieve VALIC
from any liability for indemnification which it may have to the Indemnified
Party against whom such action is brought other than that liability which may
have been incurred solely as a result of the failure to give notice. In case
any such action is brought against an Indemnified Party, VALIC shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from VALIC to such party of VALIC's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and VALIC 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.
9. (a) Except as limited by and in accordance with the provisions of
Sections 9(b) and 9(c), ADVISER agrees to indemnify and hold harmless VALIC and
each of its
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directors and officers and each person, if any, who controls VALIC within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 9) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
ADVISER) 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 FUND's shares or the Contracts and:
(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 sales
literature of 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
ADVISER or FUND or its adviser by or on behalf of VALIC
for use in the registration statement or prospectus for
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
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(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
ADVISER or FUND or its adviser or persons under their
control) or wrongful conduct of FUND or ADVISER 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, 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 statements therein not misleading,
if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity
with information furnished to VALIC by or on behalf of
FUND; or
(iv) arise as a result of (1) a failure by FUND to
substantially provide the services and furnish the
materials under the terms of this Agreement; (2) a
failure by FUND to qualify as a
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Regulated Investment Company under Subchapter M of the
Code; or (3) a failure by FUND to register its shares but
only if such registration is required in those states
where the FUND is subject to the state securities
commission.
(v) arise out of or result from any material breach of any
representation and/or warranty made by ADVISER in this
Agreement or arise out of or result from any other
material breach of this Agreement by ADVISER.
(b) ADVISER shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party is 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
VALIC.
(c) ADVISER shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified ADVISER in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify ADVISER of any
such claim shall not relieve
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ADVISER from any liability for indemnification which it may have to the
Indemnified Party against whom such action is brought other than that liability
which may have been incurred solely as a result of the failure to give notice.
In case any such action is brought against the Indemnified Parties, ADVISER
shall be entitled to participate at its own expense in the defense thereof.
ADVISER also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from ADVISER to
such party of ADVISER's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by
it, and ADVISER will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
10. FUND represents and warrants that FUND shares sold pursuant to
this Agreement shall be registered under the 1933 Act and duly authorized for
issuance, and shall be issued, in compliance in all material respects with
applicable law, and that FUND is and shall remain registered under the 1940 Act
for so long as required thereunder. FUND further represents and warrants that
FUND qualifies as a Regulated Investment Company under Subchapter M of the
Code, and will make every effort to maintain such qualification (under
Subchapter M or any successor or similar provisions), and that FUND will notify
VALIC immediately upon having a reasonable basis for believing that it has
ceased to so qualify or that it might not so qualify in the future. FUND will
register and qualify its shares for sale in accordance with the laws of the
various states as may be required by law in those states where this FUND is
subject to the jurisdiction of the state securities commission.
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11. VALIC 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 ACCOUNT as a segregated asset account under Texas law and
has registered ACCOUNT as a unit investment trust under the 1940 Act. VALIC
represents and warrants that the Contracts are or will be registered under the
1933 Act and that the Contracts will be issued in compliance in all material
respects with all applicable federal and state laws.
12. FUND will provide VALIC with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications which disclose the
relationship of the FUND and VALIC or which may have an effect upon the FUND's
relationship with VALIC, and all amendments or supplements to any of the above
that relate to the FUND promptly after the filing of each such document with
the SEC or other regulatory authority. VALIC will provide FUND or its designee
with at least one complete copy of all prospectuses, statements of additional
information, annual and semi-annual reports, proxy statements, exemptive
applications and all amendments or supplements to any of the above that relate
to ACCOUNT promptly after the filing of each such document with the SEC or
other regulatory authority.
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13. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
14. VALIC will provide pass-through voting privileges to all Contract
owners so long as the Commission continues to interpret the 1940 Act as
requiring pass-through voting privileges for variable contract owners.
Accordingly, VALIC will vote shares of FUND held in ACCOUNT in a manner
consistent with voting instructions timely-received from Contract owners. VALIC
will vote shares of FUND held in ACCOUNT for which no voting instructions from
Contract owners are timely-received, as well as shares of FUND which VALIC
itself owns, in the same proportion as those shares of FUND for which voting
instructions from Contract owners are timely-received. Participating Insurance
Companies will be responsible for assuring that each of their separate accounts
participating in FUND calculates voting privileges in a manner consistent with
other Participating Insurance Companies.
15. FUND and ADVISER agree to comply with any applicable state
insurance laws or regulations, including cooperating with VALIC in any filings
of sales literature for the Contracts, to the extent notified thereof in
writing by VALIC, unless such compliance is deemed by FUND or ADVISER to be
unduly burdensome, in which event any Party may exercise its option to
terminate this Agreement under Section 16 hereof, except that such termination
shall be effective immediately.
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16. (a) This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
(b) This Agreement shall terminate automatically in the event of
its assignment unless such assignment is made with the written consent of VALIC
and FUND.
(c) This Agreement shall terminate without penalty at the option of
the terminating party in accordance with the following provisions:
(i) At the option of VALIC or FUND at any time from the date
hereof upon 90 days' advance written notice, unless a
shorter time is agreed to by the parties;
(ii) At the option of VALIC if FUND shares are not reasonably
available to meet the requirements of the Contracts.
Notice of election to terminate shall be furnished by
VALIC and termination shall be effective ten days after
FUND's receipt of said notice unless FUND makes available
a sufficient number of shares to meet the requirements of
the Contracts within said ten-day period;
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(iii) At the option of VALIC, upon the institution of formal
proceedings against FUND by the SEC, the NASD, or any
other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in VALIC'S
reasonable judgment, materially impair FUND'S ability to
meet and perform FUND'S obligations and duties hereunder.
Prompt notice of election to terminate under this
paragraph shall be furnished by VALIC with said
termination to be effective upon receipt of notice;
(iv) At the option of FUND, upon the institution of formal
proceedings against VALIC by the SEC, the NASD, or any
other regulatory body, the expected or anticipated
ruling, judgement or outcome which would, in FUND'S
reasonable judgment, materially impair VALIC'S ability to
meet and perform its obligations and duties hereunder.
Prompt notice of election to terminate under this
paragraph shall be furnished by FUND with said
termination to be effective upon receipt of notice;
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(v) At the option of FUND, if (1) FUND shall determine in its
sole judgment reasonably exercised in good faith, that
VALIC has suffered a material adverse change in its
business or financial condition or is the subject of
material adverse publicity and such material adverse
change or material adverse publicity is likely to have a
material adverse impact upon the operation or business
reputation of FUND and/or ADVISER, (2) FUND shall have
notified VALIC in writing of such determination and its
intent to terminate this Agreement, and, (3) after
consideration of the actions taken by VALIC and any other
changes in circumstances since the giving of such notice,
the determination of FUND shall continue to apply on the
sixtieth (60th) day since giving of such notice, then
such sixtieth day shall be the effective date of
termination;
(vi) At the option of VALIC after having been notified by FUND
of a termination or proposed termination of the
Investment Advisory Agreement between FUND and ADVISER or
its successors, which notice FUND shall provide promptly
to VALIC, the effective date of termination of the
Agreement to be as determined by VALIC;
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(vii) In the event FUND's shares are not registered, issued or
sold in accordance with applicable federal law, or such
law precludes the use of such shares of the FUND as the
underlying investment medium of the Contracts issued or
to be issued by VALIC. Prompt notice of election to
terminate under this paragraph shall be furnished by
VALIC with said termination to be effective upon receipt
of notice;
(viii) At the option of FUND upon a reasonable determination by
the Board in good faith that it is no longer advisable
and in the best interests of shareholders for FUND to
continue to operate pursuant to this Agreement. Prompt
notice of election to terminate under this paragraph
shall be furnished by FUND with said termination to be
effective upon receipt of notice;
(ix) At the option of FUND if the Contracts cease to qualify
as annuity contracts or life insurance contracts, as
applicable, under the Code, or if FUND reasonably
believes that the Contracts may fail to so qualify.
Prompt notice of election to terminate under this
paragraph shall be furnished by FUND with said
termination to be effective upon receipt of notice;
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(x) At the option of VALIC, upon FUND'S breach of any
material provision of this Agreement, which breach has
not been cured to the satisfaction of VALIC within ten
days after written notice of such breach is delivered to
FUND;
(xi) At the option of FUND, upon VALIC's breach of any
material provision of this Agreement, which breach has
not been cured to the satisfaction of FUND within ten
days after written notice of such breach is delivered to
VALIC;
(xii) At the option of FUND, if the variable contracts are not
registered, issued or sold in accordance with applicable
federal and/or state law. Prompt notice of election to
terminate under this paragraph shall be furnished by FUND
with said termination to be effective upon receipt of
notice;
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(xiii) At the option of VALIC, if (1) VALIC shall determine, in
its sole judgment reasonably exercised in good faith,
that FUND is the subject of material adverse publicity
and such material adverse publicity is likely to have a
material adverse impact on the sale of the Contracts
and/or the operations or business reputation of VALIC,
(2) VALIC shall have notified FUND in writing of such
determination and its intent to terminate this Agreement,
and, (3) after consideration of the actions taken by FUND
and any other changes in circumstances since the giving
of such notice, the determination of VALIC shall continue
to apply on the sixtieth (60th) day since giving of such
notice, then such sixtieth day shall be the effective
date of termination;
(xiv) At the option of VALIC, if VALIC shall determine that it
is no longer advisable and in the best interests of
Contract owners to utilize the FUND as underlying
investment vehicle and VALIC determines to substitute the
shares of another investment company for the
corresponding shares of FUND in accordance with the terms
of the Contracts for which those shares had been selected
to serve as the underlying investment media.
(d) No termination of this Agreement (except a termination under
Section 16.(c)(xiv) immediately above) shall be effective unless and until the
party terminating this Agreement gives prior written notice to all other
parties to this Agreement of its intent to terminate, which notice shall set
forth the basis for such termination.
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(e) Notwithstanding any termination of this Agreement pursuant to
Section 16(c) hereof, at the election of VALIC, FUND shall continue to make
available additional FUND shares, as provided below, 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, if VALIC elects to have FUND
make additional shares available, the owners of the Existing Contracts or
VALIC, whichever shall have legal authority to do so, shall be permitted to
reallocate investments in FUND, redeem investments in FUND and/or invest in
FUND upon the payment of additional premiums under the Existing Contracts. In
the event of a termination of this Agreement pursuant to Section 16(c) hereof,
VALIC, as promptly as is practicable under the circumstances, shall notify FUND
whether VALIC shall elect to continue to have FUND shares made available after
such termination. If FUND shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either FUND or VALIC may terminate the Agreement, as so continued
pursuant to this Section 16(e), upon prior written notice to the other party
such notice to be for a period that is reasonable under the circumstances. In
determining whether to elect to continue to have additional FUND shares made
available, VALIC shall act in good faith, giving due consideration to the
interests of existing shareholders, including holders of Existing Contracts.
Notwithstanding the foregoing, FUND shall not be required to make available
additional FUND shares if doing so would be prohibited by law.
17. Any notice shall be sufficiently given when sent by registered or
certified mail (return receipt requested) 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.
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If to FUND:
If to VALIC:
If to ADVISER:
18. Confidentiality. Each party agrees that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall be kept confidential and shall not be voluntarily disclosed to
any other person, except as may be required by law. This provision shall
survive the termination of this Agreement.
19. This Agreement shall be subject to the provisions of the 1940 Act
and the rules and regulations thereunder, including any exemptive relief
therefrom and the orders of the SEC setting forth such relief.
20. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Texas.
21. This Agreement may be executed in two or more counterparts, each of
which taken together shall constitute one instrument.
Executed this ____ day of __________, 1996.
Attest: By:
-------------------------- -------------------------------------
Attest: By:
-------------------------- -------------------------------------
The Variable Annuity Life
Insurance Company
Attest: By:
-------------------------- -------------------------------------
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SCHEDULE A
Funds
-----
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SCHEDULE B
Accounts
--------
The Variable Annuity Life Insurance Company
Separate Account A
31
EXHIBIT C
FUND or ADVISER will pay VALIC the following asset-based Services fee computed
daily and payable quarterly on the aggregate net asset value of the shares of
each FUND maintained in accounts established with the FUND by VALIC:
Fund 12b-1 Fee
---- Per Annum
---------
