Exhibit 1.8(g)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into as of this 31st day of December, 2000 FIRST
PENN-PACIFIC LIFE INSURANCE COMPANY ("First Penn"), a life insurance company
organized under the laws of the State of Indiana, AMERICAN VARIABLE INSURANCE
SERIES ("Series"), an open-end management investment company organized under the
laws of the Commonwealth of Massachusetts, AMERICAN FUNDS DISTRIBUTORS, INC.
("AFD"), a corporation organized under the laws of the State of California, and
having a business address of 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
00000, and CAPITAL RESEARCH AND MANAGEMENT COMPANY ("CRMC"), a corporation
organized under the laws of the State of Delaware, and having a business address
of 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, First Penn proposes to issue to the public, now and in the future,
certain multi-manager variable annuity contracts and variable life insurance
policies ("Contracts") as set forth in Appendix A;
WHEREAS, First Penn has established one or more separate accounts
("Accounts"), as set forth in Appendix B, for the purposes of issuing the
Contracts and has or will register the Account with the United States Securities
and Exchange Commission ("the SEC") as an unit investment trust under the
Investment Company Act of 1940 ("xxx 0000 Xxx") unless exempt therefrom;
WHEREAS, the Series has received a "Mixed and Shared Funding Order" from
the SEC granting relief from the certain provisions of the 1940 Act and the
rules thereunder to the extent necessary to permit shares of the Series to be
sold to variable annuity and life insurance separate accounts of unaffiliated
insurance companies;
WHEREAS, the Series is divided into various funds ("Funds"), some of which
are set forth in Appendix C, each Fund being subject to certain fundamental
investment policies some of which may not be changed without a majority vote of
the shareholders of such Fund;
WHEREAS, certain Funds will serve as the underlying investments for the
Contracts as set forth in Appendix C;
WHEREAS, AFD, a registered broker-dealer, will provide certain services to
First Penn with regard to the Contracts; and
WHEREAS, CRMC is the investment adviser for the Series.
NOW THEREFORE, in consideration of the foregoing and of mutual covenants
and conditions set forth herein and for other good and valuable consideration,
First Penn, the Accounts, the Series, AFD and CRMC hereby agree as follows:
1. The Series and CRMC each represents and warrants to First Penn that:
(i) a registration statement under the Securities Act of 1933 ("1933 Act") and
under the 1940 Act with respect to the Series has been filed with the SEC in the
form previously delivered to First Penn, and copies of any and all amendments
thereto will be forwarded to First Penn at the time that they are filed with the
SEC; (ii) the Series is, and shall be at all times while this Agreement is in
force, lawfully organized, validly existing, and properly qualified as an
open-end management investment company; and (iii) the Series registration
statement and any further amendments or supplements thereto will, when they
become effective, conform in all material respects to the requirements of the
1933 Act and the 1940 Act, and the rules and regulations of the SEC thereunder,
and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Series by First Penn
expressly for use therein.
2. The Series will furnish to First Penn such information with respect
to the Series in such form and signed by such of its officers as First Penn may
reasonably request, and will warrant that the statements therein contained when
so signed will be true and correct. The Series will advise First Penn
immediately of: (a) any request by the SEC (i) for amendment of the registration
statement relating to the Series or (ii) for additional information; (b) the
issuance by the SEC of any stop order suspending the effectiveness of the
registration statement of the Series or the initiation of any proceeding for
that purpose; (c) the institution of any proceeding, investigation or hearing
involving the offer or sale of the Contracts or the Series of which it becomes
aware; or (d) the happening of any material event, if known, which makes untrue
any statement made in the registration statement of the Series or which requires
the making of a change therein in order to make any statement made therein not
misleading.
3. The Series will use best efforts to register for sale under the 1933
Act and, if required, under state securities laws, such additional shares of the
Series as may reasonably be necessary for use as the funding vehicle for the
Contracts.
4. The Series agrees to make Class 1 and Class 2 shares of all of its
Funds available to the Contracts. To the extent First Penn uses Class 2 shares,
it will be entitled to a fee from the Series of ___% per annum of Class 2 assets
attributable to the Contracts to offset Contract marketing expenses for as long
as the Series' Rule 12b-1 plan remains in effect. Fund shares to be made
available to Accounts for the Contracts shall be sold by the Series and
purchased by First Penn for a given Account at the net asset value (without the
imposition of a sales load) next computed after receipt of each order by the
Series or its designee, as established in accordance with the provisions of the
then current prospectus of the Series. For purposes of this Paragraph 4, First
Penn shall be a designee of the Series for receipt of such orders from each
Account, and receipt by such designee by 4:00 p.m. Eastern time shall constitute
receipt by the Series only if the net purchase or redemption orders are
transmitted to the Series by First Penn by 11:00 a.m. Eastern time on the day
following First Penn's receipt of that information. "Business Day" shall mean
any day on which the New York Stock Exchange ("NYSE") is open for trading and on
which the Series calculates its net asset value pursuant to the rules of the
SEC. The Series will
2
make its shares available indefinitely for purchase at the applicable net asset
value per share on those days on which the Series calculates its net asset value
pursuant to the rules of the SEC, and the Series shall use its best efforts to
calculate such net asset value on each day on which the NYSE is open for
trading. The Series shall make the net asset value per share for each of the
Funds available to First Penn (using a mutually agreed upon format) on a daily
basis as soon as reasonably practical after the Series calculates its net asset
value per share, and the Series shall use its best efforts to make such net
asset value per share available by 6:00 p.m. Eastern time. The Series, and its
investment adviser, CRMC, are responsible for maintaining net asset values for
the Funds in accordance with the requirements of the 1940 Act and its current
prospectus. Shares of particular Funds shall be ordered in such quantities and
at such times as determined by First Penn to be necessary to meet the
requirements of the Contracts. Payment for shares purchased shall be made in
federal funds transmitted by wire by 2:00 p.m. Eastern time as long as the
banking system is open for business. If the banking system is closed, payment
will be transmitted the next day that the banking system is open for business.
If payment is received by the Series after 2:00 p.m., Eastern time on such
Business Day, First Penn shall, upon the Series' request, promptly reimburse the
Series for any charges, costs, fees, interest or other expenses incurred in
connection with any advances, borrowing, or overdrafts. The Series will confirm
receipt of each trade (using a mutually agreed upon format) by 1:00 p.m. Eastern
time on the Business Day the trade is placed with the Series.
The Series reserves the right to temporarily suspend sales if the Board of
Trustees of the Series deems it appropriate and in the best interests of the
Series or in response to the order of an appropriate regulatory authority.
5. The Contracts funded through the Accounts will provide for the
allocation of net amounts among certain subaccounts for investment in such
shares of the Funds as may be offered from time to time in the Contracts. The
selection of the particular subaccount is to be made by the Contract owner and
such selection may be changed in accordance with the terms of the Contracts.
6. Transfer of the Series' shares will be by book entry only. No stock
certificates will be issued to the Account. Shares ordered from a particular
Fund will be recorded by the Series as instructed by First Penn in an
appropriate title for the corresponding Account or subaccount.
7. The Series shall furnish notice promptly to First Penn (using a
mutually agreed upon format) of any dividend or distribution payable on any
shares underlying subaccounts. First Penn hereby elects to receive all such
dividends and distributions as are payable on shares of a Fund recorded in the
title for the corresponding subaccount in additional shares of that Fund. The
Series shall notify First Penn of the number of shares so issued. First Penn
reserves the right to revoke this election and to receive all such income
dividends and capital gain distributions in cash.
8. The Series shall redeem its shares in accordance with the terms of
its then current prospectus. For purposes of this Paragraph 8, First Penn shall
be a designee of the Series for receipt of requests for redemption from each
Account, and receipt by such designee by 4:00 p.m.
3
Eastern time shall constitute receipt by the Series; provided that the Series
receives notice of such request for redemption by 11:00 a.m. Eastern time on the
following Business Day. First Penn shall purchase and redeem the shares of Funds
offered by the then current prospectus of the Series in accordance with the
provisions of such prospectus. The Series agrees to redeem, upon First Penn's
request, any full or fractional shares of the designated portfolio held by First
Penn. Payment shall be made in federal funds transmitted by wire by 2:00 p.m.
Eastern time as long as the banking system is open for business. If the banking
system is closed, payment will be transmitted the next day that the banking
system is open for business. If payment is received by Lincoln Life after 2:00
p.m., Eastern time on such Business Day, the Series shall, upon First Penn's
request, promptly reimburse First Penn for any charges, costs, fees, interest or
other expenses incurred in connection with any advances, borrowing, or
overdrafts. The Series will confirm receipt of each trade (using a mutually
agreed upon format) by 1:00 p.m. Eastern time on the Business Day the trade is
placed with the Series.
9. The Series shall pay all expenses incidental to its performance under
this Agreement. The Series shall see to it that all of its shares are registered
and authorized for issue in accordance with applicable federal and state laws
prior to their purchase for the Accounts. The Series shall bear the expenses for
the cost of registration of its shares, preparation of prospectuses to be sent
to existing Contract owners, proxy materials and reports, the printing and
distribution of such items to each Contract owner who has allocated net amounts
to any Subaccount, the preparation of all statements and notices required from
it by any federal or state law, and taxes on the issue or transfer of the
Series' shares subject to this Agreement. The Series will provide First Penn, at
least once a year, with enough copies of its Statement of Additional Information
to be able to distribute one to each Contract owner or prospective Contract
owner who requests such Statement of Additional Information.
10. First Penn shall bear the expenses for the cost of printing and
distribution of Series prospectuses to be sent to prospective Contract owners.
The Series shall provide, at its expense, such documentation (in camera ready or
other mutually agreeable form) and other assistance as is reasonably necessary
in order for First Penn once each year (or more frequently if the prospectus for
the Series is amended) to have the prospectus or prospectuses for the Contracts
and the Series prospectus printed together in one or more documents. With
respect to any Series prospectus that is printed in combination with any one or
more Contract prospectus (the "Prospectus Booklet"), the Series shall bear the
costs of printing and mailing the Prospectus Booklet to existing Contract owners
based on the ratio of the number of pages of the Series prospectuses included in
the Prospectus Booklet to the number of pages in the Prospectus Booklet as a
whole. With respect to any Series report that is printed in combination with any
one or more reports of investment options for the Contracts (the "Report
Booklet"), the Series shall bear the costs of printing and mailing the Report
Booklet to existing Contract owners based on the ratio of the number of pages of
the Series report included in the Report Booklet to the number of pages in the
Report Booklet as a whole.
11. First Penn represents and warrants to the Series that any information
furnished in writing by First Penn to the Series for use in the registration
statement of the Series will not result in the registration statement's failing
to conform in all material respects to the requirements of the 1933 Act and the
1940 Act and the rules and regulations thereunder or
4
containing any untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
12. First Penn and its affiliates shall make no representations
concerning the Series' shares except those contained in the then current
prospectus of the Series, in such printed information subsequently issued on
behalf of the Series or other funds managed by CRMC as supplemental to the
appropriate fund prospectus, or in materials approved by AFD.
13. Shares of the Series may be offered to separate accounts of various
insurance companies in addition to First Penn. The Series shall comply with the
provisions of Section 817 of the Internal Revenue Code of 1986 as amended and
the regulations thereunder ("Section 817").
14. The parties to this Agreement recognize that due to differences in
tax treatment or other considerations, the interests of various Contract owners
participating in one or more Funds might, at some time, be in conflict. Each
party shall report to the other party any potential or existing conflict of
which it becomes aware. The Board of Trustees of the Series shall promptly
notify First Penn of the existence of irreconcilable material conflict and its
implications. If such a conflict exists for which First Penn is responsible as
determined by the Board of Trustees, First Penn will, at its own expense, take
whatever action it deems necessary to remedy such conflict; in any case,
Contract owners will not be required to bear such expenses.
15. First Penn agrees to indemnify and hold the Series harmless against,
any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and reasonable other expenses) to which the Series may be
subject under any statute, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements arise as a result of First Penn: (a) making untrue statements of
material facts or omitting material fact in the registration statement,
prospectus or sales literature of the Contracts and/or Accounts; (b) making
untrue statements of material facts that the Series includes in its materials,
provided the Series relies on information supplied by First Penn; (c) engaging
in unlawful conduct with respect to the sale of the Contracts or Fund shares;
and (d) materially breaching this Agreement or a representation or warranty.
16. The Series and CRMC each agrees to indemnify and hold First Penn
harmless against, any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and reasonable other expenses) to which First Penn
may be subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
or settlements arise as a result of the Series', AFD's or CRMC's (a) making
untrue statements of material facts or omitting material facts in the
registration statement, prospectus or sales literature of the Series; (b) making
untrue statements of material facts that the Series includes in its materials,
provided First Penn relies on information supplied by or on behalf of the
Series; (c) engaging in unlawful conduct with respect to the sale of the
Contracts or Fund shares; (d) materially breaching this Agreement or a
representation or warranty; and (e) failing to comply with the requirements of
Section 817 and regulations thereunder.
17. First Penn shall be responsible for assuring that the Accounts
provide pass-
5
through voting privileges to Contract owners so long as and to the extent that
the Securities and Exchange Commission continues to interpret the 1940 Act to
require pass-through voting privileges for the Contracts.
18. AFD will be responsible for conducting training activities for First
Penn's wholesalers regarding CRMC's approach to investment management in
connection with First Penn's wholesaler support of the Series. Training will
include initial sessions as to CRMC's investment approach and strategies,
background in CRMC's investment results, information on CRMC's portfolio
counselors managing the Series and general information on CRMC. AFD will provide
such periodic additional training and refresher training as may be requested by
First Penn. AFD will provide speakers and panelists at national sales meetings
conducted by First Penn regarding the Series.
In consideration of the activities performed by AFD for First Penn, First
Penn will pay AFD .25% on each new Contract purchase payment initially allocated
to one or more of the Funds.
19. The parties understand that there is no intention to create a joint
venture in the subject matter of this Agreement. Accordingly, the right to
terminate this Agreement and to engage in any activity not inconsistent with
this Agreement is absolute. This Agreement will terminate:
(i) By any party at any time upon six months' written notice to
the other parties; or
(ii) at the option of First Penn or the Series, upon ten calendar
days' prior written notice to the other parties, if a final
non-appealable administrative or judicial decision is entered
against any other party which has a material impact on the
Contracts;
(iii) at the option of First Penn, upon ten calendar days' prior
written notice to the other parties, if shares of the Series
are not reasonably available;
(iv) at the option of First Penn, immediately upon written notice
to the other parties, if the Series or CRMC fails to meet the
requirements for either diversification under Section 817 or
registered investment company status or if the Board of the
Series terminates the Class 2 Plan of Distribution pursuant to
Rule 12b-1 under the 1940 Act; or
6
(v) immediately in the event the Series' shares are not
registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such
shares as an underlying investment for the Contracts issued or
to be issued by First Penn; in such event prompt notice shall
be given by First Penn or the Series to the other parties.
The effective date for termination pursuant to any notice required under
this Paragraph shall be calculated beginning with the date of receipt of such
notice to all other parties.
20. All notices, consents, waivers, and other communications under this
Agreement must be in writing, and will be deemed to have been duly received (a)
when delivered by hand (with written confirmation of receipt), (b) when sent by
facsimile (with written confirmation of receipt), provided that a copy is mailed
by registered mail, return receipt requested, or (c) the day after it is sent by
a nationally recognized overnight delivery service, in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties):
IF TO FIRST PENN:
First Penn-Pacific Life Insurance Company
00 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Facsimile No.: 000-000-0000
IF TO SERIES:
American Variable Insurance Series
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President
Facsimile No.: 000-000-0000
IF TO CRMC:
Capital Research and Management Company
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Senior Vice President and Legal Counsel
Facsimile No.: 000-000-0000
IF TO AFD:
American Funds Distributors, Inc.
000 X. Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Secretary and Legal Counsel
Facsimile No.: 000-000-0000
7
21. If this Agreement terminates, any provision of this Agreement
necessary to the orderly windup of business under it will remain in effect as to
that business, after termination.
22. If this Agreement terminates, the Series, at First Penn's option,
will continue to make additional shares of the Series available for all
Contracts existing as of the effective date of termination (under the same terms
and conditions as were in effect prior to termination of this Agreement with
respect to existing Contract owners), unless the Series liquidates or applicable
laws prohibit further sales. First Penn agrees not to redeem shares unless
legitimately required to do so according to a Contract owner's request or under
an order from the SEC.
23. The obligations of the Series under this Agreement are not binding
upon any of the Trustees, officers, employees, or shareholders (except CRMC if
it is a shareholder) of the Series individually, but bind only the Series'
assets. When seeking satisfaction for any liability of the Series in respect of
this Agreement, First Penn and the Account agree not to seek recourse against
said Trustees, officers, employees, or shareholders, or any of them, or any of
their personal assets for such satisfaction. Notwithstanding the foregoing, if
First Penn seeks satisfaction for the Series for any losses, claims, damages,
liabilities or litigation in respect of this Agreement, First Penn and the
Accounts shall also have recourse against AFD and CRMC, which shall be jointly
and severally liable for all amounts due First Penn and not recovered from the
Series.
24. This Agreement shall be construed in accordance with the laws of the
State of California.
25. This Agreement and the parties' rights, duties, and obligations under
this Agreement are not transferable or assignable by any of them without the
express, prior written consent of the other party hereto. Any attempt by a party
to transfer or assign this Agreement or any of its rights, duties or obligations
under this Agreement without such consent is void.
26. The following Paragraphs shall survive any termination of this
Agreement: 4, 7, 8, 15, 16, 19, 20-25.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the date first above written.
FIRST PENN-PACIFIC LIFE INSURANCE
COMPANY (ON BEHALF OF THE ACCOUNTS
AND ITSELF)
Attest:
By: -----------------------------
-------------------------- Its: Vice President
AMERICAN VARIABLE INSURANCE
SERIES
Attest:
By: -----------------------------
-------------------------- Its: Senior Vice President
AMERICAN FUNDS DISTRIBUTORS, INC.
Attest:
By: -----------------------------
-------------------------- Its: President
CAPITAL RESEARCH AND MANAGEMENT
COMPANY
Attest:
By: -----------------------------
-------------------------- Its: Executive Vice President
9
APPENDIX A
MoneyGuard VUL
APPENDIX B
First Penn-Pacific Variable Life Insurance Separate Account
APPENDIX C
American Variable Insurance Series
Global Small Capitalization Fund Class 2
Growth Fund Class 2
Growth-Income Fund Class 2
77708
10
