EXHIBIT 8(a)
PARTICIPATION AGREEMENT
BY AND AMONG
AIM VARIABLE INSURANCE FUNDS, INC.,
AIM DISTRIBUTORS, INC.,
AMERICAN GENERAL LIFE INSURANCE COMPANY,
ON BEHALF OF ITSELF AND
ITS SEPARATE ACCOUNTS,
AND
AMERICAN GENERAL SECURITIES INCORPORATED
TABLE OF CONTENTS
DESCRIPTION PAGE
Section 1. Available Funds............................................... 2
1.1 Availability.................................................. 2
1.2 Addition, Deletion or Modification of Funds................... 2
1.3 No Sales to the General Public................................ 2
Section 2. Processing Transactions....................................... 2
2.1 Timely Pricing and Orders..................................... 2
2.2 Timely Payments............................................... 3
2.3 Applicable Price.............................................. 3
2.4 Dividends and Distributions................................... 4
2.5 Book Entry.................................................... 4
Section 3. Costs and Expenses............................................ 4
3.1 General....................................................... 4
3.2 Registration.................................................. 4
3.3 Other (Non-Sales-Related)..................................... 5
3.4 Other (Sales-Related)......................................... 5
3.5 Parties To Cooperate.......................................... 5
Section 4. Legal Compliance.............................................. 5
4.1 Tax Laws...................................................... 5
4.2 Insurance and Certain Other Laws.............................. 8
4.3 Securities Laws............................................... 8
4.4 Notice of Certain Proceedings and Other Circumstances......... 9
4.5 AMERICAN GENERAL To Provide Documents; Information About AVIF. 10
4.6 AVIF To Provide Documents; Information About LIFE COMPANY..... 11
Section 5. Mixed and Shared Funding...................................... 12
5.1 General....................................................... 12
5.2 Disinterested Directors....................................... 13
5.3 Monitoring for Material Irreconcilable Conflicts.............. 13
5.4 Conflict Remedies............................................. 14
5.5 Notice to AMERICAN GENERAL.................................... 15
5.6 Information Requested by Board of Directors................... 15
5.7 Compliance with SEC Rules..................................... 15
5.8 Other Requirements............................................ 16
Section 6. Termination................................................... 16
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DESCRIPTION PAGE
6.1 Events of Termination.......................................... 16
6.2 Notice Requirement for Termination............................. 17
6.3 Funds To Remain Available...................................... 17
6.4 Survival of Warranties and Indemnifications.................... 18
6.5 Continuance of Agreement for Certain Purposes.................. 18
Section 7. Parties To Cooperate Respecting Termination.................... 18
Section 8. Assignment..................................................... 18
Section 9. Notices........................................................ 18
Section 10. Voting Procedures.............................................. 19
Section 11. Foreign Tax Credits............................................ 20
Section 12. Indemnification................................................ 20
12.1 Of AVIF AIM DISTRIBUTORS by AMERICAN GENERAL and
UNDERWRITER.................................................... 20
12.2 Of AMERICAN GENERAL and AIM DISTRIBUTORS by AVIF............... 22
12.3 Effect of Notice............................................... 25
12.4 Successors..................................................... 25
Section 13. Applicable Law................................................. 25
Section 14. Execution in Counterparts...................................... 25
Section 15. Severability................................................... 25
Section 16. Rights Cumulative.............................................. 25
Section 17. Headings....................................................... 26
Section 18. Confidentiality................................................ 26
Section 19. Trademarks and Fund Names...................................... 26
Section 20. Parties to Cooperate........................................... 28
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PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the ____ day of _________,
1998 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a
Maryland corporation ("AVIF"); American General Life Insurance Company, a
Texas life insurance company ("AMERICAN GENERAL"), 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"); and American General Securities Incorporated,
an affiliate of AMERICAN GENERAL and the principal underwriter of the
Contracts ("UNDERWRITER") (collectively, 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 nine separate series ("Series"),
shares ("Shares") of 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, AMERICAN GENERAL 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, AMERICAN GENERAL 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, AMERICAN GENERAL 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
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WHEREAS, to the extent permitted by applicable insurance laws and
regulations, AMERICAN GENERAL intends to purchase Shares in one or more of the
Funds on behalf of the Accounts to fund the Contracts; and
WHEREAS, UNDERWRITER is a broker-dealer registered with the SEC under
the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing
of the National Association of Securities Dealers, Inc. ("NASD");
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 AMERICAN GENERAL 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 Directors of AVIF
may refuse to sell Shares of any Fund to any person, or suspend or terminate
the offering of Shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of
the Directors 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.
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 herein 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
AMERICAN GENERAL with the net asset value per Share for each Fund by 5:30 p.m.
Central Time on each Business Day. As used herein, "Business Day" shall mean
any day on which (i) the New York
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Stock Exchange is open for regular trading, (ii) AVIF calculates the Fund's
net asset value, and (iii) AMERICAN GENERAL is open for business.
(b) AMERICAN GENERAL 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. AMERICAN GENERAL 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 AMERICAN GENERAL
in the event that AVIF is unable to meet the 5:30 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
AMERICAN GENERAL.
(c) With respect to payment of the purchase price by AMERICAN GENERAL
and of redemption proceeds by AVIF, AMERICAN GENERAL 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), AMERICAN GENERAL 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 AMERICAN
GENERAL.
2.2 TIMELY PAYMENTS.
AMERICAN GENERAL 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 AMERICAN GENERAL 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 AMERICAN GENERAL 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 AMERICAN GENERAL
receives prior to the close of regular trading on the New York Stock Exchange
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), AMERICAN GENERAL shall be the
designated agent of AVIF for receipt of orders relating to Contract
transactions on each Business Day and receipt by such designated agent shall
constitute receipt by AVIF; PROVIDED that AVIF receives
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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.
(b) All other Share purchases and redemptions by AMERICAN GENERAL 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.
2.4 DIVIDENDS AND DISTRIBUTIONS.
AVIF will furnish notice by wire or telephone (followed by written
confirmation) on or prior to the payment date to AMERICAN GENERAL of any
income dividends or capital gain distributions payable on the Shares of any
Fund. AMERICAN GENERAL 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 AMERICAN GENERAL 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. AMERICAN GENERAL 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 AMERICAN GENERAL. Shares ordered from AVIF
will be recorded in an appropriate title for AMERICAN GENERAL, on behalf of
its Account.
SECTION 3. COSTS AND EXPENSES
3.1 GENERAL.
Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 REGISTRATION.
(a) AVIF will bear the cost of its registering as a management
investment company under the 1940 Act and registering its Shares under the
1933 Act, and keeping such registrations current and effective; including,
without limitation, the preparation of and filing with the SEC of Forms N-SAR
and Rule 24f-2 Notices with respect to AVIF and its Shares and payment of all
applicable registration or filing fees with respect to any of the foregoing.
(b) AMERICAN GENERAL will bear the cost of registering, to the extent
required, each Account as a unit investment trust under the 1940 Act and
registering units of interest under the Contracts under the 1933 Act and
keeping such registrations current and effective; including, without
limitation, the preparation and filing with the SEC of Forms N-SAR and Rule
24f-2
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Notices with respect to each Account and its units of interest and payment of
all applicable registration or filing fees with respect to any of the
foregoing.
3.3 OTHER (NON-SALES-RELATED).
(a) AVIF will bear, or arrange for others to bear, the costs of
preparing, filing with the SEC and setting for printing AVIF's prospectus,
statement of additional information and any amendments or supplements thereto
(collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF
proxy material and other shareholder communications.
(b) AMERICAN GENERAL will bear the costs of preparing, filing with the
SEC and setting for printing each Account's prospectus, statement of
additional information and any amendments or supplements thereto
(collectively, the "Account Prospectus"), any periodic reports to Contract
owners, annuitants, insureds or participants (as appropriate) under the
Contracts (collectively, "Participants"), voting instruction solicitation
material, and other Participant communications.
(c) AMERICAN GENERAL will print in quantity and deliver to existing
Participants the documents described in Section 3.3(b) above and the
prospectus provided by AVIF in camera ready or computer diskette form. AVIF
will print the AVIF statement of additional information, proxy materials
relating to AVIF and periodic reports of AVIF.
3.4 OTHER (SALES-RELATED).
AMERICAN GENERAL will bear the expenses of distribution. These expenses
would include by way of illustration, but are not limited to, the costs of
distributing to Participants the following documents, whether they relate to
the Account or AVIF: prospectuses, statements of additional information, proxy
materials and periodic reports. These costs would also include the costs of
preparing, printing, and distributing sales literature and advertising
relating to the Funds, as well as filing such materials with, and obtaining
approval from, the SEC, the NASD, any state insurance regulatory authority,
and any other appropriate regulatory authority, to the extent required.
3.5 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.
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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 AMERICAN GENERAL 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 AMERICAN GENERAL 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) AMERICAN GENERAL agrees that if the Internal Revenue Service
("IRS") asserts in writing in connection with any governmental audit or review
of AMERICAN GENERAL or, to AMERICAN GENERAL's knowledge, of any Participant,
that any Fund has failed to comply with the diversification requirements of
Section 817(h) of the Code or AMERICAN GENERAL 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) AMERICAN GENERAL shall promptly notify AVIF of such
assertion or potential claim (subject to the
Confidentiality provisions of Section 18 as to any
Participant);
(ii) AMERICAN GENERAL shall consult with AVIF as to how to
minimize any liability that may arise as a result of such
failure or alleged failure;
(iii) AMERICAN GENERAL 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) AMERICAN GENERAL 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,
6
however, that AMERICAN GENERAL will retain control of the
conduct of such conferences discussions, proceedings,
contests or appeals;
(v) any written materials to be submitted by AMERICAN GENERAL
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 AMERICAN
GENERAL 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 AMERICAN GENERAL to any such
person without the express written consent of AVIF which
shall not be unreasonably withheld;
(vi) AMERICAN GENERAL 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
AMERICAN GENERAL) 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) AMERICAN GENERAL 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
AMERICAN GENERAL shall not be required, after exhausting
all administrative penalties, to appeal any adverse
judicial 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 AMERICAN GENERAL
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, AMERICAN
GENERAL may, in its discretion, authorize AVIF or its affiliates to act in the
name of AMERICAN GENERAL in, and to control the conduct of, such conferences,
discussions, proceedings, contests or appeals and all
7
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 AMERICAN GENERAL 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) AMERICAN GENERAL 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; AMERICAN GENERAL 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) AMERICAN GENERAL 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. AMERICAN GENERAL 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 AMERICAN GENERAL, including, the furnishing of information not otherwise
available to AMERICAN GENERAL which is required by state insurance law to
enable AMERICAN GENERAL to obtain the authority needed to issue the Contracts
in any applicable state.
(b) AMERICAN GENERAL 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 Texas 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 Account as a segregated asset account under Section 3.75 of
the Texas Insurance Code 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 a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Maryland 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.
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(a) AMERICAN GENERAL 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 Texas law, (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) AMERICAN GENERAL
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 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 Maryland
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 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 currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it reserves the right to make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule
12b-1, AVIF undertakes to have its Board of Directors, a majority of whom are
not "interested" persons of the Fund, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
(e) 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 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.
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4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES.
(a) AVIF will immediately notify AMERICAN GENERAL 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 AMERICAN GENERAL. AVIF 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) AMERICAN GENERAL 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. AMERICAN GENERAL 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 AMERICAN GENERAL TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF.
(a) AMERICAN GENERAL 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) AMERICAN GENERAL 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 designated agent objects to such use within five (5) Business Days
after receipt of
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such material or such shorter period as the Parties hereto may, from time to
time, agree upon. AVIF hereby designates AIM as the entity to receive such
sales literature, until such time as AVIF appoints another designated agent by
giving notice to AMERICAN GENERAL in the manner required by Section 9 hereof.
(c) Neither AMERICAN GENERAL 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) AMERICAN GENERAL 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 the NASD rules, the 1933 Act or the 0000 Xxx.
4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT AMERICAN GENERAL.
(a) AVIF will provide to AMERICAN GENERAL 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 AMERICAN GENERAL camera ready or computer
diskette copies of all AVIF prospectuses and printed copies, in an amount
specified by AMERICAN GENERAL, of AVIF statements of additional information,
proxy materials, periodic reports to
11
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 AMERICAN GENERAL in a timely manner so as to enable AMERICAN GENERAL, as
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 AMERICAN GENERAL or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which AMERICAN GENERAL, 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 AMERICAN
GENERAL 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. AMERICAN GENERAL 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) Neither AVIF nor any of its affiliates will give any information
or make any representations or statements on behalf of or concerning AMERICAN
GENERAL, 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 AMERICAN GENERAL for distribution; or
(iii) in sales literature or other promotional material approved by AMERICAN
GENERAL or its affiliates, except with the express written permission of
AMERICAN GENERAL.
(e) AVIF shall cause its principal underwriter to adopt and implement
procedures reasonably designed to ensure that information concerning AMERICAN
GENERAL, 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 AMERICAN GENERAL, 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.
(f) 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 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 the NASD rules, the 1933 Act or the 1940 Act.
12
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 AMERICAN GENERAL, 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 such an exemptive order granted to AVIF.
AVIF hereby notifies AMERICAN GENERAL 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 DIRECTORS.
AVIF agrees that its Board of Directors shall at all times consist of
directors a majority of whom (the "Disinterested Directors") 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 of Directors 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"). AMERICAN GENERAL agrees to inform the Board of
Directors 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 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;
13
(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, AMERICAN GENERAL will
assist the Board of Directors in carrying out its responsibilities by
providing the Board of Directors with all information reasonably necessary for
the Board of Directors to consider any issue raised, including information as
to a decision by AMERICAN GENERAL to disregard voting instructions of
Participants. AMERICAN GENERAL'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 of Directors or a majority of the Disinterested Directors that a
material irreconcilable conflict exists, AMERICAN GENERAL 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 Directors), 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
(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.
14
(b) If the material irreconcilable conflict arises because of AMERICAN
GENERAL's decision to disregard Participant voting instructions and that
decision represents a minority position or would preclude a majority vote,
AMERICAN GENERAL 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 AMERICAN GENERAL that this provision is
being implemented, and until such withdrawal AVIF shall continue to accept and
implement orders by AMERICAN GENERAL 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 AMERICAN GENERAL conflicts
with the majority of other state regulators, then AMERICAN GENERAL will
withdraw each Account's investment in AVIF within six (6) months after AVIF's
Board of Directors informs AMERICAN GENERAL 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 AMERICAN
GENERAL for the purchase and redemption of Shares of AVIF. No charge or
penalty will be imposed as a result of such withdrawal.
(d) AMERICAN GENERAL 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 Directors
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. AMERICAN GENERAL 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.
15
5.5 NOTICE TO AMERICAN GENERAL.
AVIF will promptly make known in writing to AMERICAN GENERAL the Board
of Directors' 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.
5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS.
AMERICAN GENERAL and AVIF (or its investment adviser) will at least
annually submit to the Board of Directors of AVIF such reports, materials or
data as the Board of Directors may reasonably request so that the Board of
Directors 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 of Directors. All reports
received by the Board of Directors of potential or existing conflicts, and all
Board of Directors 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 of Directors
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 six (6) 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
16
(b) at the option of AVIF upon institution of formal proceedings
against AMERICAN GENERAL or its affiliates by the NASD, the SEC, any state
insurance regulator or any other regulatory body regarding AMERICAN GENERAL'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
(c) at the option of AMERICAN GENERAL upon institution of formal
proceedings against AVIF, its principal underwriter, or its investment adviser
by the NASD, 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, AMERICAN GENERAL 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 AMERICAN GENERAL, 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 AMERICAN GENERAL; or
(e) upon termination of the corresponding Subaccount's investment in
the Fund pursuant to Section 5 hereof; or
(f) at the option of AMERICAN GENERAL if the Fund ceases to qualify as
a RIC under Subchapter M of the Code or under successor or similar provisions,
or if AMERICAN GENERAL reasonably believes that the Fund may fail to so
qualify; or
(g) at the option of AMERICAN GENERAL if the Fund fails to comply with
Section 817(h) of the Code or with successor or similar provisions, or if
AMERICAN GENERAL reasonably believes that the Fund may fail to so comply; or
(h) at the option of AVIF if the Contracts issued by AMERICAN GENERAL
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.
17
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 six (6) 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
(c) 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 within twenty-four (24) hours 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, AVIF will, at the
option of AMERICAN GENERAL, continue to make available additional shares of
the Fund pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, the owners of the Existing Contracts 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 terminations under Section 5 and
the effect of such terminations will be governed by Section 5 of this
Agreement.
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 AMERICAN GENERAL 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).
18
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.
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 by Section 9 hereof
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, INC.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
AMERICAN GENERAL LIFE INSURANCE COMPANY
AMERICAN GENERAL SECURITIES INCORPORATED
c/o American Independent Producer Division
0000-X Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
19
SECTION 10. VOTING PROCEDURES
Subject to the cost allocation procedures set forth in Section 3 hereof,
AMERICAN GENERAL 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. AMERICAN
GENERAL will vote Shares in accordance with timely instructions received from
Participants. AMERICAN GENERAL 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 AMERICAN GENERAL 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. AMERICAN
GENERAL reserves the right to vote shares held in any Account in its own
right, to the extent permitted by law. AMERICAN GENERAL shall be responsible
for assuring that each of its Accounts holding Shares calculates 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 AMERICAN GENERAL 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 directors
and with whatever rules the SEC may promulgate with respect thereto.
SECTION 11. FOREIGN TAX CREDITS
AVIF agrees to consult in advance with AMERICAN GENERAL 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 AIM DISTRIBUTORS BY AMERICAN GENERAL AND UNDERWRITER.
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, AMERICAN GENERAL and UNDERWRITER agree to indemnify and hold harmless
AVIF, AIM Distributors, and their respective affiliates, and each person, if
any, who controls AVIF, AIM Distributors, and their respective affiliates
within the meaning of Section 15 of the 1933 Act and each of their respective
directors and officers, (collectively, the "Indemnified Parties" for purposes
of this
20
Section 12.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of AMERICAN
GENERAL and UNDERWRITER) 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 AMERICAN
GENERAL or UNDERWRITER by or on behalf of AVIF 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 AMERICAN
GENERAL, UNDERWRITER or their respective affiliates and on
which such persons have reasonably relied) or the negligent,
illegal or fraudulent conduct of AMERICAN GENERAL,
UNDERWRITER or their respective affiliates or persons under
their control (including, without limitation, their
employees and "Associated Persons," as that term is defined
in paragraph (m) of Article I of the NASD'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 or its affiliates by or on behalf of
AMERICAN GENERAL, UNDERWRITER or their respective affiliates
21
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 AMERICAN GENERAL or
UNDERWRITER 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 AMERICAN GENERAL or
UNDERWRITER in this Agreement or arise out of or result from
any other material breach of this Agreement by AMERICAN
GENERAL or UNDERWRITER; or
(v) arise as a result of failure by the Contracts issued by
AMERICAN GENERAL 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) Neither AMERICAN GENERAL nor UNDERWRITER shall 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
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.
(c) Neither AMERICAN GENERAL nor UNDERWRITER shall be liable under
this Section 12.1 with respect to any action against an Indemnified Party
unless AVIF shall have notified AMERICAN GENERAL and UNDERWRITER 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 AMERICAN
GENERAL and UNDERWRITER of any such action shall not relieve AMERICAN GENERAL
and UNDERWRITER 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, AMERICAN GENERAL and UNDERWRITER 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 AMERICAN GENERAL or
UNDERWRITER to such Indemnified Party of AMERICAN GENERAL's or UNDERWRITER's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with AMERICAN GENERAL and UNDERWRITER and shall bear the fees and
expenses of any additional counsel retained by it, and neither AMERICAN
GENERAL nor UNDERWRITER will 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.
22
12.2 OF AMERICAN GENERAL AND UNDERWRITER BY AVIF.
(a) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e), below, AVIF and AIM Distributors agrees to indemnify and hold
harmless AMERICAN GENERAL, UNDERWRITER, their respective affiliates, and each
person, if any, who controls AMERICAN GENERAL, UNDERWRITER or their respective
affiliates within the meaning of Section 15 of the 1933 Act and each of their
respective directors 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 AIM Distributors) 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, AIM
Distributors or their respective affiliates by or on behalf
of AMERICAN GENERAL, UNDERWRITER 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 and AIM Distributors or their respective affiliates and
on which such persons have reasonably relied) or the
negligent, illegal or fraudulent conduct of AVIF and AIM
Distributors or their respective affiliates or persons under
its control (including, without limitation, their employees
and "Associated Persons" as that term is defined in Section
(n) of Article I of the NASD 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
23
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 AMERICAN GENERAL, UNDERWRITER or their
respective affiliates by or on behalf of AVIF and AIM
Distributors or their respective affiliates 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 or AIM Distributors in this Agreement or arise out
of or result from any other material breach of this
Agreement by AVIF or AIM Distributors.
(b) Except to the extent provided in Sections 12.2(c), 12.2(d) and
12.2(e) hereof, AVIF and AIM Distributors agrees 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) 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
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 AMERICAN GENERAL 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 AMERICAN GENERAL of Shares
of another investment company or portfolio for those of any adversely affected
Fund as a funding medium for each Account that AMERICAN GENERAL reasonably
deems necessary or appropriate as a result of the noncompliance.
(c) Neither AVIF nor AIM Distributors 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 AMERICAN GENERAL, UNDERWRITER, each Account or Participants.
(d) Neither AVIF nor AIM Distributors shall liable under this Section
12.2 with respect to any action against an Indemnified Party unless the
Indemnified Party shall have notified AVIF and AIM Distributors in writing
within a reasonable time after the summons or other first legal
24
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 and AIM Distributors of any such action shall not relieve AVIF and
AIM Distributors 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 AIM Distributors 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 AIM Distributors to such Indemnified Party of
AVIF's and/or AIM Distributor's election to assume the defense thereof, the
Indemnified Party will cooperate fully with AVIF and/or AIM Distributors and
shall bear the fees and expenses of any additional counsel retained by it, and
neither AVIF nor AIM Distributors 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 be liable under the indemnification
provisions contained in this Agreement to any individual or entity, including,
without limitation, AMERICAN GENERAL, UNDERWRITER 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 AMERICAN GENERAL or
UNDERWRITER hereunder or by any Participating Insurance Company under an
agreement containing substantially similar representations, warranties and
covenants; (ii) the failure by AMERICAN GENERAL or any 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 therefrom); or (iii) the failure by AMERICAN
GENERAL or any 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.
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SECTION 13. APPLICABLE LAW
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Maryland 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.
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 AMERICAN
GENERAL or any of its affiliates (collectively, the "AMERICAN GENERAL
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 AMERICAN GENERAL Protected Parties or any of
their employees or agents in connection with AMERICAN GENERAL's performance of
its duties under this Agreement are the valuable property of the AMERICAN
GENERAL Protected Parties. AVIF agrees that if it comes into possession of any
list or compilation of the identities of or other information about the
AMERICAN GENERAL Protected Parties' customers, or any other information or
property of the AMERICAN GENERAL Protected Parties, other than such
information as may be independently developed or compiled by AVIF from
information supplied to it by the AMERICAN GENERAL Protected Parties'
customers who also maintain
26
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 AMERICAN GENERAL's prior
written consent; or (b) as required by law or judicial process. AMERICAN
GENERAL 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. AMERICAN GENERAL 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 AMERICAN GENERAL
from information supplied to it by the AVIF Protected Parties' customers who
also maintain accounts directly with AMERICAN GENERAL, AMERICAN GENERAL 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) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of
AVIF, owns all right, title and interest in and to the name, trademark and
service xxxx "AIM" and such other tradenames, trademarks and service marks as
may be set forth on Schedule B, as amended from time to time by written notice
from AIM to AMERICAN GENERAL (the "AIM licensed marks" or the "licensor's
licensed marks") and is authorized to use and to license other persons to use
such marks. AMERICAN GENERAL and its affiliates are hereby granted a
non-exclusive license to use the AIM licensed marks in connection with
AMERICAN GENERAL's performance of the services contemplated under this
Agreement, subject to the terms and conditions set forth in this Section 19.
(b) The grant of license to AMERICAN GENERAL and its affiliates ( the
"licensee") shall terminate automatically upon termination of this Agreement.
Upon automatic termination, the licensee shall cease to use the licensor's
licensed marks, except that AMERICAN GENERAL shall have the right to continue
to service any outstanding Contracts bearing any of the AIM licensed marks.
Upon AIM's elective termination of this license, AMERICAN GENERAL and its
affiliates shall immediately cease to issue any new annuity or life insurance
contracts bearing any of the AIM licensed marks and shall likewise cease any
activity which suggests that it has any right under any of the AIM licensed
marks or that it has any association with AIM, except that AMERICAN GENERAL
shall have the right to continue to service outstanding Contracts bearing any
of the AIM licensed marks.
27
(c) The licensee shall obtain the prior written approval of the
licensor for the public release by such licensee of any materials bearing the
licensor's licensed marks. The licensor's approvals shall not be unreasonably
withheld.
(d) During the term of this grant of license, a licensor may request
that a licensee submit samples of any materials bearing any of the licensor's
licensed marks which were previously approved by the licensor but, due to
changed circumstances, the licensor may wish to reconsider. If, on
reconsideration, or on initial review, respectively, any such samples fail to
meet with the written approval of the licensor, then the licensee shall
immediately cease distributing such disapproved materials. The licensor's
approval shall not be unreasonably withheld, and the licensor, when requesting
reconsideration of a prior approval, shall assume the reasonable expenses of
withdrawing and replacing such disapproved materials. The licensee shall
obtain the prior written approval of the licensor for the use of any new
materials developed to replace the disapproved materials, in the manner set
forth above.
(e) The licensee hereunder: (i) acknowledges and stipulates that, to
the best of the knowledge of the licensee, the licensor's licensed marks are
valid and enforceable trademarks and/or service marks and that such licensee
does not own the licensor's licensed marks and claims no rights therein other
than as a licensee under this Agreement; (ii) agrees never to contend
otherwise in legal proceedings or in other circumstances; and (iii)
acknowledges and agrees that the use of the licensor's licensed marks pursuant
to this grant of license shall inure to the benefit of the licensor.
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, the NASD 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.
-----------------------------------------
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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, INC.
Attest: _____________________________ By: _____________________________
Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxx
Assistant Secretary Title: President
AIM DISTRIBUTORS, INC.
Attest: _____________________________ By: _____________________________
Xxxxx X. Xxxxxx Name: A.W. Xxxx Xxxxxxxxxx
Assistant General Counsel Title: Sr. Vice President
& Assistant Secretary
AMERICAN GENERAL LIFE INSURANCE
COMPANY, on behalf of itself and its
separate accounts
Attest: _____________________________ By: _____________________________
Xxxxxx X. Xxxxxx Name: Xxx X. Xxxx
Assistant Secretary Title: Senior Vice President-Variable
Products
AMERICAN GENERAL SECURITIES
INCORPORATED
Attest: _____________________________ By: _____________________________
Xxxxxx X. Xxxxxx Name: F. Xxxx Xxxxxx
Assistant Secretary Title: President
29
SCHEDULE A
FUNDS AVAILABLE UNDER THE CONTRACTS
o AIM VARIABLE INSURANCE FUNDS, INC.
V.I. International Equity
V.I. Value
SEPARATE ACCOUNTS UTILIZING THE FUNDS
American General Life Insurance Company Separate Account VL-R
CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS
Platinum Investor I Policy Form No. 97600
Platinum Investor II Policy Form No. 97610
30
SCHEDULE B
o AIM VARIABLE INSURANCE FUNDS, INC.
AIM __________________ Fund
o AIM and Design
[AIM GRAPHIC OMITTED]
31
