EXHIBIT (8)(i)
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into as of October 1,
2002 by and between XXXXXXX XXXXX LIFE INSURANCE COMPANY (the "Company"), on its
own behalf and on behalf of each segregated asset account set forth on Exhibit A
(individually and collectively the "Account"), and AMERICAN CENTURY INVESTMENT
SERVICES, INC. ("Distributor").
WHEREAS, the Account is duly established and maintained as a segregated
asset account, duly established by the Company, on the date shown for such
Account on Exhibit A, to set aside and invest assets attributable to variable
annuity contracts set forth in Exhibit A (the "Contracts"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company wishes to purchase shares of the Advisor Class of the
mutual funds listed in Exhibit B (the "Funds"), each of which is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf
of the Account to fund the Contracts; and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options as
contemplated hereby and to retain the Company to perform certain administrative
services on behalf of the Funds, and the Company is willing and able to furnish
such services;
NOW, THEREFORE, the Company and Distributor agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions
of this Agreement, Distributor will cause the Issuer to make shares of the Funds
available to be purchased, exchanged, or redeemed, by or on behalf of the
Account through a single account per Fund at the net asset value applicable to
each order. The Funds' shares shall be purchased and redeemed on a net basis in
such quantity and at such time as determined by the Company to satisfy the
requirements of the Account for which the Funds serve as underlying investment
media. Dividends and capital gains distributions will be automatically
reinvested in full and fractional shares of the Funds.
2. ADMINISTRATIVE SERVICES. The Company agrees to provide all
administrative services for the Account and the Contract owners in accordance
with the provisions of that certain Administrative Services Agreement between
the Company and Distributor of even date herewith.
3. TIMING OF TRANSACTIONS. Distributor hereby appoints the
Company as agent for the Funds for the limited purpose of accepting purchase and
redemption orders for Fund shares from the Account. On each day the New York
Stock Exchange (the "Exchange") is open for business
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(each, a "Business Day"), the Company may receive instructions from the Account
for the purchase or redemption of shares of the Funds ("Orders"). Orders
received and accepted by the Company prior to the close of regular trading on
the Exchange (the "Close of Trading") on any given Business Day (currently, 4:00
p.m. Eastern time) and transmitted to the Funds' transfer agent by 8:00 a.m.
Eastern time on such Business Day will be executed at the net asset value
determined as of the Close of Trading on the next Business Day. Any Orders
received by the Company on such day but after the Close of Trading, and all
Orders that are transmitted to the Funds' transfer agent after 8:00 a.m. Eastern
time on the next Business Day, will be executed at the net asset value
determined as of the Close of Trading on the next Business Day following the day
of receipt of such Order. The day as of which an Order is executed by the Funds'
transfer agent pursuant to the provisions set forth above is referred to herein
as the "Trade Date". All orders are subject to acceptance or rejection by
Distributor or the Funds in the sole discretion of either of them.
4. PROCESSING OF TRANSACTIONS.
(a) If transactions in Fund shares are to be settled through the
National Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the Fund/SERV and
Networking Agreement, between Company and American Century Services Corporation,
an affiliate of Distributor, shall apply.
(b) If transactions in Fund shares are to be settled directly with
the Funds' transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day,
Distributor (or one of its affiliates) will provide to the Company via facsimile
or other electronic transmission acceptable to the Company the Funds' net asset
value, dividend and capital gain information and, in the case of income funds,
the daily accrual for interest rate factor (mil rate), determined at the Close
of Trading.
(2) By 8:00 a.m. Eastern time on the Business Day next
following the Trade Date, the Company will provide to Distributor via facsimile
or other electronic transmission acceptable to Distributor a report stating
whether the instructions received by the Company from Contract owners by the
Close of Trading on such Business Day resulted in the Accounts being a net
purchaser or net seller of shares of the Funds. As used in this Agreement, the
phrase "other electronic transmission acceptable to Distributor" includes the
use of remote computer terminals located at the premises of the Company, its
agents or affiliates, which terminals may be linked electronically to the
computer system of Distributor, its agents or affiliates (hereinafter, "Remote
Computer Terminals").
(3) Upon the timely receipt from the Company of the
report described in (2) above, the Funds' transfer agent will execute the
purchase or redemption transactions (as the case may be) at the net asset value
computed as of the Close of Trading on the Trade Date. Payment for net purchase
transactions shall be made by wire transfer to the applicable Fund custodial
account
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designated by the Funds on the Business Day next following the Trade
Date. Such wire transfers shall be initiated by the Company's bank prior to 4:00
p.m. Eastern time and received by the Funds prior to 6:00 p.m. Eastern time on
the Business Day next following the Trade Date ("T+1"). If payment for a
purchase Order is not timely received, such Order will be, at Distributor's
option, either (i) executed at the net asset value determined on the Trade Date,
and the Company shall be responsible for all costs to Distributor or the Funds
resulting from such delay, or (ii) executed at the net asset value next computed
following receipt of payment. Payments for net redemption transactions shall be
made by wire transfer by the Issuer to the account(s) designated by the Company
on T+1; provided, however, the Issuer reserves the right to settle redemption
transactions within the time period set forth in the applicable Fund's
then-current prospectus. On any Business Day when the Federal Reserve Wire
Transfer System is closed, all communication and processing rules will be
suspended for the settlement of Orders. Orders will be settled on the next
Business Day on which the Federal Reserve Wire Transfer System is open and the
original Trade Date will apply.
5. PROSPECTUS AND PROXY MATERIALS.
(a) Distributor shall provide the Company with copies of the
Issuer's proxy materials, periodic fund reports to shareholders and other
materials that are required by law to be sent to the Issuer's shareholders. In
addition, at the Company's request Distributor shall provide the Company with a
sufficient quantity (as indicated by the Company) of prospectuses of the Funds
to be used in conjunction with the transactions contemplated by this Agreement,
together with such additional copies of the Issuer's prospectuses as may be
reasonably requested by Company. If the Company provides for pass-through voting
by the Contract owners, or if the Company determines that pass-through voting is
required by law, Distributor will provide the Company with a sufficient quantity
of proxy materials for each, as directed by the Company.
(b) The cost of preparing, printing and shipping of the
prospectuses, periodic fund reports and other materials of the Issuer to the
Company shall be paid by Distributor or its agents or affiliates; provided,
however, that if at any time Distributor or its agent reasonably deems the usage
by the Company of such items to be excessive, it may, prior to the delivery of
any quantity of materials in excess of what is deemed reasonable, request that
the Company demonstrate the reasonableness of such usage. If Distributor
believes the reasonableness of such usage has not been adequately demonstrated,
it may request that the party responsible for such excess usage pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, Distributor may
refuse to supply such additional materials and Distributor shall be deemed in
compliance with this SECTION 5 if it delivers to the Company at least the number
of prospectuses and other materials as may be required by the Issuer under
applicable law.
(c) If the Company so requests, Distributor shall provide the
Issuer's prospectuses, periodic fund reports and other materials of the Issuer
to the Company by electronic file instead of by paper copy. If the Company
chooses to receive electronic files, the Company shall be
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responsible for any costs of preparing, printing and shipping such documents.
(d) The cost of any distribution of prospectuses, proxy materials,
periodic fund reports and other materials of the Issuer to the Contract owners
shall be paid by the Company and shall not be the responsibility of Distributor
or the Issuer.
6. REPRESENTATIONS.
(a) The Company represents and warrants that the Contracts (1)
are, or prior to issuance will be, registered under the Securities Act of 1933
(the "1933 Act"), or (2) are not registered because they are properly exempt
from registration under the 1933 Act or will be offered exclusively in
transactions that are properly exempt from registration under the 1933 Act. The
Company further represents and warrants that the Contracts will be issued and
sold in compliance in all material respects with all applicable federal
securities and state securities and insurance laws and that the sale of the
Contracts shall comply in all material respects with state insurance suitability
requirements. The Company further represents and warrants that it is an
insurance company duly organized and in good standing under applicable law, that
it has legally and validly established the Account prior to any issuance or sale
thereof as a segregated asset account under Arkansas insurance laws, and that it
(A) has registered or, prior to any issuance or sale of the Contracts, will
register the Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts, or alternatively (B) has not registered the Account in proper
reliance upon an exclusion from registration under the 1940 Act. The Company
shall register and qualify the Contracts or interests therein as securities in
accordance with the laws of the various states only if and to the extent deemed
advisable by the Company.
(b) Distributor represents that (i) this Agreement has been duly
authorized by all necessary corporate action and, when executed and delivered,
shall constitute the legal, valid and binding obligation of Distributor,
enforceable in accordance with its terms; (ii) the prospectus of each Fund
complies in all material respects with federal and state securities laws; (iii)
shares of the Issuer are registered and authorized for sale in accordance with
all federal and state securities laws; (iv) each Fund engages in business as an
open-end, diversified management investment company and was established for the
purpose of serving as the investment vehicle for separate accounts established
for variable life insurance contracts and variable annuity contracts to be
offered by insurance companies which have entered into agreements substantially
similar to this Agreement; (v) each Fund is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and they will maintain such qualification (under Subchapter
M or any successor or similar provision); (vi) the Funds and all of their
directors, officers, employees and other individuals/entities having access to
the funds and/or securities of the Funds are and continue to be at all times
covered by a blanket fidelity bond or similar coverage issued by a reputable
bonding company (including coverage for larceny and embezzlement) for the
benefit of each 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; (vii) the
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Distributor is a member in good standing of the NASD and is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended (the "1934
Act"); and (viii) the Distributor will sell and distribute the Funds' shares in
accordance with all applicable federal and state securities laws.
7. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and
state laws applicable to its respective activities under this Agreement. All
obligations of each party under this Agreement are subject to compliance with
applicable federal and state laws.
(b) Each party shall promptly notify the other party in the event
that it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Fund on any Business Day will
be based upon instructions that it received from the Contract owners, in proper
form prior to the Close of Trading of the Exchange on that Business Day. The
Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with SECTION 7(c) hereof.
(d) The Company covenants and agrees that all Orders transmitted
to the Fund's transfer agent, whether by telephone, telecopy, or other
electronic transmission acceptable to Distributor, shall be sent by or under the
authority and direction of a person designated by the Company as being duly
authorized to act on behalf of the Contract owner. Distributor shall be entitled
to rely on the existence of such authority and to assume that any person
transmitting Orders for the purchase, redemption or transfer of Fund shares on
behalf of the Company is "an appropriate person" as used in Sections 8-107 and
8-401 of the Uniform Commercial Code with respect to the transmission of
instructions regarding Fund shares on behalf of the owner of such Fund shares.
The Company shall maintain the confidentiality of all passwords and security
procedures issued, installed or otherwise put in place with respect to the use
of Remote Computer Terminals and assumes full responsibility for the security
therefor. The Company further agrees to be responsible for the accuracy,
propriety and consequences of all data transmitted to Distributor by the Company
by telephone, telecopy or other electronic transmission acceptable to
Distributor.
(e) The Company agrees that, to the extent it is able to do so, it
will use its best efforts to give equal emphasis and promotion to shares of the
Funds as is given to other underlying investments of the Accounts, subject to
applicable Securities and Exchange Commission rules. In addition, the Company
shall not impose any fee, condition, or requirement for the use of the Funds as
investment options for the Contracts that operates to the specific prejudice of
the Funds vis-a-vis the other investment media made available for the Contracts
by the Company.
(f) The Company shall not, without the written consent of
Distributor, make representations concerning the Issuer or the shares of the
Funds except those contained in the then-
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current prospectus and in current printed sales literature approved by
Distributor or the Issuer.
(g) Advertising and sales literature with respect to the Funds
prepared by the Company or its agents, if any, for use in marketing shares of
the Funds as underlying investment media to Contract owners shall be submitted
to Distributor for review and approval at least 10 business days before such
material is used. No such material shall be used unless the Distributor or its
designee approves such material within the 10 business days after receipt
thereof.
8. USE OF NAMES. Except as otherwise expressly provided for in
this Agreement, neither Distributor nor any of its affiliates nor the Funds
shall use any trademark, trade name, service xxxx or logo of the Company, or any
variation of any such trademark, trade name, service xxxx or logo, without the
Company's prior written consent, the granting of which shall be at the Company's
sole option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service xxxx or logo of the
Fund, Distributor or any variation of any such trademarks, trade names, service
marks, or logos, without the prior written consent of either the Fund or
Distributor, as appropriate, the granting of which shall be at the sole option
of Distributor and/or the Fund.
9. PROXY VOTING. The Company shall provide pass-through voting
privileges to all Contract owners so long as the SEC continues to interpret the
1940 Act as requiring such privileges or to the extent otherwise required by
law. The Company will distribute to Contract owners all proxy material furnished
by Distributor and will vote shares in accordance with instructions received
from such Contract owners. The Company shall vote Fund shares for which no
voting instructions are received in the same proportion as shares for which such
instructions have been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held for such
Contract owners.
10. INDEMNITY.
(a) Distributor agrees to indemnify and hold harmless the Company
and its officers, directors, employees, agents, affiliates and each person, if
any, who controls the Company within the meaning of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this SECTION 10(a)) against any
losses, claims, expenses, damages or liabilities (including amounts paid in
settlement thereof) or litigation expenses (including legal and other expenses)
(collectively, "Losses"), to which the Indemnified Parties may become subject,
insofar as such Losses (i) result from a breach by Distributor of a material
provision of this Agreement, or (ii) arise out of or are based upon any untrue
statement of material fact contained in the Issuer's registration statement (or
any amendment or supplement thereto) or the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Distributor will reimburse any legal or other expenses
reasonably incurred by the Indemnified Parties in connection with investigating
or defending any such Losses. Distributor shall not be liable for
indemnification hereunder if such Losses are attributable to the negligence or
misconduct of the Company in performing its obligations under this Agreement.
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(b) The Company agrees to indemnify and hold harmless Distributor
and the Issuer, and their respective officers, directors, employees, agents,
affiliates and each person, if any, who controls Issuer or Distributor within
the meaning of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this SECTION 10(b)) against any Losses to which the Indemnified
Parties may become subject, insofar as such Losses (i) result from a breach by
the Company of a material provision of this Agreement; (ii) result from the use
by any person of the Remote Computer Terminals; or (iii) arise out of or are
based upon any untrue statement of any material fact contained in the
registration statement or private offering memorandum for the Contracts or
contained in the Contracts (or any amendment or supplement to any of the
foregoing) or the 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 was made in reliance upon and in conformity
with information furnished to the Company by or on behalf of the Issuer for use
in the registration statement or private offering memorandum for the Contracts
(or any amendment or supplement to any of them). The Company will reimburse any
legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Losses. The Company shall
not be liable for indemnification hereunder if such Losses are attributable to
the negligence or misconduct of Distributor or the Issuer in performing their
obligations under this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this SECTION 10. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this SECTION 10 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such
action, the indemnifying party shall not, without the prior written consent of
the indemnified parties in such action, settle or compromise the liability of
the indemnified parties in such action, or permit a default or consent to the
entry of any judgment in respect thereof, unless in connection with such
settlement, compromise or consent, each indemnified party receives from such
claimant an unconditional release from all liability in respect of such claim.
11. TERMINATION; WITHDRAWAL OF OFFERING. This Agreement may be
terminated by either party upon 90 days' prior written notice to the other
party. Notwithstanding the above, the Distributor reserves the right, without
prior notice, to suspend sales of shares of any Fund, in whole
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or in part, or to make a limited offering of shares of any of the Funds in the
event that (A) any regulatory body commences formal proceedings against the
Company, Distributor, affiliates of Distributor, or the issuer of a Fund, which
proceedings Distributor reasonably believes may have a material adverse impact
on the ability of Distributor, such Fund or the Company to perform its
obligations under this Agreement or (B) in the judgment of Distributor,
declining to accept any additional instructions for the purchase or sale of
shares of any such Fund is warranted by market, economic or political
conditions.
The Company reserves the right to terminate the Agreement:
(a) if shares of the Funds are not reasonably available to meet
the requirements of the Contracts as determined by the Company;
(b) upon institution of formal proceedings against a Fund or
Distributor by the National Association of Securities Dealers, the Securities
and Exchange Commission, or any state securities or insurance department or any
other regulatory body, which would have a material adverse effect on the
Distributor's or a Fund's ability to perform its obligations under this
Agreement;
(c) as to any Fund, if the Fund ceases to qualify as a Regulated
Investment Company under Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably believes that the Fund may fail
to so qualify;
(d) as to any Fund, if the Fund fails to meet the diversification
requirements of Section 817(h) of the Code or if the Company reasonably believes
that the Fund will fail to meet such requirements; or
(e) if the Company determines in its sole judgment exercised in
good faith, that either any Fund or the Distributor has suffered a material
adverse change in its business, operations, or financial condition or is the
subject of material adverse publicity which is likely to have a material adverse
impact upon the business and operations of the Company or the Contracts
(including the sale thereof).
Notwithstanding the foregoing, this Agreement may be terminated
immediately (i) by any party as a result of any other breach of this Agreement
by another party, which breach is not cured within 30 days after receipt of
notice from the other party, or (ii) by any party upon a determination that
continuing to perform under this Agreement would, in the reasonable opinion of
the terminating party's counsel, violate any applicable federal or state law,
rule, regulation or judicial order. Termination of this Agreement shall not
affect the obligations of the parties to make payments under SECTION 4 for
Orders received by the Company prior to such termination and shall not affect
the Fund's obligation to maintain the Accounts as set forth by this Agreement.
Following termination, Distributor shall not have any Administrative Services
payment obligation to the Company (except for payment obligations accrued but
not yet paid as of the termination date).
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12. NON-EXCLUSIVITY. Both parties acknowledge and agree that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each party is free to enter into similar agreements and arrangements
with other entities.
13. SURVIVAL. The provisions of SECTION 8 (Use of Names) and
SECTION 10 (Indemnity) of this Agreement shall survive termination of this
Agreement.
14. AMENDMENT. Neither this Agreement, nor any provision hereof,
may be amended, waived, discharged or terminated orally, but only by an
instrument in writing signed by all of the parties hereto.
15. NOTICES. All notices and other communications hereunder shall
be given or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Xxxxxxx Xxxxx Life Insurance Company
0 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq., Senior
Vice President and General Counsel
To the Issuer or Distributor:
American Century Investment Services, Inc.
0000 Xxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Any notice, demand or other communication given in a manner prescribed in this
SECTION 15 shall be deemed to have been delivered on receipt.
16. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned
without the written consent of both parties to the Agreement at the time of such
assignment. This Agreement shall be binding upon and inure to the benefit both
parties hereto and their respective permitted successors and assigns.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
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18. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
19. ENTIRE AGREEMENT. This Agreement, including the attachments
hereto, constitutes the entire agreement between the parties with respect to the
matters dealt with herein, and supersedes all previous agreements, written or
oral, with respect to such matters.
If the foregoing correctly sets forth our understanding, please
indicate your agreement to and acceptance thereof by signing below, whereupon
this Agreement shall become a binding agreement between us as of the latest date
indicated.
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By:
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Name:
----------------------------------
Title:
----------------------------------
Date:
------------------------------------
We agree to and accept the terms of the foregoing Agreement.
XXXXXXX XXXXX LIFE INSURANCE
COMPANY
By:
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
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EXHIBIT A
ACCOUNTS
EXHIBIT B
AMERICAN CENTURY FUNDS
- Equity Income (Advisor Class)
