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EXHIBIT 1.8.a
PARTICIPATION AGREEMENT WITH XXXXX AMERICAN FUND
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FUND PARTICIPATION AGREEMENT
This AGREEMENT is made this 14th day of March, 1995, by and between
American United Life Insurance Company(R) (the "Company"), a life insurance
company domiciled in Indiana, on its behalf and on behalf of the segregated
asset accounts of the Company (the "Separate Accounts"); Xxxxx American Fund
(the "Fund"), a Massachusetts business trust; and Xxxx Xxxxx & Company,
Incorporated (the "Distributor"), a Delaware corporation.
WITNESSETH
WHEREAS, the Fund 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 ("1940 Act") and the Fund is authorized to
issue separate classes of shares of beneficial interests ("shares"), each
representing an interest in a separate portfolio of assets known as a "series"
and each series has its own investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its series
to separate accounts of insurance companies that fund variable life insurance
policies and variable annuity contracts ("Variable Contracts") and to serve as
an investment medium for Variable Contracts offered by insurance companies that
have entered into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is currently
comprised of six separate series, and other series may be established in the
future; and
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WHEREAS, the Fund has obtained an order from the SEC, granting
Participating insurance Companies, separate accounts funding Variable Contracts
of Participating Insurance Companies, and the Fund exemptions from the
provisions of sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and
paragraph (b)(15) of each of Rules 6e-2 and 6e-3(T) under the 1940 Act, to the
extent necessary to permit shares of the Fund to be sold to and held by separate
accounts funding variable annuity contracts or scheduled or flexible premium
variable life insurance contracts of both affiliated and unaffiliated life
insurance companies (the "Shared Funding Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended ("1934 Act"), and is a
member in good standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company wishes to purchase shares of one or more of the Fund's
series on behalf of its Separate Accounts to serve as an investment medium for
Variable Contracts funded by the Separate Accounts, and the Distributor is
authorized to sell shares of the Fund's series;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, the parties hereby agree as follows:
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ARTICLE I. Sale of Fund Shares
1.1. The Distributor agrees to sell to the Company those shares of the
series offered and made available by the Fund and identified on Exhibit A
("Series") that the Company orders on behalf of its Separate Accounts, and
agrees to execute such orders on each day on which the Fund calculates its net
asset value pursuant to rules of the SEC ("business day") at the net asset value
next computed after receipt and acceptance by the Fund or its designee of the
order for the shares of the Fund.
1.2. The Fund agrees to make available on each business day shares of the
Series for purchase at the applicable net asset value per share by the Company
on behalf of its Separate Accounts; provided, however, that the Trustees of the
Fund may refuse to sell shares of any Series to any person, or suspend or
terminate the offering of shares of any Series, if such action is required by
law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Trustees, acting in good faith and in light of the Trustees'
fiduciary duties under applicable law, necessary in the best interests of the
shareholders of any Series.
1.3. The Fund and the Distributor agree that shares of the Series of the
Fund will be sold only to Participating Insurance Companies, their separate
accounts, and other persons consistent with each Series being adequately
diversified pursuant to Section 817(h) of the Internal Revenue Code of 1986, as
amended ("Code") and the regulations thereunder. No shares of any Series will be
sold directly to the general public.
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1.4. The Fund and the Distributor will not sell shares of the Series to any
insurance company or separate account unless an agreement containing provisions
substantially the same as this Agreement is in effect to govern such sales.
1.5. Upon receipt of a request for redemption in proper form from the
Company, the Fund agrees to redeem in cash any full or fractional shares of the
Series held by the Company, ordinarily executing such requests on each business
day at the net asset value next computed after receipt and acceptance by the
Fund or its designee of the request for redemption, except that the Fund
reserves the right to suspend the right of redemption, consistent with Section
22(e) of the 1940 Act and any rules thereunder. Such redemptions shall
ordinarily be paid in federal funds or by any other method mutually agreed upon
by the parties hereto by the next business day following receipt by the Fund or
its designee of notice of the order for redemption; however the Fund reserves
the right to postpone payment upon redemption consistent with Section 22(e) of
the Act and any Rules thereunder.
1.6. For purposes of Sections 1.1 and 1.5, the Company shall be the
designee of the Fund for receipt of purchase and redemption orders from the
Separate Account, and receipt by such designee shall constitute receipt by the
Fund; provided that the Company receives the order by the close of business of
the New York Stock Exchange. The Company will use its best efforts to ensure
that the Fund receives notice of such order by 9:30 a.m. New York City time on
the next following business day.
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1.7. The Company shall pay for shares of the Series on the business day
next following the day that the Company receives an order to purchase shares of
the Series, except with respect to shares of any Series of the Fund ("Acquired
Series") ordered by the Company for a Separate Account or any subaccount thereof
in connection with an exchange or transfer from another Separate Account or
another subdivision of a Separate Account under the Variable Contracts, Company
shall pay for shares of the Acquired Series on the later of (1) the next
business day after an order to purchase the shares is made in accordance with
Section 1.1 hereof, or (2) on the same business day that the Separate Account
or subdivision from which the exchange or transfer is being made receives
payment from the investment company portfolio in which it invests, but in no
event later than seven days after the purchase order is received by the Company.
Payment shall be in federal funds transmitted by wire or by any other method
mutually agreed upon by the parties hereto.
1.8. Issuance and transfer of shares of the Series will be by book entry
only unless otherwise agreed by the Fund. Stock certificates will not be issued
to the Company or the Separate Accounts unless otherwise agreed by the Fund.
Fund and Distributor agree that shares ordered from the Fund will be recorded as
specified in such orders in an appropriate title for the Separate Accounts or
the appropriate subaccounts of the Separate Accounts.
1.9. The Fund shall promptly furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income dividends or
capital gain distributions payable on the shares of the Series. The Company
hereby elects to reinvest in the Series all such dividends and distributions as
are payable on a Series' shares and to receive such
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dividends and distributions in additional shares of that Series. The Company
reserves the right to revoke this election in writing and to receive all such
dividends and distributions in cash. The Fund shall notify the Company of the
number of shares so issued as payment of such dividends and distributions.
1.10. The Fund shall instruct its recordkeeping agent to advise the Company
on each business day of the net asset value per share for each Series as soon as
reasonably practical after the net asset value per share is calculated, which is
normally 6:30 p.m. New York City time and shall use its best efforts to make
such net asset value per share available by 9:00 p.m. New York City time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under Indiana law and that it is taxed as an
insurance company under Subchapter L of the Code.
2.2. The Company represents and warrants that it has legally and validly
established each of the Separate Accounts as a segregated asset account under
the Indiana Insurance Code, and that each of the Separate Accounts is a validly
existing segregated asset account under Indiana law.
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2.3. The Company represents and warrants that the Variable Contracts issued
by the Company or interests in the Separate Accounts under such Variable
Contracts (1) are or, prior to issuance, will be registered as securities under
the Securities Act of 1933 ("1933 Act") or, alternatively (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 0000 Xxx.
2.4. The Company represents and warrants that each of the Separate
Accounts: (1) has been registered as a unit investment trust in accordance with
the provisions of the 1940 Act or, alternatively (2) has not been registered in
proper reliance upon an exclusion from registration under the 0000 Xxx.
2.5. The Company represents that it believes, in good faith, that the
Variable Contracts issued by the Company are currently treated as annuity
contracts or life insurance policies (which may include modified endowment
contracts), whichever is appropriate, under applicable provisions of the Code.
2.6. The Company represents and warrants that any of its Separate Accounts
that fund variable life insurance contracts and that are registered with the SEC
as investment companies, rely on the exemptions provided by Rule 6e-2 or Rule
6e-3(T), or any successor thereto under the 1940 Act.
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2.7. The Fund represents and warrants that it is a business trust duly
organized and in good standing under the laws of Massachusetts.
2.8. The Fund represents and warrants that the shares of the Series are
duly authorized for issuance in accordance with applicable law and that the Fund
is registered as an open-end management investment company under the 0000 Xxx.
2.9. The Fund represents that it believes, in good faith, (i) that the
Series currently comply with the diversification provisions of Section 817(h) of
the Code and the regulations issued thereunder relating to the diversification
requirements for variable life insurance policies and variable annuity contracts
and (ii) that each Series has complied with such provisions since its
commencement of operations.
2. 10. The Distributor represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
ARTICLE III. General Duties
3.1. The Fund shall take all such actions as are necessary under applicable
federal and state law to permit the sale of the shares of each Series to the
Separate Accounts, including maintaining its registration as an investment
company under the 1940 Act, and registering the shares of the Series sold to the
Separate Accounts under the 1933 Act for so long as required by applicable law.
The Fund shall amend its Registration Statement filed with the SEC under
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the 1933 Act and the 1940 Act from time to time as required in order to permit
the continuous offering of the shares of the Series. The Fund shall register and
qualify the shares of the Series for sale in accordance with the laws of the
various states to the extent deemed necessary by the Fund or the Distributor.
3.2. The Fund shall make every effort to maintain qualification of each
Series as a Regulated Investment Company under Subchapter M of the Code (or any
successor or similar provision) and shall notify the Company immediately upon
having a reasonable basis for believing that a Series has ceased to so qualify
or that it might not so qualify in the future.
3.3. The Fund will invest assets of the Series in such a manner to permit
the Series to be used for investment by Separate Accounts of life insurance
companies funding variable annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations thereunder (or any successor
provisions). Without limiting the scope of the foregoing, the Fund shall make
every effort to enable each Series to comply with the diversification provisions
of Section 817(h) of the Code and the regulations issued thereunder relating to
the diversification requirements for variable life insurance policies and
variable annuity contracts and any prospective amendments or other modifications
to Section 817 or regulations thereunder, and shall notify the Company
immediately upon having a reasonable basis for believing that any Series has
ceased or might cease to comply.
3.4. Fund agrees to use its best efforts to ensure that each Series of the
Fund shall be managed consistent with its investment objective or objectives,
investment policies, and invest-
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ment restrictions as described in the Fund's prospectus and registration
statement, as amended or modified from time to time.
3.5. The Company shall take all such actions as are necessary under
applicable federal and state law to permit the sale of the Variable Contracts
issued by the Company, including registering each Separate Account as an
investment company to the extent required under the 1940 Act, and registering
the Variable Contracts or interests in the Separate Accounts under the Variable
Contracts to the extent required under the 1933 Act, and obtaining all necessary
approvals to offer the Variable Contracts from state insurance commissioners.
3.6. The Company shall make every effort to maintain the treatment of the
Variable Contracts issued by the Company as annuity contracts or life insurance
policies, whichever is appropriate, under applicable provisions of the Code and
shall notify the Fund and the Distributor immediately upon having a reasonable
basis for believing that such Variable Contracts have ceased to be so treated or
that they might not be so treated in the future. In the event that a change in
the Code or in the regulations thereunder or in an interpretation thereof makes
it unreasonable for the Company to continue to treat Variable Contracts as
annuity contracts or life insurance policies, whichever is appropriate, then the
Company shall, as soon as may be practical under the circumstances, notify the
Fund and the Distributor of its intent or plans with respect to such affected
annuity contracts or life insurance policies.
3.7. The Company shall require that any persons who offer and sell the
Variable Contracts issued by the Company do so in accordance with applicable
provisions of the 1933
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Act, the 1934 Act, the 1940 Act, the NASD Rules of Fair Practice, and state law
respecting the offering of variable life insurance policies and variable annuity
contracts.
3.8. The Distributor shall sell and distribute the shares of the Series of
the Fund in accordance with the applicable provisions of the 1933 Act, the 1934
Act, the 1940 Act, the NASD Rules of Fair Practice, and state law.
3.9. A majority of the Board of Trustees of the Fund shall consist of
persons who are not "interested persons" of the Fund ("disinterested Trustees"),
as defined by Section 2(a)(19) of the 1940 Act, except that if this provision of
this Section 3.9 is not met by reason of the death, disqualification, or bona
fide resignation of any Trustee or Trustees, then the operation of this
provision shall be suspended (a) for a period of 45 days if the vacancy or
vacancies may be filled by the Fund's Board; (b) for a period of 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.
3.10. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction (including, without
limitation, the SEC, the NASD, and state insurance regulators) and shall permit
such authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
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3.11. The Company shall, at least annually, submit to the Board of Trustees
of the Fund such reports, materials or data as the Trustees may reasonably
request so that the Trustees may carry out the obligations imposed upon them by
the Shared Funding Exemptive Order, and said reports, materials and data shall
be submitted more frequently if deemed appropriate by the Board of Trustees.
ARTICLE IV. Potential Conflicts
4.1. The Fund's Board of Trustees shall monitor the Fund for the existence
of any material irreconcilable conflict (1) between the interests of owners of
variable annuity contracts and variable life insurance policies, and (2) between
the interests of owners of Variable Contracts ("Variable Contract Owners")
issued by different Participating Insurance Companies that invest in the Fund.
An irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance 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
interpretive letter, or any similar action by insurance, tax, or securities
regulatory authorities; (c) an administrative or judicial decision in any
relevant proceeding; (d) the manner in which the investments of the Fund or any
Series are being managed; or (e) a decision by a Participating Insurance Company
to disregard the voting instructions of Variable Contract Owners.
4.2. The Company agrees that it shall be responsible for reporting any
potential or existing conflicts to the Fund's Board of Trustees. The Company
will be responsible for
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assisting the Board of Trustees of the Fund in carrying out its responsibilities
under this Agreement, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever Variable
Contract Owner voting instructions are disregarded. The Company shall carry out
its responsibility under this Section 4.2 with a view only to the interests of
the Variable Contract Owners.
4.3. The Company agrees that in the event that it is determined by a
majority of the Board of Trustees of the Fund or a majority of the Fund's
disinterested Trustees that a material irreconcilable conflict exists, the
Company shall, in cooperation with other Participating Insurance Companies whose
Variable Contract owners are affected, at its own expense and to the extent
reasonably practicable (as determined by a majority of the disinterested
Trustees of the Board of the Fund), take whatever steps are necessary to
eliminate the irreconcilable material conflict, including: (1) withdrawing the
assets allocable to some or all of the Separate Accounts from the Fund or any
Series and reinvesting such assets in a different investment medium, which may
include another series of the Fund, or submitting the question of whether such
segregation should be implemented to a vote of all affected Variable Contract
Owners and, as appropriate, segregating the assets of any appropriate group
(i.e., Contract Owners of Variable Contracts issued by one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected Variable Contract Owners the option of making such a change; and (2)
establishing a new registered management investment company or managed separate
account. If a material irreconcilable conflict arises because of the Company's
decision to disregard Variable Contract Owners' voting instructions and that
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decision represents a minority position or would preclude a majority vote, the
Company shall be required, at the Fund's election, to withdraw the Separate
Accounts' investment in the Fund, and no charge or penalty will be imposed as a
result of such withdrawal. The Fund shall neither be required to bear the costs
of remedial actions taken to remedy a material irreconcilable conflict nor shall
it be requested to pay a higher investment advisory fee for the sole purpose of
covering such costs. In addition, no Variable Contract Owner shall be required
directly or indirectly to bear the direct or indirect costs of remedial actions
taken to remedy a material irreconcilable conflict. A majority of the
disinterested members of the Board of Trustees of the Fund shall determine
whether any proposed action adequately remedies any material irreconcilable
conflict, but in no event will the Fund be required to establish a new funding
medium for any Variable Contract. A new funding medium for any Variable Contract
need not be established by the Company pursuant to this Section 4.3, if an offer
to do so has been declined by vote of a majority of Variable Contract Owners who
would be adversely affected by the irreconcilable material conflict. All reports
received by the Fund's Board of Trustees of potential or existing conflicts, and
all Board action with regard to determining the existence of a conflict,
notifying Participating Insurance Companies and the Fund's investment adviser of
a conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board of Trustees of
the Fund or other appropriate records, and such minutes or other records shall
be made available to the SEC upon request. The Company and the Fund shall carry
out their responsibilities under this Section 4.3 with a view only to the
interests of the Variable Contract Owners.
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4.4. The Board of Trustees of the Fund shall promptly notify the Company in
writing of its determination of the existence of an irreconcilable material
conflict and its implications.
ARTICLE V. Prospectuses and Proxy Statements; Voting
5.1. The Company shall distribute such prospectuses, proxy statements and
periodic reports of the Fund to the owners of Variable Contracts issued by the
Company as required to be distributed to such Variable Contract Owners under
applicable federal or state law.
5.2. The Distributor shall provide the Company with as many copies of the
current prospectus of the Fund as the Company may reasonably request. If
requested by the Company in lieu thereof, the Fund shall provide such
documentation (including a final copy of the Fund's prospectus as set in type or
in camera-ready copy) and other assistance as is reasonably necessary in order
for the Company to print together in one document the current prospectus for the
Variable Contracts issued by the Company and the current prospectus for the
Fund. The Fund shall bear the expense of printing copies of its current
prospectus that will be distributed to existing Variable Contract Owners, and
the Company shall bear the expense of printing copies of the Fund's prospectus
that are used in connection with offering the Variable Contracts issued by the
Company.
5.3. The Fund and the Distributor shall provide (1) at the Fund's expense,
one copy of the Fund's current Statement of Additional Information ("SAI") to
the Company and to any owner of a Variable Contract issued by the Company who
requests such SAI, (2) at the Com-
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pany's expense, such additional copies of the Fund's current SAI as the Company
shall reasonably request and that the Company shall require in accordance with
applicable law in connection with offering the Variable Contracts issued by the
Company.
5.4. The Fund, at its expense, shall provide the Company with copies of its
proxy material, periodic reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
purposes of distributing to owners of Variable Contracts issued by the Company.
The Fund, at the Company's expense, shall provide the Company with copies of its
periodic reports to shareholders and other communications to shareholders in
such quantity as the Company shall reasonably request for use in connection with
offering the Variable Contracts issued by the Company. If requested by the
Company in lieu thereof, the Fund shall provide such documentation (including a
final copy of the Fund's proxy materials, periodic reports to shareholders and
other communications to shareholders, as set in type or in camera-ready copy)
and other assistance as reasonably necessary in order for the Company to print
such shareholder communications for distribution to owners of Variable Contracts
issued by the Company.
5.5. For so long as the SEC interprets the 1940 Act to require pass-through
voting by Participating Insurance Companies whose Separate Accounts are
registered as investment companies under the 1940 Act ("Registered Separate
Accounts"), the Company shall vote shares of each Series of the Fund held in
Registered Separate Accounts or subaccounts thereof, at regular and special
meetings of the Fund in accordance with instructions timely received by the
Company (or its designated agent) from owners of Variable Contracts funded by
such
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Registered Separate Accounts or subaccounts thereof having a voting interest in
the Series. The Company shall vote shares of a Series of the Fund held in
Registered Separate Accounts or subaccounts thereof that are attributable to the
Variable Contracts as to which no timely instructions are received, as well as
shares held in such Registered Separate Accounts or subaccounts thereof that are
not attributable to the Variable Contracts and owned beneficially by the Company
(resulting from charges against the Variable Contracts or otherwise), in the
same proportion as the votes cast by owners of the Variable Contracts funded by
that Separate Account or subaccount thereof having a voting interest in the
Series from whom instructions have been timely received. The Company shall vote
shares of each Series of the Fund held in its general account or in any Separate
Account that is not registered under the 1940 Act, if any, in its discretion or
in the same proportion as the votes cast with respect to shares of the Series
held in all Registered Separate Accounts of the Company or subaccounts thereof,
in the aggregate. The Company agrees to take steps so that each Registered
Separate Account or subaccount thereof investing in the Fund calculates voting
privileges in a reasonable manner which will be communicated to the Company by
the Fund and that such manner will be consistent with other registered variable
annuity or variable life insurance separate accounts investing in the Fund.
5.6. To the extent applicable, the Fund shall disclose in its prospectus,
in substance, that: (1) shares of the Series of the Fund are offered to
affiliated or unaffiliated insurance company separate accounts which fund both
annuity and life insurance contracts, (2) due to differences in tax treatment or
other considerations, the interests of various Variable Contract Owners
participating in the Fund or a Series might at some time be in irreconcilable
conflict,
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and (3) the Board of Trustees of the Fund will monitor for any material
irreconcilable conflicts and determine what action, if any, should be taken.
ARTICLE VI. Sales Material and Information
6.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund (or any Series thereof) or its investment adviser or the
Distributor is named, and no such sales literature or other promotional material
shall be used without the prior approval of the Fund and the Distributor or the
designee of either. The Fund and the Distributor shall use their best efforts to
provide such approval or, if approval is not given, then to provide comments
suggesting appropriate changes to any piece of sales literature or other
promotional material within two (2) business days of receipt of such materials.
6.2. The Company agrees that neither it nor any of its affiliates shall
give any information or make any representations or statements on behalf of the
Fund or concerning the Fund other than the information or representations
contained in the Registration Statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sales
literature or other promotional material approved by the Fund or its designee
and/or by the Distributor or its designee, except with the prior permission of
the Fund or its designee and/or the Distributor or its designee.
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6.3. The Fund or the Distributor or the designee of either shall furnish to
the Company or its designee, each piece of sales literature or other promotional
material in which the Company or its Separate Accounts are named, and no such
material shall be used without the prior approval of the Company or its
designee.
6.4. The Fund and the Distributor agree that each and the affiliates of
each shall not give any information or make any representations on behalf of the
Company or concerning the Company, the Separate Accounts, or the Variable
Contracts issued by the Company, other than the information or representations
contained in a registration statement or prospectus for such Variable Contracts,
as such registration statement and prospectus may be amended or supplemented
from time to time, or in reports for the Separate Accounts or prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the Company or its designee, except with
the prior permission of the Company.
6.5. The Fund will provide to the Company at least one complete copy of all
prospectuses, Statements of Additional Information, reports, proxy statements
and other voting solicitation materials, and all amendments and supplements to
any of the above, that relate to the Fund or its shares, promptly after the
filing of such document with the SEC or other regulatory authorities.
6.6. The Company will provide to the Fund at least one complete copy of all
prospectuses (which shall include an offering memorandum if the Variable
Contracts issued by the
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Company or interests therein are not registered under the 1933 Act), Statements
of Additional Information, reports, solicitations for voting instructions, and
all amendments or supplements to any of the above, that relate to the Variable
Contracts issued by the Company or the Separate Accounts promptly after the
filing of such document with the SEC or other regulatory authority.
6.7. For purposes of this Article VI, 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, computerized media, or other public
media), 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.
ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.l (a). The Company agrees to indemnify and hold harmless the Fund, each
of its Trustees and officers and the Distributor and each of the Directors and
officers of the
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Distributor (collectively, the "Indemnified Parties" for purposes of this
Section 7.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or litigation expenses (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
litigation expenses:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus (which shall include an offering memorandum) for the Variable
Contracts issued by the Company or sales literature for such Variable
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 the Company by or on behalf
of the Fund for use in the registration statement or prospectus for the
Variable Contracts issued by the Company or in sales literature (or any
amendment or supplement to any of the foregoing) or otherwise for use in
connection with the sale of the Variable Contracts or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other than
statements or representations (1) contained in the registration statement,
prospectus or sales literature of the Fund not supplied by the Company or
persons under its control, or (2) contained in the registration statement,
prospectus, SAI, or sales literature for the Variable Contracts made in
reliance upon and in conformity with information furnished to the Company
by or on behalf of the Fund or the Distributor) or wrongful conduct of the
Company or persons under the control thereof with respect to the sale or
distribution of the Variable Contracts issued by the Company or the Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required
to be stated
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therein or necessary to make the statements therein not misleading if such
a statement or omission was made in reliance upon information furnished to
the Fund by or on behalf of the Company; or
(iv) arise out of or result from the material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company;
except to the extent provided in Sections 7.1(b) and 7.1(c) hereof
7.l(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations or
duties under this Agreement or to the Fund.
7.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified the Company in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon such Indemnified Party (or after such
Party shall have received notice of such service on any designated agent), but
failure to notify the Company of any such claim shall not relieve the Company
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the
23
defense thereof, with counsel satisfactory to the Indemnified Party named in the
action. After notice from the Company to such party of the Company's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Company will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.1(d). The Indemnified Parties shall promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares hereunder or the Variable Contracts
issued by the Company or the operation of the Fund provided that such litigation
or proceedings relate to or affect the interests of the Company.
7.2. Indemnification By the Distributor
7.2(a). The Distributor agrees to indemnify and hold harmless the Company
and each of its directors and officers and the Separate Accounts (collectively,
the "Indemnified Parties" for purposes of this Section 7.2) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Distributor) or litigation expenses (including legal
and other expenses) to which the Indemnified Parties may become subject under
any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or litigation expenses:
24
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement or
prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Distributor or the Fund or the designee of either by or on
behalf of the Company for use in the registration statement or prospectus
for the Fund or in sales literature (or any amendment or supplement to any
of the foregoing) or otherwise for use in connection with the sale of the
Variable Contracts issued by the Company or Fund shares; or
(ii) arise out of or as a result of any statement or representation (other than
statements or representations (1) contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by
the Distributor or persons under the control thereof, or (2) contained in
the registration statement, prospectus, SAI, or sales literature for the
Fund made in reliance upon and in conformity with information furnished to
the Fund by or on behalf of the Company) or wrongful conduct of the Fund or
Distributor or persons under their control with respect to the sale or
distribution of the Variable Contracts or the Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts issued by the Company, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon information furnished
to the Company by the Distributor or by or on behalf of the Fund; or
(iv) arise out of or result from the material breach of any representation
and/or warranty made by the Distributor or the Fund in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Distributor or the Fund, including but not limited to, compliance with
the diversification requirements of Section 817(h) of the Code and
qualification of each Series of the Fund as a Regulated Investment Company
under Subchapter M of the Code;
25
except to the extent provided in Sections 7.2(b) and 7.2(c) hereof.
7.2(b). The Distributor shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
expenses to which an Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of obligations and
duties under this Agreement or to the Company or the Separate Accounts.
7.2(c). The Distributor shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Party shall have notified the Distributor in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Party shall have received notice of such service on any designated agent),
but failure to notify the Distributor of any such claim shall not relieve the
Distributor from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
Indemnification Provision. In case any such action is brought against an
Indemnified Party, the Distributor will be entitled to participate, at its own
expense, in the defense thereof. The Distributor also shall be entitled to
assume the defense thereof, with counsel satisfactory to the Indemnified Party
named in the action. After notice from the Distributor to such party of the
Distributor's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Distributor will not be liable to such party under this Agree-
26
meet for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.2(d). The Company shall promptly notify the Distributor of the
commencement of any litigation or proceedings against any Indemnified Party in
connection with the issuance or sale of the Fund shares hereunder or the
Variable Contracts issued by the Company or the operation of the Separate
Accounts provided that such litigation or proceedings relate to or affect the
interests of the Fund or the Distributor.
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Indiana.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934,
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
27
ARTICLE IX. Termination
9.1. This Agreement shall terminate:
(a) at the option of any party upon 90 days advance written notice to
the other parties, unless a shorter time is agreed to by the parties to
this Agreement; or
(b) at the option of the Company if shares of the Series are not
reasonably available to meet the requirements of the Variable Contracts
issued by the Company, as determined by the Company, and upon written
notice by the Company to the other parties to this Agreement; or,
(c) at the option of the Fund or the Distributor upon institution of
formal proceedings against the Company by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body if the Fund
or the Distributor shall determine, in its sole judgment exercised in good
faith, that the Company has suffered a material adverse change in its
business, operations, financial condition, or prospects since the date of
this Agreement or is the subject of material adverse publicity; or
(d) at the option of the Company upon institution of formal
proceedings against the Fund or the Distributor by the NASD, the SEC, or
any state securities or insurance department or any other regulatory body
if the Company shall determine, in its sole judgment exercised in good
faith, that the Fund or the Distributor has suffered a material adverse
change in its business, operations, financial condition, or prospects since
the date of this Agreement or is the subject of material adverse publicity;
or
28
(e) upon requisite vote of the Variable Contract Owners having an
interest in the Separate Accounts (or any subaccounts thereof) to
substitute the shares of another investment company or series thereof for
the corresponding shares of the Fund or a Series in accordance with the
terms of the Variable Contracts for which those shares had been selected to
serve as the underlying investment media; or
(f) in the event any of the shares of a Series are not registered,
issued or sold in accordance with applicable state and/or federal law, or
such law precludes the use of such shares as the underlying investment
media of the Variable Contracts issued or to be issued by the Company; or
(g) at the option of any party to the Agreement upon a determination
by a majority of the Trustees of the Fund, or a majority of its
disinterested Trustees, that an irreconcilable material conflict exists; or
(h) at the option of the Company if the Fund or a Series fails to meet
the diversification requirements specified in Section 3.2 or 3.3 hereof; or
(i) at the option of the Fund or the Distributor if the Variable
Contracts issued by the Company cease to qualify as annuity contracts or
life insurance contracts, as applicable, under the Code or if the Variable
Contracts are not registered, issued or sold in accordance with applicable
state and/or federal law; or
(j) at the option of the Company upon any substitution of the shares
of another investment company or series thereof for shares of the Fund or a
Series in accordance with the terms of the Contracts, provided that the
Company has given at least 45 days prior written notice to the Fund or
Distributor of the date of the substitution.
29
(k) at the option of the Company upon a material breach of this
Agreement or of any representation or warranty herein by the Fund or the
Distributor, or at the option of the Fund or the Distributor upon a
material breach of this Agreement or of any representation or warranty
herein by the Company.
9.2. Each party to this Agreement shall promptly notify the other parties
to the Agreement of the institution against such party of any such formal
proceedings as described in Sections 9.l(c) and (d) hereof. The Company shall
give 45 days prior written notice to the Fund of the date of any proposed vote
of Variable Contract Owners to replace the Fund's shares as described in Section
9.1(e) hereof.
9.3. Under the terms of the Variable Contracts, the Company reserves the
right, subject to compliance with the law as then in effect, to make
substitutions for the securities that are held by a Separate Account of Company
under certain circumstances. The parties acknowledge that Company has the right
to substitute other securities for the shares of the Fund or a Series already
purchased or to be purchased in the future if the shares of the Fund or any or
all of the Series should no longer be available for investment, or if, in the
judgment of Company management, further investment in shares of the Fund or any
or all of the Series thereof should become inappropriate in view of the purposes
of the Contracts. Company will provide 45 days written notice to the Fund or to
the Distributor prior to effecting any such substitution.
30
9.4. If this Agreement terminates, any provision of this Agreement
necessary to the orderly windup of business under it will remain in effect as to
that business, after termination.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund: The Xxxxx American Fund
00 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxx
If to the Distributor: Xxxx Xxxxx & Company, Incorporated
00 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxx
If to the Company: American United Life Insurance Company(R)
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
ARTICLE XI.
11. 1. The Fund and the Company agree that if and to the extent Rule 6e-2
or 6e-3(T) under the 1940 Act is amended or if Rule 6e-3 is adopted in final
form, to the extent appli-
31
cable, the Fund and the Company shall each take such steps as may be necessary
to comply with such Rule as amended or adopted in final form.
11.2. A copy of the Fund's Agreement and Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts and notice is hereby
given that the Agreement has been executed on behalf of the Fund by a Trustee of
the Fund in his or her capacity as Trustee and not individually. The obligations
of this Agreement shall only be binding upon the assets and property of the Fund
and shall not be binding upon any Trustee, officer or shareholder of the Fund
individually.
11.3. It is understood that the name "American United Life Insurance
Company(R)", "AUL", or any derivative thereof or logo associated with that name
is the valuable property of the Company and its affiliates, and that the Company
has the right to use such name (or derivative or logo) only so long as this
Agreement is in effect. Upon termination of this Agreement the Company shall
forthwith cease to use such name (or derivative or logo).
11.4. It is understood that the name "Xxxxx", or any derivative thereof or
logo associated with that name is the valuable property of the Distributor and
its affiliates, and that the Company has the right to use such name (or
derivative or logo) only so long as this Agreement is in effect. Upon
termination of this Agreement the Company shall forthwith cease to use such name
(or derivative or logo).
32
11.5. The Fund and the Distributor agree to treat as the property of the
Company any list or compilation of names, addresses, and other information
relating to the owners of the Variable Contracts or prospects for the sale of
the Variable Contracts acquired in the course of performing under this Agreement
and agree not to use such information for any purpose without the prior written
consent of the Company.
11.6. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
11.7. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.8. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
11.9. This Agreement may not be assigned by any party to the Agreement
except with the written consent of the other parties to the Agreement. For
purposes of this provision, the term "assigned" shall include a change in
control of a party to the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
33
executed as of the day and year first above written.
THE XXXXX AMERICAN FUND
ATTEST: __________________ BY: __________________
Name: Xxxxx Staple Name: Xxxxxxx Xxxx
Tile: Secretary Title: Treasurer
XXXX XXXXX & COMPANY, INCORPORATED
ATTEST: __________________ BY: __________________
Name: Xxxxx Staple Name: Xxxxxxx Xxxx
Tile: Secretary Title: Treasurer
AMERICAN UNITED LIFE INSURANCE COMPANY(R)
ATTEST: __________________ BY:___________________.
Name: Xxxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxx, Xx.
Tile: Associate General Counsel Title: Vice President
Pension Contracts
34
Exhibit A
List of Series Currently available to American United Life Insurance
Company(R):
Xxxxx American Growth Portfolio
