EXHIBIT 8(H)
PARTICIPATION AGREEMENT
-----------------------
AMONG
X. XXXX PRICE INVESTMENT SERVICES, INC.,
X. XXXX PRICE SERVICES, INC.,
AND
X. XXXX PRICE ASSOCIATES, INC.
AND
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this 1st day of December, 2014
by and among THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, (hereinafter the
"Company"), organized under the laws of the State of Texas, on its own behalf
and on behalf of each segregated asset account of the Company set forth on
Schedule A hereto as such schedule may be amended from time to time (each such
account hereinafter referred to as the "Account"), and X. XXXX PRICE INVESTMENT
SERVICES, INC., a Maryland corporation ("Underwriter"), X. XXXX PRICE SERVICES,
INC., a Maryland corporation (Transfer Agent"), and X. XXXX PRICE ASSOCIATES,
INC. (hereinafter the "Adviser"), a Maryland corporation (Underwriter, Transfer
Agent and Adviser collectively, "X. Xxxx Price").
WHEREAS, the X. Xxxx Price funds engage in business as open-end management
investment companies (individually a "Fund", collectively the "Funds") and are
available to act as an investment vehicle for separate accounts established for
variable life insurance policies and variable annuity contracts to be offered by
insurance companies; and
WHEREAS, the Funds are registered as open-end management investment
companies under the Investment Company Act of 1940, as amended (the "1940 Act")
and the shares are registered under the Securities Act of 1933, as amended
(hereinafter the "1933 Act"); and
WHEREAS, certain Funds have issued an Advisor Class of shares ("Advisor
Class"); and
WHEREAS, the Fund intends to offer the Advisor Class of shares as set forth
on Schedule C, as may be amended from time to time by mutual agreement of the
parties hereto; under this Agreement to the Accounts of the Company; and
WHEREAS, the Underwriter is registered as a broker-dealer with the
Securities Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended, and is a member in good standing of the Financial Industry
Regulatory Authority ("FINRA"); and
WHEREAS, the Transfer Agent is the registered transfer agent of the Funds;
and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940; and
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EXHIBIT 8(H)
WHEREAS, the Company has registered or will register certain variable
annuity contracts under the 1933 Act (the "Contracts", as defined in Section 1.4
hereto); and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set aside
and invest assets attributable to one or more Contracts; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Fund at net asset
value on behalf of each Account to fund certain of the aforesaid Contracts; and
NOW THEREFORE, in consideration of their mutual promises, the Company and,
the Fund agree as follows:
ARTICLE I. SALE OF FUND SHARES
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1.1 X. Xxxx Price agrees to make available to the Company those shares of
the Fund which each Account orders, executing such purchase and/or redemption
orders on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of the order for the shares of the Fund. For purposes
of this Section 1.1, the Company shall be the designee of the Fund for receipt
of such orders from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Company receives the order on any
Business Day by 4:00 p.m. Eastern Time or such other time that the New York
Stock Exchange (NYSE) is open and the Fund receives notice of such order by 8:00
a.m. Eastern time on the next following Business Day ("Trade Date + 1"). In
placing orders with the Fund, the Company shall net all purchases and
redemptions into one order request; the Company will not place two separate
orders with the Fund. "Business Day" shall mean any day on which the NYSE is
open for trading and on which the Fund calculates its net asset value pursuant
to the rules of the SEC.
1.2 X. Xxxx Price agrees to make shares of the Fund available for purchase
at the applicable net asset value per share by the Company and its Accounts on
those days on which the Fund calculates its net asset value pursuant to rules of
the SEC and the Fund shall use reasonable efforts to calculate such net asset
value on each day which the NYSE is open for trading. Notwithstanding the
foregoing, the Fund may refuse to offer shares to any person, or suspend or
terminate the offering of its shares as authorized in the Fund's current
registration statement. To the maximum extent permissible and practicable,
notice of election to suspend or terminate shall be furnished in writing, by the
Fund. Absent extraordinary circumstances, said termination would be effective no
earlier than ten (10) Business Days after receipt of such notice by the Company
in order to give the Company sufficient time to take appropriate steps in
response to such suspension or termination.
1.3 Redemption proceeds shall be wired to the Company within three (3)
Business Days or such longer period permitted by the 1940 Act or the rules,
orders or regulations thereunder, and, if practicable, the Fund shall notify the
person designated in writing by the Company as the recipient for such notice of
such delay by 3:00 p.m. Central time the same Business Day that the Company
transmits the redemption order to the Fund. The Parties recognize the impact to
the Company and its Contract owners of failing to satisfy redemption requests in
cash and recognize that the need to redeem in kind would only occur in
extraordinary circumstances. If such a circumstance were to occur, the Trust
will use best efforts to satisfy redemption proceeds solely in cash, in
accordance with applicable law.
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EXHIBIT 8(H)
Notwithstanding anything to the contrary, the Fund reserves the right to make
redemptions in kind if the Adviser determines extraordinary circumstances
require such an election.
1.4 The Company agrees to purchase and redeem the shares of the Fund in
accordance with the provisions of this Agreement and the Fund's then current
prospectus and statement of additional information. In the event of a conflict
between this Agreement and the Fund's prospectus or statement of additional
information, the Fund's prospectus and statement of additional information shall
control. The Company agrees that all net amounts available under the variable
annuity contracts listed on Schedule B attached hereto and incorporated herein
by this reference, as such Schedule B may be amended from time to time hereafter
by mutual written agreement of all the parties hereto, (the "Contracts") shall
be invested in the Fund, in such other Funds advised by the Adviser as may be
mutually agreed to in writing by the parties hereto, in the Company's general
account, or in an investment company other than the Fund.
1.5 The Company shall pay for Fund shares on Trade Date + 1 in accordance
with the provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire. For purpose of Section 2.10 and 2.11, upon receipt by the
Fund of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
If payment is not received by Fund by the close of business on Trade Date + 1,
Transfer Agent shall have the right to cancel the purchase in the Fund and hold
the Company responsible for any losses, charges, costs, fees, interest, or other
expenses incurred by Transfer Agent or the Funds in connection with any advances
to, or borrowings or overdrafts, or any similar expense or loss incurred by the
Funds, as a result of portfolio transactions effected by the Funds based upon
such purchase orders.
1.6 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.7 X. Xxxx Price shall provide written notification, which may include
email communication, to the Company of any income, dividends or capital gain
distributions payable on the Fund's shares. Notwithstanding this Section 1.7, X.
Xxxx Price shall utilize its best efforts to provide the Company with at least
ten (10) Business Days advance notice of any forthcoming dividend or capital
gain distributions. The Company hereby elects to receive all such income
dividends and capital gain distributions as are payable on the Fund shares in
additional shares of the Fund. The Company reserves the right to revoke this
election and to receive all such income dividends and capital gain distributions
in cash. X. Xxxx Price shall notify the Company of the number of shares so
issued as payment of such dividends and distributions.
1.8 X. Xxxx Price shall make the Funds' net asset value per share available
to the Company on a daily basis as soon as reasonably practical after the net
asset value per share is calculated and shall use its best efforts to make such
net asset value per share available by 7:00 p.m. Eastern time.
1.9 Any material error in the calculation or reporting of a Fund's net
asset value per share, dividend or capital gain information triggering a
material impact to the Fund, shall be reported reasonably promptly upon
discovery by X. Xxxx Price to the Company. If the Fund provides the Company with
materially incorrect net asset value information, through no fault of the
Company, the Company shall be entitled to (1) an adjustment with respect to the
Fund shares purchased or redeemed to reflect the correct net asset value per
share ("Adjustment") and (2) reimbursement of out-of-pocket expenses, up to
$30,000 per pricing error occurrence, incurred by the Company in connection with
the Company's responsibility to adjust any plan participant's account value
affected by the materially incorrect net asset value; provided, the Company
adjusts all Contract owner and plan participant's accounts invested in the
Account and nets Contract owner gains with losses. Any necessary Adjustment
hereunder shall be made or paid as
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EXHIBIT 8(H)
applicable no later than fifteen (15) Business Days, if reasonably practicable,
after the receipt of notice from X. Xxxx Price; provided however, that the
Company shall not be required to repay an overpayment forwarded to a plan
participant that is no longer a client of the Company. The determination of
materiality of any net asset value pricing error shall be based on the SEC's
recommended guidelines regarding such errors. 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 by the Fund to the
Company.
1.10 The Fund shall provide written notification, which may include email
communication, to the Company of the amount of shares traded and the associated
net asset value total trade amount and the outstanding share balances held in
the Account(s) as of the end of each Business Day.
1.11 The Company agrees that purchases and redemptions of Fund shares
offered by the then current prospectus and statement of additional information
of the Fund shall be made in accordance with the provisions of the prospectus
and statement of additional information provided, however, that the Company will
apply its frequent trading policy described in and attached as Schedule D to
this Agreement to Contract owners investing in the shares of the Fund. Schedule
D may be amended by the Company from time to time with the consent of the
Transfer Agent, which consent shall not be unreasonably withheld or delayed
provided that such amendment is no less restrictive than the Company's existing
frequent trading policy.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
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2.1 REPRESENTATIONS OF THE COMPANY. The Company represents and warrants
that
(a) it is an insurance company duly organized and in good standing under
applicable law and that it has legally and validly established each Account
prior to any issuance or sale thereof as a segregated asset account under the
Insurance Code of the State of Texas and has registered or, prior to any
issuance or sale of the Contracts, will register each 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;
(b) the Contracts are or will be registered under the 1933 Act; that the
Contracts will be issued and sold in compliance in all material respects with
all applicable federal and state laws and that the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements;
and
(c) it will maintain errors and omissions or other professional liability
insurance coverage with coverage limits in amounts standard in the industry,
covering its activities as contemplated by this Agreement. The Company shall
provide any party to this Agreement with evidence of insurance coverage upon
request.
(d) it has adopted an Anti-Money Laundering Program as required by the USA
PATRIOT Act, which includes development of internal policies, procedures and
controls to detect and prevent money laundering and that investments in the
Funds is within the scope of its AML Program. Company also represents and
warrants that with respect to accounts held in the Funds, it is an exempt entity
as defined under Section 326 of the Patriot Act (Customer Identification Rule)
and accordingly is not a "customer" or "account" of the Funds. If Company is not
an exempt entity under Section 326, it agrees to submit documents requested by
Transfer Agent to allow it to verify the existence of the Company's identity.
Company also agrees to comply with economic sanction programs administered by
the U.S. Treasury Department's Office of Foreign Asset Control ("OFAC"). Company
certifies that it has OFAC
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EXHIBIT 8(H)
compliance programs in place which includes: (1) procedures for checking
customer names and, to the extent required, persons with signature authority
over accounts against the OFAC lists of sanctioned governments and specially
designated nationals, terrorists and drug traffickers and (2) screening of wire
transfers and other payments against the OFAC lists. Company also agrees to
comply with all applicable laws, statues, regulations and codes relating to
anti-bribery and anti-corruption, including but not limited to the Foreign
Corrupt Practices Act.
2.2 REPRESENTATIONS OF THE ADVISER.
(a) The Adviser represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with all applicable federal and state securities
laws and that the Fund is and shall remain registered under the 0000 Xxx. The
Adviser shall amend the Fund's Registration Statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Adviser shall register and qualify the
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable. The Adviser makes no representations as to whether
any aspect of the Fund's operations, including but not limited to, investment
policies, fees, and expenses, complies with the insurance and other applicable
laws of the various states.
(b) The Adviser represents that, under the terms of its investment advisory
agreements with the Fund, the Adviser is and will be responsible for managing
the Fund in compliance with the Fund's investment objectives, policies and
restrictions as set forth in the Fund Prospectus. The Adviser represents that
these objectives, policies and restrictions do and will include that the Fund is
operating as a regulated investment company ("RIC") in compliance with
Subchapter M of the Code and regulations thereunder. The Adviser further
represents that the Fund has adopted and will maintain procedures to make every
effort to ensure that the Fund is managed in compliance with Subchapter M and
regulations thereunder. On request, the Fund shall also provide the Company with
such cooperation and assistance as may be reasonably necessary for the Company
or any appropriate person designated by the Company to review from time to time
a summary of the procedures and practices of the Adviser for ensuring that the
Fund is managed in compliance with Subchapter M and regulations thereunder. In
the event of any noncompliance regarding its status as a RIC, the Adviser shall
notify the Company immediately and shall pursue those efforts necessary to
enable each affected series of the Fund to qualify once again for treatment as a
RIC in compliance with Subchapter M, including cooperation in good faith with
the Company.
(c) The Adviser represents that it seeks to ensure that the Fund's
investment policies, fees and expenses are and shall at all times remain in
compliance with applicable federal and state laws, and seeks to remain in
material compliance with applicable federal and state laws to the extent
required to perform this Agreement.
(d) The Adviser represents that the Fund is lawfully organized and validly
existing under applicable laws and that it does and will comply in all material
respects with the 1940 Act.
(e) The Adviser represents and warrants that all of their directors,
officers, employees, and other individuals/entities dealing with the money or
securities of the Fund are and shall 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 shall include coverage for larceny and embezzlement and shall
be issued by a reputable bonding company.
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EXHIBIT 8(H)
(f) The Adviser represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal laws and that
it shall perform its obligations for the Fund in compliance in all material
respects any applicable state and federal securities laws.
(g) The Adviser represents and warrants that it is registered as an
investment adviser under federal securities laws.
(h) For each Fund that meets the requirements of Section 1.817-5(f)(2)(i)
of the regulations under the Internal Revenue code of 1986, as amended, (the
"Code"), the Adviser represents and warrants that it will use commercially
reasonably efforts to comply and maintain such Fund's compliance with the
diversification requirements set forth in Section 817(h) of the Code and Section
1.817-5 of the regulations under the Code. The Adviser will notify the Company
immediately upon having a reasonable basis for believing that such Fund has
ceased to so comply or that such Fund might not so comply in the future. In the
event of a breach of this Section 2.2(h) by such Fund, it will take all
reasonable steps to adequately diversify such Fund so as to achieve compliance
within the grace period afforded by Section 1.817-5 of the regulations under the
Code.
2.3 REPRESENTATIONS OF THE TRANSFER AGENT/UNDERWRITER.
(a) The Transfer Agent and Underwriter each represent and warrant that it
has full power and authority to enter into and perform this Agreement and, when
executed and delivered, this Agreement shall constitute a valid, legal and
binding obligation of the Transfer Agent or Underwriter, enforceable in
accordance with its terms.
(b) The Transfer Agent and Underwriter each represent and warrant that it
is duly qualified and duly authorized to act on behalf of the Fund as
contemplated by this Agreement.
(c) The Transfer Agent and Underwriter shall promptly notify the Company in
the event that it is, for any reason, unable to perform any of its obligations
under this Agreement.
ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
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3.1 The Adviser shall provide the Company with as many copies of the Fund's
current prospectus as the Company may reasonably request. If requested by the
Company in lieu thereof, the Fund shall provide camera-ready film containing the
Fund's prospectus and Statement of Additional Information, and such other
assistance as is reasonably necessary in order for the Company once each year
(or more frequently if the prospectus and/or Statement of Additional Information
for the Fund is amended during the year) to have the prospectus for the
Contracts and the Fund's prospectus printed together in one document, and to
have the Statement of Additional Information for the Fund and the Statement of
Additional Information for the Contracts printed together in one document.
Alternatively, the Company may print the Fund's prospectus and/or its Statement
of Additional Information in combination with other Fund companies' prospectuses
and statements of additional information or place the Fund's Prospectus and
Statement of Additional Information on the Company's internet website or other
electronic media. For Fund prospectuses and Statements of Additional Information
provided by the Company to its existing owners of Contracts, who are invested in
the Fund on or about the date of the Fund's then-current prospectus, in order to
update disclosure as required by the 1933 Act and/or the 1940 Act, the cost of
printing shall be borne by the Fund. If the Company chooses to receive
camera-ready film in lieu of receiving printed copies of the Fund's prospectus,
the Fund will reimburse the Company in an amount equal to the product of A and B
where A is the number of such prospectuses distributed to owners of the
Contracts, and B is the Fund's per unit cost of typesetting and printing the
Fund's
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EXHIBIT 8(H)
prospectus, provided such reimbursement does not exceed the Fund's cost to
typeset and print its own prospectus and Statement of Additional Information.
The same procedures shall be followed with respect to the Fund's Statement of
Additional Information.
3.2 The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available upon request.
3.3 The Adviser, at its expense, shall provide the Company with copies of
Fund reports to shareholders, and other communications to shareholders in such
quantity as the Company shall reasonably require for distribution to Contract
owners.
3.4 To the extent that the SEC interprets the 1940 Act to require
pass-through voting privileges for variable Contract owners: (a) the Company
will provide pass-through voting privileges to Contract owners whose cash values
are invested, through the Account, in shares of the Fund; and (b) with respect
to each Account, the Company will vote shares of the Fund held by the Account
and for which no timely voting instructions from Contract owners or plan
participants are received, as well as shares held by the Separate Account that
are owned by the Company for their general accounts, in the same proportion as
the Company votes shares held by the Account for which timely voting
instructions are received from Contract owners and plan participants.
Upon notification of an upcoming proxy mailing or information statement (or
mailing of any other non-routine materials, if requested), the Company shall
provide to the Fund's print/mail vendor a list of plan and/or Contract owner
addresses, as appropriate, as of the requested record date for inclusion in the
mailing. Unless otherwise provided in the plan document or by the plan sponsor,
plan participants and Contract owners will be responsible for voting all
proxies. Non-routine materials such as prospectus supplements and proxy or
information statement materials shall be printed and distributed at the expense
of the Fund or an affiliate.
ARTICLE IV. SALES MATERIAL AND INFORMATION
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4.1 The Company shall furnish, or shall cause to be furnished, to the
Underwriter or its designee, each piece of sales literature or other promotional
material in which the Fund or the Adviser is named, at least fifteen (15)
Business Days prior to its use. No such material shall be used if the
Underwriter or its designee object to such use within fifteen (15) Business Days
after receipt of such material. The Underwriter, the Adviser, or the designee of
either reserves the right to reasonably object to the continued use of any such
sales literature or other promotional material in which the Fund or the Adviser
is named, and no such material shall be used if the Fund, the Adviser, or the
designee of either so objects.
4.2 The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts 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 or
by the Underwriter, except with the permission of the Fund or the Adviser or the
designee of either.
4.3 The Underwriter, the Adviser, or the designee of either shall furnish,
or shall cause to be furnished, to the Company or its designee, each piece of
sales literature or other promotional material in which the Company or its
Account(s), is named at least fifteen (15) Business Days prior to its use. No
such material shall be used if the Company or its designee object to such use
within fifteen (15) Business
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EXHIBIT 8(H)
Days after receipt of such material. Notwithstanding that the Company did not
initially object, the Company reserves the right to object at any time
thereafter to the continued use of any such sales literature or other
promotional material in which the Company is named, and no such material shall
be used thereafter if the Company so objects.
4.4 The Underwriter and the Adviser shall not give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports for each Account which are in the public domain
or approved by the Company for distribution to Contract owners, or in sales
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company.
4.5 The Underwriter will promptly provide to the Company at least one
complete copy of all of the Fund's public registration statements, prospectuses,
summary prospectuses, Statements of Additional Information (SAI), shareholder
reports, proxy statements, no-action letters and, notices of exemptive orders,
and notices, orders or responses relating thereto, and all supplements and
amendments to any of the above, that relate to the Fund or its shares, as
reasonably practicable following the effective date of such document with, or
the issuance of such documents by, the SEC or other regulatory authorities;
provided however, that the Fund's prospectus and SAI (and summary prospectus, if
requested by the Company) shall not be provided later than the effective date of
such filing. Upon request, the Underwriter will promptly provide to the Company
at least one complete copy of all sales literature and other promotional
materials, and all amendments to any of the foregoing, that relate to the Fund
or its shares.
4.6 Upon request, the Company will provide to the Fund at least one
complete copy of all registration statements, prospectuses, Statements of
Additional Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no-action letters, and notices, orders or responses relating
thereto and all supplements and amendments to any of the above, that relate to
the Contracts or each Account, contemporaneously with the filing of such
document with, or the issuance of such documents by, the SEC or other regulatory
authorities.
4.7 For purposes of this Article IV, 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, telephone directories (other than routine
listings), electronic or other public media), sales literature (i.e., any
----
written or electronic communication distributed or made generally available to
customers or the public, including brochures, circulars, research reports,
market letters, performance reports or summaries, form letters, telemarketing
scripts, 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, and registration statements, prospectuses, Statements of Additional
Information, shareholder reports, and proxy materials.
4.8 The Adviser will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for the Fund. The Adviser will
work with the Company so as to enable the Company to solicit proxies from
Contract owners. In addition, the Adviser agrees to provide the Company with as
much notice as is reasonably practicable of any material change in the Fund's
registration statement, particularly any change that would result in a change to
the registration statement or prospectus for any Account.
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EXHIBIT 8(H)
ARTICLE V. FEES AND EXPENSES
-----------------
5.1 All expenses incident to performance by X. Xxxx Price under this
Agreement shall be paid by X. Xxxx Price, with the understanding that Fund
related expenses may be charged by X. Xxxx Price back to the Fund, as
applicable. The Adviser shall be responsible for ensuring that all shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. X. Xxxx Price shall bear the expenses
for the cost of registration and qualification of the Fund's shares, preparation
and filing of the Fund's prospectus and registration statement, proxy materials
and reports, setting the prospectus in type, setting in type and printing the
proxy materials and reports to shareholders (including the costs of printing a
prospectus that constitutes an annual report), the preparation of all statements
and notices required by any federal or state law, all taxes on the issuance or
transfer of the Fund's shares.
5.2 X. Xxxx Price shall bear the expense of printing the Fund's prospectus
for owners of Contracts, who are invested in the Fund on or about the date of
the Fund's then-current prospectus, pursuant to Section 3.1 of this Agreement.
The Fund shall also bear the expense of printing the Fund's proxy materials and
reports to such Contract owners.
ARTICLE VI. FOREIGN TAX CREDITS
-------------------
6.1 For each Fund that meets the requirements of Section 853(a) of the
Code, the Fund will make the election thereunder to pass through foreign tax
credits to its shareholders unless the Fund determines, in its sole discretion,
that the amount of foreign tax credits per share is immaterial.
ARTICLE VII. INDEMNIFICATION
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7.1 Indemnification By The Company
------------------------------
(a) The Company agrees to indemnify and hold harmless X. Xxxx Price, the
Fund, and each director of the Board and officers (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 (including reasonable legal
and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of the Fund's shares or the
Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement or prospectus for the Contracts or
contained in the Contracts or advertisements or sales literature
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 the Company by or
on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or
advertisements or sales literature
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EXHIBIT 8(H)
(or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its control)
or wrongful conduct of the Company or persons under its control,
with respect to the sale or distribution of the Contracts or Fund
Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, advertisements 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 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 as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation 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, as limited by and in accordance with
the provisions of Sections 7.1(b) and 7.1(c) hereof.
(b) The Company shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations or duties under this Agreement or to the Fund,
whichever is applicable.
(c) The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified 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 Indemnified 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 the
Indemnified Parties, 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 defense thereof, with counsel satisfactory to the 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.
(d) The Indemnified Parties will promptly notify the Company of the
commencement of any material litigation or proceedings against the Fund in
connection with the issuance or sale of the Fund shares or the contracts or the
operation of the Fund.
10
EXHIBIT 8(H)
7.2 Indemnification by X. Xxxx Price
--------------------------------
(a) X. Xxxx Price agrees to indemnify and hold harmless the Company and the
principal underwriter for the Contracts and each of their respective directors
and officers and the principal underwriter for the Contracts and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
(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 Adviser) or litigation (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 expenses (or actions in respect thereof) or settlements
are related to the sale or acquisition of the Fund's shares or the Contracts
and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or prospectus or advertisements 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 Adviser 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) or otherwise for use in connection with the sale
of the contracts or Trust shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
Registration Statement, prospectus or sales literature for the
Contracts not supplied by the Adviser or persons under its
control) or wrongful conduct of the Adviser or persons under
their control, with respect to the sale or distribution of Fund
shares; or
(iii) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a Registration Statement,
prospectus, advertisements or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the
Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by X. Xxxx Price to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to qualify as a regulated
investment company under Subchapter M of the Code);
(v) arise as a result of the Fund's or X. Xxxx Price's (or their
designated agent's) (i) incorrect calculation of the daily net
asset value, dividend rate or capital gain distribution rate;
(ii) incorrect reporting of the daily net asset value, dividend
rate or capital gain distribution rate; or (iii) untimely
reporting of the net asset value, dividend rate or capital gain
distribution rate. Any gain accruing to the Company attributable
to the Fund's or X. Xxxx Price's (or their designated agent's)
incorrect calculation or reporting of the daily net asset value
shall be returned to the Fund by the Company upon receipt of
notice from the Fund or X. Xxxx Price regarding such
11
EXHIBIT 8(H)
incorrect calculation or reporting; provided, however, any
out-of-pocket expenses are limited to the expenses identified in
Section 1.9; or
(vi) arise out of or result from any material breach of any
representation or warranty made by the Fund or the Adviser in
this Agreement or arise out of or result from any other material
breach of this Agreement by the Fund or the Adviser; as limited
by and in accordance with the provisions of Section 7.2(b) and
7.2(c) hereof.
(b) X. Xxxx Price shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to which
an Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to each Company or
the Account, whichever is applicable.
(c) X. Xxxx Price shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified X. Xxxx Price in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify X. Xxxx Price of
any such claim shall not relieve X. Xxxx Price 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 the Indemnified Parties, X. Xxxx Price also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party named in the action.
After notice from X. Xxxx Price to such party of X. Xxxx Price's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and X. Xxxx Price 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.
(d) The Company agrees promptly to notify X. Xxxx Price of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with this Agreement, the issuance or sale of the contracts, the
operation of each Account, or the sale or acquisition of shares of the Fund.
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 Texas without giving
effect to conflict of laws. Each party also hereby irrevocably submits to the
exclusive jurisdiction of the courts located in the State of Texas in any
proceeding arising out of or relating to this agreement, agrees not to commence
any suit, action or proceeding relating thereto except in such courts, and
waives, to the fullest extent permitted by law, the right to move to dismiss or
transfer any action brought in such court on the basis of any objection to
personal jurisdiction or venue. Each party hereby irrevocably consents to the
service of process in any such proceeding by the mailing of copies of such
process to it at its address set forth in Article X hereto.
8.2 This Agreement shall be subject to the provisions of the 1933 Act, 1934
Act and 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
12
EXHIBIT 8(H)
ARTICLE IX. TERMINATION
-----------
9.1 This Agreement shall continue in full force and effect until the first to
occur of:
(a) termination by any party for any reason by one hundred eighty (180)
day's advance written notice delivered to the other parties; or
(b) termination by the Company by written notice to X. Xxxx Price and the
Adviser based upon the Company's determination that shares of such
Fund are not reasonably available to meet the requirements of the
Contracts; or
(c) termination by the Company by written notice to X. Xxxx Price in the
event the Fund's shares are not registered, issued or sold in
accordance with applicable state or federal law or such law precludes
the use of such shares as the underlying investment media of the
Contracts issued or to be issued by the Company; or
(d) termination by the Company by written notice to X. Xxxx Price in the
event that the Fund ceases to qualify as a RIC 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 do so qualify;
or
(e) termination by either the Underwriter, Transfer Agent or the Adviser
by written notice to the Company, if either one or both of the Fund or
the Adviser respectively, shall determine, in their sole judgment
exercised in good faith, that the Company or its affiliated companies
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
(f) termination by the Company by written notice to the Fund and the
Adviser, if the Company shall determine, in its sole judgment
exercised in good faith, that either the Fund or the Adviser 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
(g) termination by any party by written notice upon the institution of
formal proceedings against the Company, the Fund, or the Adviser by
the FINRA", the SEC or other regulatory body; or
(h) termination by the Company or the Fund by written notice to the other
party upon a determination by the majority of the Fund's Board that a
material irreconcilable conflict exists among the interests of (i) all
contract owners of all separate accounts or (ii) the interests of the
Participating Insurance Companies; or
(i) termination by any party by advance written notice upon the
"assignment" of the Agreement (as defined under the 0000 Xxx) unless
made with the written consent of each party to the Agreement; or
(j) termination by the Company by written notice upon the sale,
acquisition or change of control of the Adviser; or
13
EXHIBIT 8(H)
(k) termination by the Company arising from the substitution of Fund
shares with the shares of another investment company for the Contracts
for which the Fund shares have been selected to serve as the
underlying investment medium, subject to compliance with applicable
regulations of the SEC, Company will give sixty (60) day's written
notice to the Fund and the Adviser of any proposed action to replace
Fund shares; or
(l) termination by the Company, the Underwriter, Transfer Agent or the
Adviser by written notice to the other parties upon a material breach
of the Agreement by the other party.
9.2 Effect of Termination. Notwithstanding any termination of this
---------------------
Agreement and for so long as Fund continues to be available for sale to existing
shareholders, the Fund and the Adviser shall at the option of the Company,
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 shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund or invest in the Fund upon the making of additional
purchase payments under the Existing Contracts. All orders for the purchase of
shares are subject to acceptance or rejection by X. Xxxx Price or the Funds in
their sole discretion.
ARTICLE X. Notices
-------
Any notice shall be sufficiently given when sent by registered or certified
mail, overnight delivery or facsimile 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 Underwriter:
X. Xxxx Price Investment Services, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to General Counsel at the same address.
If to the Transfer Agent:
X. Xxxx Price Services, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to General Counsel at the same address.
If to the Adviser:
X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
With a copy to General Counsel at the same address.
14
EXHIBIT 8(H)
If to the Company:
The Variable Annuity Life Insurance Company
0000 Xxxxx Xxxxxxx X00
Xxxxxxx, XX 00000
Attention: Xxx Xxxx
With a copy to:
The Variable Annuity Life Insurance Company
ATTN: General Counsel
0000 Xxxxx Xxxxxxx X0-00
Xxxxxxx, XX 00000
ARTICLE XI. MISCELLANEOUS
-------------
11.1 Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses of the
owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
11.2 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.
11.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.4 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.
11.5 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities having jurisdiction over them (which may
include but not be limited to the SEC and state insurance regulators) and shall
permit such authorities reasonable access to its relevant non-privileged books
and records in connection with any investigation or inquiry relating to this
Agreement or the transactions contemplated hereby to the extent practicable and
except where a party's respective interests are adverse to or in conflict with
another party's interests.
11.6 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, which the parties hereto are entitled to under state and
federal laws.
11.7 This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior consent of all parties hereto;
provided, however, that the Adviser may assign this Agreement or any rights or
obligations hereunder to any affiliate of or company under common control with
the Adviser if such assignee is duly organized, licensed and registered to
perform the obligations of the Adviser under this Agreement.
15
EXHIBIT 8(H)
IN WITNESS HEREOF, each of the parties has caused this Agreement to be
executed in its name and on its behalf by its duly authorized representative and
its seal to be hereunder affixed as of the date specified below.
THE VARIABLE ANNUITY LIFE X. XXXX PRICE
INSURANCE COMPANY INVESTMENT SERVICES, INC.
By: XXXXXX X. XXXX By: XXXXX XXXXXXX
---------------------------- -----------------------------
Title: Vice President Title: Vice President
Date: 12/4/14 Date: 11/24/14
X. XXXX PRICE SERVICES, INC.
By: XXXXX XXXXXXX
-----------------------------
Title: Vice President
Date: 11/24/14
X. XXXX PRICE ASSOCIATES, INC.
By: XXXXX XXXXXXX
-----------------------------
Title: Vice President
Date: 11/24/14
16
EXHIBIT 8(H)
Schedule A
----------
Accounts
--------
Name of Account Date of Resolution of Company's Board which
Established the Account
The Variable Annuity Life Insurance April 18, 1979
Company Separate Account A
17
EXHIBIT 8(H)
Schedule B
----------
Contracts
---------
Portfolio Director Series
18
EXHIBIT 8(H)
Schedule C
----------
Series
------
X. Xxxx Price Retirement 2015 Fund (Advisor Class)
X. Xxxx Price Retirement 2020 Fund (Advisor Class)
X. Xxxx Price Retirement 2025 Fund (Advisor Class)
X. Xxxx Price Retirement 2030 Fund (Advisor Class)
X. Xxxx Price Retirement 2035 Fund (Advisor Class)
X. Xxxx Price Retirement 2040 Fund (Advisor Class)
X. Xxxx Price Retirement 2045 Fund (Advisor Class)
X. Xxxx Price Retirement 2050 Fund (Advisor Class)
X. Xxxx Price Retirement 2055 Fund (Advisor Class)
X. Xxxx Price Retirement 2060 Fund (Advisor Class)
19
EXHIBIT 8(H)
Schedule D
Investor Trading Policy
VALIC has a policy to discourage excessive trading and market timing. Our
investment options are not designed to accommodate short-term trading or "market
timing" organizations, or individuals engaged in certain trading strategies,
such as programmed transfers, frequent transfers, or transfers that are large in
relation to the total assets of a mutual fund. These trading strategies may be
disruptive to mutual funds by diluting the value of the fund shares, negatively
affecting investment strategies and increasing portfolio turnover. Excessive
trading also raises fund expenses, such as recordkeeping and transaction costs,
and xxxxx fund performance.
Accordingly, VALIC implemented certain policies and procedures intended to
hinder short-term trading. If an investor sells fund shares valued at $5,000 or
more, whether through an exchange, transfer, or any other redemption, the
investor will not be able to make a purchase of $5,000 or more in that same fund
for 30 calendar days.
This policy applies only to investor-initiated trades of $5,000 or more, and
does not apply to the following:
- Plan-level or employer-initiated transactions;
- Purchase transactions involving transfers of assets or rollovers;
- Retirement plan contributions, loans, and distributions (including
hardship withdrawals);
- Xxxx XXX conversions or XXX recharacterizations;
- Systematic purchases or redemptions;
- Systematic account rebalancing; or
- Trades of less than $5,000.
As described in a fund's prospectus and statement of additional information, in
addition to the above, fund purchases, transfers and other redemptions may be
subject to other investor trading policies, including redemption fees, if
applicable. Certain funds may set limits on transfers in and out of a fund
within a set time period in addition to or in lieu of the policy above. Also,
an employer's benefit plan may limit an investor's rights to transfer.
We intend to enforce these investor trading policies uniformly. We make no
assurances, however, that all the risks associated with frequent trading will be
completely eliminated by these policies and/or restrictions. If we are unable to
detect or prevent market timing activity, the effect of such activity may result
in additional transaction costs for the investment options and dilution of
long-term performance returns. Thus, an investor's account value may be lower
due to the effect of the extra costs and resultant lower performance. We reserve
the right to modify these policies at any time.
VALIC REPRESENTS THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AND ITS
SUBSIDIARIES VALIC FINANCIAL ADVISORS, INC. AND VALIC RETIREMENT SERVICES
COMPANY.
Last updated: April 8, 2009
20
