PARTICIPATION AGREEMENT
Among
INVESCO VARIABLE INVESTMENT FUNDS, INC
INVESCO FUNDS GROUP, INC.
and
ANNUITY INVESTORS LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this 30th day of May, 1997 by and among
ANNUITY INVESTORS LIFE INSURANCE COMPANY, (hereinafter the "Insurance Company"),
an Ohio corporation, on its own behalf and on behalf of each segregated asset
account of the Insurance Company set forth on Schedule A hereto as may be
amended from time to time (each such account hereinafter referred to as the
"Account"), INVESCO VARIABLE INVESTMENT FUNDS, INC., a Maryland corporation (the
"Company") and INVESCO FUNDS GROUP, INC. ("INVESCO"), a Delaware corporation.
WHEREAS, the Company engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established for variable annuity and life insurance contracts to be offered by
insurance companies which have entered into participation agreements
substantially identical to this Agreement ("Participating Insurance Companies");
and
WHEREAS, the beneficial interest in the Company is divided into several series
of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Company has obtained an order from the Securities and Exchange
Commission (the "Commission"), dated December 29, 1993 (File No. 812-8590),
granting Participating Insurance Companies and their separate accounts
exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the
Investment Company Act of 1940, as amended, (the "1940 Act") and Rules 6e- (b)
(15) and 6e-3 (T) (b) (15) thereunder, to the extent necessary to permit shares
of the Company to be sold to and held by variable annuity and variable life
insurance separate accounts of life insurance companies that may or may not be
affiliated with one another (the "Mixed and Shared Funding Exemptive Order");
and
WHEREAS, the Company is registered as an open-end management investment company
under the 1940 Act and its shares are registered under the Securities Act of
1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, INVESCO is duly registered as an investment adviser under the
Investment Advisers Act of 1940 and any applicable state securities law and as a
broker dealer under the Securities Exchange Act of 1934, as amended, (the "1934
Act"), and is a member in good standing of the National Association of
Securities Dealers, Inc. (the"NASD"); and
WHEREAS, the Insurance Company has registered under the 1933 Act, or will
register under the 1933 Act, certain variable annuity contracts identified by
the form number(s) listed on Schedule B to this Agreement, as amended from time
to time hereafter by mutual written agreement of all the parties hereto (the
"Contracts"); and
WHEREAS, each Account is a duly organized, validly existing segregated asset
account, established by resolution of the board of directors of the Insurance
Company on the date shown for that Account on Schedule A hereto, to set aside
and invest assets attributable to the Contracts; and
WHEREAS, the Insurance 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 Insurance Company intends to purchase shares in the Funds on behalf of the
Accounts to fund the Contracts and INVESCO is authorized to sell such shares to
unit investment trusts such as the Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Insurance
Company, the Company and INVESCO agree as follows:
ARTICLE I. Sale of Company Shares
1.1. INVESCO agrees to sell to the Insurance Company those shares of the Company
which each Account orders, executing such orders on a daily basis at the net
asset value next computed after receipt by the Company or its designee of the
order for the shares of the Company. For purposes of this Section 1.1, the
Insurance Company shall be the designee of the Company for receipt of such
orders from the Accounts and receipt by such designee shall constitute receipt
by the Company; provided that the Company receives notice of such order by 9:00
a.m., Mountain Time, on the next following Business Day. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading and on
which the Company calculates its net asset value pursuant to the rules of the
Commission.
1.2. The Company agrees to make its shares available for purchase at the
applicable net asset value per share by the Insurance Company and its Accounts
on those days on which the Company calculates its Funds' net asset values
pursuant to rules of the Commission and the Company shall use reasonable efforts
to calculate its Funds' net asset values on each day on which the New York Stock
Exchange is open for trading. Notwithstanding the foregoing, the board of
directors of the Company (hereinafter the "Board") may refuse to sell shares of
any Fund to any person, or suspend or terminate the offering of shares of any
Fund if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board acting in good faith and
in light of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of that Fund.
1.3. The Company and INVESCO agree that shares of the Company will be sold only
to Participating Insurance Companies and their separate accounts. No shares of
any Fund will be sold to the general public.
1.4. The Company and INVESCO will not sell Company shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Sections 2.1, 3.4, 3.5 and Article VII of this
Agreement is in effect to govern such sales.
1.5. The Company agrees to redeem, on the Insurance Company's request, any full
or fractional shares of the Company held by the Insurance Company, executing
such requests on a daily basis at the net asset value next computed after
receipt by the Company or its designee of the request for redemption.
For purposes of this Section 1.5, the Insurance Company shall be the designee of
the Company for receipt of requests for redemption from each Account and receipt
by that designee shall constitute receipt by the Company; provided that the
Company receives notice of the request for redemption by 9:00 a.m., Mountain
Time, on the next following Business Day.
1.6. The Insurance Company agrees to purchase and redeem the shares of each Fund
offered by the then-current prospectus of the Company in accordance with the
provisions of that prospectus.
1.7. The Insurance Company shall pay for Company shares by 9:00 a.m., Mountain
Time, on the next Business Day after an order to purchase Company shares is made
in accordance with the provisions of Section 1.1 hereof. Payment shall be in
federal funds transmitted by wire. For the purpose of Sections 2.10 and 2.11,
upon receipt by the Company of the federal funds so wired, such funds shall
cease to be the responsibility of the Insurance Company and shall become the
responsibility of the Company. Payment of aggregate redemption proceeds
(aggregate redemptions of a Fund's shares by an Account) ordinarily will be made
by wiring federal funds to the Insurance Company on the next Business Day after
receipt of the redemption request, but in any event within seven days after
receipt of the redemption request. Notwithstanding the foregoing, in the event
that one or more Funds has insufficient cash on hand to pay aggregate
redemptions on the next Business Day, and if such Fund has determined to settle
redemption transactions for all of its shareholders on a delayed basis (more
than one Business Day, but in no event more than seven calendar days, after the
date on which the redemption order is received, unless otherwise permitted by an
order of the Commission under Section 22(e) of the 1940 Act), the Company shall
be permitted to delay sending redemption proceeds to the Insurance Company by
the same number of days that the Company is delaying sending redemption proceeds
to the other shareholders of the Fund.
Redemptions of up to the lesser of $250,000 or 1% of the net asset value of the
Fund whose shares are to be redeemed in any 90-day period will be made in cash.
Redemptions in excess of that amount in any 90-day period may, in the sole
discretion of the Company, be in-kind redemptions, with the securities to
be delivered in payment of redemptions selected by the Company and valued at the
value assigned to them in computing the Fund's net asset value per share,
provided that (i) such in-kind redemptions are permitted under applicable
provisions of the 1940 Act and (ii) the Company at such time utilizes in-kind
redemptions under this Section 1.7 with respect to other Participating Insurance
Companies with redemptions in excess of $250,000 within any 90-day period.
1.8. Issuance and transfer of the Company's shares will be by book entry only.
Stock certificates will not be issued to the Insurance Company or any Account.
Shares ordered from the Company will be recorded in an appropriate title for
each Account or the appropriate subaccount of each Account.
1.9. The Company shall furnish same day notice (by wire or telephone, followed
by written confirmation) to the Insurance Company of any income, dividends or
capital gain distributions payable on the Funds' shares. The Insurance Company
hereby elects to receive all income dividends and capital gain distributions
payable on a Fund's shares in additional shares of that Fund. The Insurance
Company reserves the right to revoke this election and to receive all such
income dividends and capital gain distributions in cash. The Company shall
notify the Insurance Company of the number of shares issued as payment of
dividends and distributions.
1.10. The Company shall make the net asset value per share for each Fund
available to the Insurance 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 those per-share net asset values available via facsimile by
5:00 p.m., Mountain Time.
ARTICLE II. Representations and Warranties
2.1. The Insurance Company represents and warrants that 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 applicable state insurance suitability requirements.
The Insurance Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law and that it has
legally and validly established the Account prior to any issuance or sale
thereof as a segregated asset account under Section 3907.15 of the Ohio Revised
Code and has registered, or prior to any issuance or sale of the Contracts will
register, the Account as a unit investment trust in accordance with the
provisions of the 1940 Act to serve as a segregated investment account for the
Contracts.
2.2. The Company represents and warrants that Company shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sale in compliance with the laws of the State of Maryland and all
applicable federal securities laws and that the Company is andshall remain
registered under the 1940 Act. The Company shall amend the 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
Company 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 by the
Company or INVESCO.
2.3. The Company represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code") and that it will make every effort to maintain that
qualification (under Subchapter M or any successor or similar provision) and
that it will notify the Insurance Company immediately upon having a reasonable
basis for believing that it has ceased to so qualify or that it might not so
qualify in the future.
2.4. The Insurance Company represents and warrants that the Contracts are
currently treated as annuity contracts, under applicable provisions of the Code
and that it will make every effort to maintain such treatment and that it will
notify the Company and INVESCO immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they might not
be so treated in the future.
2.5. The Company currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise,
although it may make such payments in the future. To the extent that it decides
to finance distribution expenses pursuant to Rule 12b-1, the Company undertakes
to have a board of directors, a majority of whom are not interested persons of
the Company, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Company makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7. INVESCO represents and warrants that it is a member in good standing of the
NASD and is registered as a broker-dealer with the Commission. INVESCO further
represents that it will sell and distribute the Company shares in accordance
with the laws of the State of Ohio and all applicable state and federal
securities laws, including without limitation the 1933 Act, the 1934 Act, and
the 0000 Xxx.
2.8. The Company represents that it is lawfully organized and validly existing
under the laws of the State of Maryland and that it does and will comply in all
material respects with the 1940 Act.
2.9. INVESCO represents and warrants that it is and shall remain duly
registered in all material respects under all applicable federal and state
securities laws and that it shall perform its obligations for the Company in
compliance in all material respects with the laws of the State of Colorado and
any applicable state and federal securities laws.
2.10. The Company and INVESCO represent and warrant that all of their officers,
employees, investment advisers, investment sub-advisers, and other individuals
or entities dealing with the money and/or securities of the Company are, and
shall continue to be at all times, covered by a blanket fidelity bond or similar
coverage for the benefit of the Company in an amount not less than the minimum
coverage required currently by Section 17g-(1) of the 1940 Act or related
provisions as may be promulgated from time to time. That fidelity bond shall
include coverage for larceny and embezzlement and shall be issued by a reputable
bonding company.
2.11. The Insurance Company represents and warrants that all of its officers,
employees, investment advisers, and other individuals or entities dealing with
the money and/or securities of the Company are and shall continue to be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Company, in an amount not less than the minimum coverage required currently
for entities subject to the requirements of Rule 17g-1 of the 1940 Act or
related provisions or 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. The Insurance Company further
represents and warrants that the employees of Insurance Company, or such other
persons designated by Insurance Company, listed on Schedule C have been
authorized by all necessary action of Insurance Company to give directions,
instructions and certifications to the Company and INVESCO on behalf of
Insurance Company. The Company and INVESCO are authorized to act and rely upon
any directions, instructions and certifications received from such persons
unless and until they have been notified in writing by the Insurance Company of
a change in such persons, and the Company and INVESCO shall incur no -liability
in doing so.
2.12. The Insurance Company represents and warrants that it will not purchase
Company shares with Account assets derived from tax-qualified retirement plans
except indirectly, through Contracts purchased in connection with such plans.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. INVESCO shall provide the Insurance Company (at the Insurance Company's
expense) with as many copies of the Company's current prospectus as the
Insurance Company may reasonably request. If requested by the Insurance Company
in lieu thereof, the Company shall provide such documentation (including a final
copy of the new prospectus as set in type at the Company's expense) and other
assistance as is reasonably necessary in order for the Insurance Company once
each year (or more frequently if the prospectus for the Company is amended) to
have the prospectus for the Contracts and the Company's prospectus printed
together in one document (at the Insurance Company's expense).
3.2. The Company's prospectus shall state that the Statement of Additional
Information for the Company (the "SAI") is available from INVESCO (or in the
Company's discretion, the Prospectus shall state that the SAI is available from
the Company), and INVESCO (or the Company), at its expense, shall print and
provide the SAI free of charge to the Insurance Company and to any owner of a
Contract or prospective owner who requests the SAI.
3.3. The Company, at its expense, shall provide the Insurance Company with
copies of its proxy material, reports to stockholders and other communications
to stockholders in such quantity as the Insurance Company shall reasonably
require for distributing to Contract owners.
3.4. If and to the extent required by law, the Insurance Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Company shares in accordance with instructions received from
Contract owners; and
(iii) vote Company shares for which no instructions have been received in the
same proportion as Company shares of such portfolio for which instructions have
been received:
so long as and to the extent that the Commission continues to interpret the 1940
Act to require pass-through voting privileges for variable contract owners. The
Insurance Company reserves the right to vote Company shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that each of
their separate accounts participating in the Company calculates voting
privileges in a manner consistent with the standards set forth on Schedule D
attached hereto and incorporated herein by this reference, which standards will
also be provided to the other Participating Insurance Companies. The Insurance
Company shall fulfill its obligations under, and abide by the terms and
conditions of, the Mixed and Shared Funding Exemptive Order.
3.5. The Company will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Company will either provide for
annual meetings (except insofar as the Commission may interpret Section 16 of
the 1940 Act not to require such meetings) or, as the Company currently intends,
comply with Section 16(c) of the 1940 Act (although the Company is not one of
the trusts described in Section 16(c) of that Act) as well as with Sections
16(a) and, if and when applicable, 16(b). Further, the Company will act in
accordance with the Commissions interpretation of the requirements of Section
16(a) with respect to periodic elections of directors and with whatever rules
the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Insurance Company 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, a sub-adviser of one of the Funds, or INVESCO
is named, at least fifteen calendar days prior to its use.
No such material shall be used if the Company or its designee objects to such
use within ten calendar days after receipt of such material.
4.2. The Insurance Company shall not give any information or make any
representations or statements on behalf of the Company or concerning the Company
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Company's shares, as such registration statement and prospectus may be amended
or supplemented from time to time, or in reports or proxy statements for the
Company, or in sales literature or other promotional material approved by the
Company or its designee or by INVESCO, except with the permission of the Company
or INVESCO.
4.3. The Company, INVESCO, or its designee shall furnish, or shall cause to be
furnished, to the Insurance Company or its designee, each piece of sales
literature or other promotional material in which the Insurance Company and/or
its separate account(s), is named at least fifteen calendar days prior to its
use. No such material shall be used if the Insurance Company or its designee
object to such use within ten calendar days after receipt of that material.
4.4. The Company and INVESCO shall not give any information or make any
representations on behalf of the Insurance Company or concerning the Insurance
Company, the Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as that registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for the Account which
are in the public domain or approved by the Insurance Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Insurance Company or its designee, except with the permission of
the Insurance Company.
4.5. The Company will provide to the Insurance Company at least one complete
copy of each registration statement, prospectus, statement of additional
information, report, proxy statement, piece of sales literature or other
promotional material, application for exemption, request for no-action letter,
and any amendment to any of the above, that relate to the Company or its shares,
contemporaneously with the filing of the document with the Commission, the NASD,
or other regulatory authorities.
4.6. The Insurance Company will provide to the Company at least one complete
copy of each registration statement, prospectus, statement of additional
information, report, solicitation for voting instructions, piece of sales
literature and other promotional material, application for exemption, request
for no action letter, and any amendment to any of the above, that relates to the
Contracts or the Account, contemporaneously with the filing of the document with
the Commission, the NASD, or other regulatory authorities.
4.7. For purposes of this Agreement, the phrase "sales literature or other
promotional material" includes, but is not limited to, advertisements,
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, 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, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
4.8. At the request of any party to this Agreement, each other party will make
available to the other party's independent auditors and/or representative of the
appropriate regulatory agencies, all records, data and access to operating
procedures that may be reasonably requested. Company agrees that Insurance
Company shall have the right to inspect, audit and copy all records pertaining
to the performance of services under this Agreement pursuant to the requirements
of the Ohio Department of Insurance. However, Company and INVESCO shall own and
control all of their respective records pertaining to their performance of the
services under this Agreement.
ARTICLE V. Fees and Expenses
5.1. The Company and INVESCO shall pay no fee or other compensation to the
Insurance Company under this agreement, except that if the Company or any Fund
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then INVESCO may make payments to the Insurance Company if and in
amounts agreed to by INVESCO in writing, subject to review by the board of
directors of the Company. No such payments shall be made directly by the
Company.
5.2. All expenses incident to performance by the Company under this Agreement
shall be paid by the Company. The Company shall see to it that all its shares
are registered and authorized for issuance in accordance with applicable federal
law and, if and to the extent deemed advisable by the Company or INVESCO, in
accordance with applicable state laws prior to their sale. The Company shall
bear the expenses for the cost of registration and qualification of the
Company's shares, preparation and filing of the Company'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, and all taxes on the issuance or transfer of the Company's
shares.
5.3. The Insurance Company shall bear the expenses of printing and distributing
to Contract owners the Contract prospectuses and of distributing to Contract
owners the Company's prospectus, proxy materials and reports.
ARTICLE VI. Diversification
6.1. The Company will, at the end of each calendar quarter, comply with Section
817(h) of the Code and Treasury Regulation 1.817-5 relating to the
diversification requirements for variable annuity, endowment, modified endowment
or life insurance contracts and any amendments or other modifications to that
Section or Regulation.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Company for the existence of any material
irreconcilable conflict between the interests of the variable contract owners of
all separate accounts investing in the Company. 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 any Fund are being managed; (e.) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by a Participating Insurance Company to
disregard the voting instructions of variable contract owners. The Board shall
promptly inform the Insurance Company if it determines that an irreconcilable
material conflict exists and the implications thereof. The Board shall have sole
authority to determine whether an irreconcilable material conflict exists and
such determination shall be binding upon the Insurance Company.
7.2 The Insurance Company will report promptly any potential or existing
conflicts of which it is aware to the Board. The Insurance Company will assist
the Board in carrying out its responsibilities under the Mixed and Shared
Funding Exemptive Order, 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 Insurance Company to inform the Board whenever
Contract owner voting instructions are to be disregarded. Such responsibilities
shall be carried out by Insurance Company with a view only to the interests of
the Contract owners.
7.3. If it is determined by a majority of the Board, or a majority of its
directors who are not interested persons of the Company, INVESCO, or any
sub-adviser to any of the Funds (the "Independent Directors"), that a material
irreconcilable conflict exists, the Insurance Company and/or other Participating
Insurance Companies shall, at their expense and to the extent reasonably
practicable (as determined by a majority of the Independent Directors), take
whatever steps are necessary to remedy or eliminate the irreconcilable material
conflict, up to and including: (1), withdrawing the assets allocable to some or
all of the separate accounts from the Company or any Fund and reinvesting those
assets in a different investment medium, including (but not limited to) another
Fund of the Company, or submitting the question 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 (e.g., annuity
contract owners, life insurance contract owners, or variable contract owners of
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 and obtaining approval thereof by
the Commission.
7.4. If a material irreconcilable conflict arises because of a decision by the
Insurance Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Insurance Company may be required, at the Company's election, to withdraw the
affected Account's investment in the Company and terminate this Agreement with
respect to that Account; provided, however that such withdrawal and termination
shall be limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the Independent Directors. Any such
withdrawal and termination must take place within six (6) months after the
Company gives written notice that this provision is being implemented, and until
the end of that six month period INVESCO and the Company shall continue to
accept and implement orders by the Insurance Company for the purchase (and
redemption) of shares of the Company.
7.5. If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to the Insurance Company conflicts
with the majority of other state regulators, then the Insurance Company will
withdraw the affected Account's investment in the Company and terminate this
Agreement with respect to that Account within six months after the Board informs
the Insurance Company in writing that it has determined that the state insurance
regulator's decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the Independent Directors. Until the end of the foregoing six month
period, INVESCO and the Company shall continue to accept and implement orders by
the Insurance Company for the purchase (and redemption) of shares of the
Company.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of
the Independent Directors shall determine whether any proposed action adequately
remedies any irreconcilable material conflict, but in no event will the Company
be required to establish a new funding medium for the Contracts. The Insurance
Company shall not be required by Section 7.3 to establish a new funding medium
for the Contracts if an offer to do so has been declined by vote of a majority
of Contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Board determines that any proposed action does
not adequately remedy any irreconcilable material conflict, then the Insurance
Company will withdraw the Account's investment in the Company and terminate this
Agreement within six (6) months after the Board informs the Insurance Company in
writing of the foregoing determination, provided, however, that the withdrawal
and termination shall be limited to the extent required by the material
irreconcilable conflict, as determined by a majority of the Independent
Directors.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3 (T) are amended or Rule
6e-3 is adopted, to provide exemptive relief from any provision of the Act or
the rules promulgated thereunder with respect to mixed or shared funding (as
defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Mixed and Shared Funding
Exemptive Order, then (a) the Company and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent those rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3,
7.4, and 7.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to those Sections are contained in
the Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Insurance Company
8.1(a). The Insurance Company agrees to indemnify and hold harmless the Company
and each director of the Board and officers 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 8.1)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Insurance 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 Company'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 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 in writing to the Insurance Company by or on behalf
of the Company for use in the registration statement or prospectus for the
Contracts or in the Contracts or sales literature(or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
shares of the Company;
(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 Company not supplied by the Insurance
Company, or persons under its control) or wrongful conduct of the Insurance
Company or persons under its control, with respect to the sale or distribution
of the Contracts or Company 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 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 statements therein not misleading if
such a statement or omission was made in reliance upon information furnished in
writing to the Company by or on behalf of the Insurance Company: or
(iv) arise as a result of any failure by the Insurance 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 and/or
warranty made by the Insurance Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Insurance
Company,
as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Insurance 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 that may arise from that
Indemnified Party's willful misfeasance, bad faith, or negligence in the
performance of that Indemnified Party's duties or by reason of that Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
the Company, whichever is applicable.
8.1(c). The Insurance Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
that Indemnified Party shall have notified the Insurance 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 that
Indemnified Party (or after the Indemnified Party shall have received notice of
such service on any designated agent). Notwithstanding the foregoing, the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Insurance Company of its obligations hereunder except to the extent
that the Insurance Company has been prejudiced by such failure to give notice.
In addition, any failure by the Indemnified Party to notify the Insurance
Company of any such claim shall not relieve the Insurance Company from any
liability which it may have to the Indemnified Party against whom the action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Insurance Company
shall be entitled to participate, at its own expense, in the defense of the
action. The Insurance Company also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action; provided,
however, that if the Indemnified Party shall have reasonably concluded that
there may be defenses available to it which are different from or additional to
those available to the Insurance Company, the Insurance Company shall not have
the right to assume said defense, but shall pay the reasonable costs and
expenses thereof (except that in no event shall the Insurance Company be liable
for the fees and expenses of more than one counsel for Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances).
After notice from the Insurance Company to the Indemnified Party of the
Insurance Company's election to assume the defense thereof, and in the absence
of such a reasonable conclusion that there may be different or additional
defenses available to the Indemnified Party, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Insurance Company will not be liable to that party under this Agreement for any
legal or other expenses subsequently incurred by the party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8. 1 (d) The Indemnified Parties will promptly notify the Insurance Company of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Company's shares or the Contracts or the
operation of the Company.
8.2. Indemnification by INVESCO
8.2 (a) INVESCO agrees to indemnify and hold harmless the Insurance Company and
each of its directors and officers and each person, if any, who controls the
Insurance Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including reasonable
amounts paid in settlement with the written consent of INVESCO) 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 Company'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 sales literature of the Company (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 the
statement or omission or alleged statement or omission was made in reliance upon
and in conformity with information furnished in writing to INVESCO or the
Company by or on behalf of the Insurance Company for use in the registration
statement or prospectus for the Company or in sales literature (or any amendment
or supplement) or otherwise for use in connection with the sale of the Contracts
or Company 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 INVESCO or
persons under its control) or wrongful conduct of the Company, INVESCO or
persons under their control, with respect to the sale or distribution of the
Contracts or shares of the Company; 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 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 in writing to the Insurance Company 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 (including a failure,
whether unintentional or in good faith or otherwise, to comply with the
diversification requirements specified in Article VI of this Agreement); or
(v) arise out of or result from any material breach of any representation and/or
warranty made by INVESCO in this Agreement or arise out of or result from any
other material breach of this Agreement by INVESCO; as limited by and in
accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof.
8.2(b) INVESCO 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 that may arise from the Indemnified
Party's willful misfeasance, bad faith, or negligence in the performance of the
Indemnified Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Insurance
Company or the Account, whichever is applicable.
8.2(c) INVESCO shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless the Indemnified
Party shall have notified INVESCO 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 the Indemnified Party (or after the
Indemnified Party shall have received notice of such service on any designated
agent). Notwithstanding the foregoing, the failure of any Indemnified Party to
give notice as provided herein shall not relieve INVESCO of its obligations
hereunder except to the extent that INVESCO has been prejudiced by such failure
to give notice. In addition, any failure by the Indemnified Party to notify
INVESCO of any such claim shall not relieve INVESCO 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, INVESCO will be entitled to
participate, at its own expense, in the defense thereof. INVESCO also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action; provided, however, that if the Indemnified Party shall have
reasonably concluded that there may be defenses available to it which are
different from or additional to those available to INVESCO, INVESCO shall not
have the right to assume said defense, but shall pay the reasonable costs and
expenses thereof (except that in no event shall INVESCO be liable for the fees
and expenses of more than one counsel for Indemnified Parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances) .
After notice from INVESCO to the Indemnified Party of INVESCO's election to
assume the defense thereof, and in the absence of such a reasonable conclusion
that there may be different or additional defenses available to the Indemnified
Party, the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and INVESCO will not be liable to that party under this
Agreement for any legal or other expenses subsequently incurred by that party
independently in connection with the defense thereof other than reasonable costs
of investigation.
8.2(d) The Insurance Company agrees to notify INVESCO promptly of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of the Account.
8.3 Indemnification By the Company
8.3(a). The Company agrees to indemnify and hold harmless the Insurance Company,
and each of its directors and officers and each person, if any, who controls the
Insurance Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.3)
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, at common law or otherwise, insofar as those losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements result from the gross negligence, bad faith, willful misconduct, or
reckless disregard of duty of the Board or any member thereof, are related to
the operations of the Company and:
(i) arise as a result of any failure by the Company to provide the services and
furnish the materials under the terms of this Agreement (including a failure to
comply with the diversification requirements specified in Article VI of this
Agreement); or
(ii) arise out of or result from any 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;
as limited by, and in accordance with the provisions of,
Sections 8.3(b) and 8.3(c) hereof.
8.3(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 that may arise from the Indemnified
Party's willful misfeasance, bad faith, or negligence in the performance of the
Indemnified Party's duties or by reason of the Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Insurance
Company, the Company, INVESCO or the Account, whichever is applicable.
8.3(c). The Company shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless the
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 the Indemnified Party (or after
the Indemnified Party shall have received notice of such service on any
designated agent) . Notwithstanding the foregoing, the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Company of its obligations hereunder except to the extent that the Company has
been prejudiced by such failure to give notice. In addition, any failure by the
Indemnified Party 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 will be entitled to participate, at its own expense, in the defense
thereof. The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action; provided, however, that
if the Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to the Company, the Company shall not have the right to assume said
defense, but shall pay the costs and expenses thereof (except that in no event
shall the Company be liable for the fees and expenses of more than one counsel
for Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances). After notice from the Company to the
Indemnified Party of the Company's election to assume the defense thereof, and
in the absence of such a reasonable conclusion that there may be different or
additional defenses available to the Indemnified Party, the Indemnified Party
shall bear the fees and expenses-of any additional counsel retained by it, and
the Company will not be liable to that party under this Agreement for any legal
or other expenses subsequently incurred by that party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.3(d). The Insurance Company and INVESCO agree promptly to notify the Company
of the commencement of any litigation or proceedings against it or any of its
respective officers or directors in connection with this Agreement, the issuance
or sale of the Contracts, the operation of the Account, or the sale or
acquisition of shares of the Company.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and provisions hereof interpreted under
and in accordance with the laws of the State of Colorado.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934, and
1940 acts, and the rules and regulations and rulings thereunder, including any
exemptions from those statutes, rules and regulations the Commission may grant
(including, but not limited to, the Mixed and Shared Funding Exemptive Order)
and the terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written notice to the other
parties; provided, however such notice shall not be given earlier than one year
following the date of this Agreement; or
(b) at the option of the Insurance Company to the extent that shares of Funds
are not reasonably available to meet the requirements of the Contracts as
determined by the Insurance Company, provided however, that such a termination
shall apply only to the Fund(s) not reasonably available. Prompt written notice
of the election to terminate for such cause shall be furnished by the Insurance
Company; or
(c) at the option of the Company in the event that formal administrative
proceedings are instituted against the Insurance Company by the NASD, the
Commission, an insurance commissioner or any other regulatory body regarding the
Insurance Company's duties under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase of the Company's
shares, and the Company determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a material adverse effect
upon the ability of the Insurance Company to perform its obligations under this
Agreement; or
(d) at the option of the Insurance Company in the event that formal
administrative proceedings are instituted against the Company or INVESCO by the
NASD, the Commission, or any state securities or insurance department or any
other regulatory body, and the Insurance Company determines in its sole judgment
exercised in good faith, that any such administrative proceedings will have a
material adverse effect upon the ability of the Company or INVESCO to perform
its obligations under this Agreement; or
(e) with respect to any Account, upon requisite vote of the Contract owners
having an interest in that Account (or any subaccount) to substitute the shares
of another investment company for the corresponding Fund shares in accordance
with the terms of the Contracts for which those Fund shares had been selected to
serve as the underlying investment media. The Insurance Company will give at
least 30 days' prior written notice to the Company of the date of any proposed
vote to replace the Company's shares; or
(f) at the option of the Insurance Company, in the event any of the Company's
shares are not registered, issued or sold in accordance with applicable state
and/or federal law or exemptions therefrom, or such law precludes the use of
those shares as the underlying investment media of the Contracts issued or to be
issued by the Insurance Company; or
(g) at the option of the Insurance Company, if the Company ceases to qualify as
a regulated investment company under Subchapter M of the Code or under any
successor or similar provision, or if the Insurance Company reasonably believes
that the Company may fail to so qualify; or
(h) at the option of the Insurance Company, if the Company fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Company or INVESCO, if (1) the Company or
INVESCO, respectively, shall determine, in their sole judgment reasonably
exercised in good faith, that the Insurance Company has suffered a material
adverse change in its business or financial condition or is the subject of
material adverse publicity and that material adverse change or material adverse
publicity will have a material adverse impact upon the business and operations
of either the Company or INVESCO, (2) the Company or INVESCO shall notify the
Insurance Company in writing of that determination and its intent to terminate
this Agreement, and (3) after considering the actions taken by the Insurance
Company and any other changes in circumstances since the giving of such a
notice, the determination of the Company or INVESCO shall continue to apply on
the sixtieth (60th) day following the giving of that notice, which sixtieth day
shall be the effective date of termination; or
(j) at the option of the Insurance Company, if (1) the Insurance Company shall
determine, in its sole judgment reasonably exercised in good faith, that either
the Company or INVESCO has suffered a material adverse change in its business or
financial condition or is the subject of material adverse publicity and that
material adverse change or material adverse publicity will have a material
adverse impact upon the business and operations of the Insurance Company, (2)
the Insurance Company shall notify the Company and INVESCO in writing of the
determination and its intent to terminate the Agreement, and (3) after
considering the actions taken by the Company and/or INVESCO and any other
changes in circumstances since the giving of such a notice, the determination
shall continue to apply on the sixtieth (60th) day following the giving of the
notice, which sixtieth day shall be the effective date of termination.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for any
reason or for no reason.
10.3 Notice Requirement. No termination of this Agreement shall be effective
unless and until the party terminating this Agreement gives prior written notice
to all other parties to this Agreement of its intent to terminate, which notice
shall set forth the basis for the termination.
Furthermore,
(a) in the event that any termination is based upon the
provisions of Article VII, or the provisions of Section 10. 1
(a) , 10. 1 (i) , or 10. 1 (j) of this Agreement, the prior
written notice shall be given in advance of the effective
date of termination as required by those provisions; and
(b) in the event that any termination is based upon the provisions of Section
10.1(c) or 10.1(d) of this Agreement, the prior written notice shall be given at
least ninety (90) days before the effective date of termination.
10.4. Effect of Termination. Notwithstanding any termination of this Agreement,
the Company and INVESCO shall at the option of the Insurance Company, continue
to make available additional shares of the Company pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective date
of termination of this Agreement ("Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts shall be
permitted to reallocate investments in the Company, redeem investments in the
Company and/or invest in the Company upon the making of additional purchase
payments under the Existing Contracts. The parties agree that this Section 10.4
shall not apply to any terminations under Article VII And the effect of Article
VII terminations shall be governed by Article VII of this Agreement.
10.5. The Insurance Company shall not redeem Company shares attributable to the
Contracts (as opposed to Company shares attributable to the Insurance Company's
assets held in the Account) except (i) as necessary to implement Contract
-owner- initiated transactions, or (ii) as required by state and/or federal laws
or regulations or judicial or other legal precedent of general application (a
"Legally Required Redemption"). Upon request, the Insurance Company will
promptly furnish to the Company and INVESCO the opinion of counsel for the
Insurance Company (which counsel shall be reasonably satisfactory to the Company
and INVESCO) to the effect that any redemption pursuant to clause (ii) above is
a Legally Required Redemption.
ARTICLE XI. Notices.
Any notice shall be sufficiently given when sent by registered or certified mail
to the other party at the address of that other party set forth below or at such
other address as the other party may from time to time specify in writing.
If to the Company:
X.X. Xxx 000000
Xxxxxx, Xxxxxxxx
00000-0000
Attention: General Counsel
If to the Insurance Company:
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: General Counsel
If to INVESCO:
X.X. Xxx 000000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
ARTICLE XII. Miscellaneous
12.1. 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 without the express written consent
of the affected party unless and until that information may come into the public
domain.
12.2. 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.
12.3. This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together shall constitute one and the same instrument.
12.4. 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.
12.5. Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, the NASD and state insurance regulators) and shall permit those
authorities reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
12.6. 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.
12.7. No party may assign this Agreement without the prior written consent of
the others.
IN WITNESS WHEREOF, each of the parties hereto 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 hereto as of the date specified below.
Insurance Company:
ANNUITY INVESTORS LIFE
INSURANCE COMPANY
By its authorized officer,
By: /s/ Xxxx X. Meuthing
---------------------------
Title: Senior Vice President
Date: June 2, 1997
Company:
INVESCO VARIABLE INVESTMENT FUNDS, INC.
By its a authorized officer,
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Title: Treasurer and Chief Financial and Accounting
Officer
Date: May 30, 1997
INVESCO:
INVESCO FUNDS GROUP, INC.
By its authorized officer,
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Title: Senior Vice President and Treasurer
Date: May 30, 1997
Schedule A
Accounts
Name of Account Date of Resolution of Insurance Company's
Board which Established the Account
Annuity Investors Variable
Account B December 19, 1996
INVESCO Variable Investment Funds, Inc.
Industrial Income Fund
Total Return Fund
High Yield Fund
Schedule B
Contracts
1. Contract Form
A801-BD (NQ Rev. 3/97)-3 Individual Non-Qualified
A801-BD (Q Rev. 3/97)-3 Individual Qualified
G801-BD (97)-3 Group Master
C801-BD (97)-3 Group Certificate
Schedule C
Persons Authorized to Give Instructions to the Company and INVESCO
(1) NAME: /s/Xxxxxx X. Xxxxx ADDRESS AND PHONE NUMBER
-----------------------
Xxxxxx X. Xxxxx
000 X. 0xx Xx., Xxxxxxxxxx, XX 00000
PHONE: (000) 000-0000
Signature
(2) NAME: /s/Xxxx Xxxxxxx
------------------------
000 X. 0xx Xx., Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Signature
(3) NAME: /s/Xxxxxx Xxxx
------------------------
000 X. 0xx Xx., Xxxxxxxxxx, XX 00000
PHONE: (000) 000-0000
Signature
(4) NAME: /s/Xxxx Xxxxxxx
-------------------------
000 X. 0xx Xx., Xxxxxxxxxx, XX 00000
PHONE: (000) 000-0000
Signature
(5) NAME: /s/Xxxxx Xxxxxxxxx
-------------------------
000 X. 0xx Xx., Xxxxxxxxxx, XX 00000
PHONE: (000) 000-0000
Signature
Schedule D
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities for the
handling of proxies relating to the Company by INVESCO, the Company and the
Insurance Company. The defined terms herein shall have the meanings assigned in
the Participation Agreement except that the term "Insurance Company" shall also
include the department or third party assigned by the Insurance Company to
perform the steps delineated below.
1. The number of proxy proposals is given to the Insurance Company by INVESCO as
early as possible before the date set by the Company for the shareholder meeting
to facilitate the establishment of tabulation procedures. At this time INVESCO
will inform the Insurance Company of the Record, Mailing and Meeting dates. This
will be done verbally approximately two months before meeting.
2. Promptly after the Record Date, the Insurance Company will perform a "tape
run", or other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the "Customer")
as of the Record Date.
Allowance should be made for account adjustments made after this date that could
affect the status of the Customers' accounts of the Record Date.
Note: The number of proxy statements is determined by the activities described
in Step #2. The Insurance Company will use its best efforts to call in the
number of Customers to INVESCO, as soon as possible, but no later than one week
after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Insurance Company by the Company. The Insurance Company, at its
expense, shall produce and personalize the Voting Instruction cards. The Legal
Department of INVESCO ("INVESCO Legal") must approve the Card before it is
printed. Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
C. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and
verification of votes (already on Cards as printed by
the Company).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
4. During this time, INVESCO Legal will develop, produce, and the Company
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Insurance Company for
insertion into envelopes (envelopes and return envelopes are provided and paid
for by the Insurance Company). Contents of envelope sent to customers by
Insurance Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. Return envelope (postage pre-paid by Insurance Company)
addressed to the Insurance Company or its tabulation
agent
d. "Urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible and
that their vote is important. One copy will be supplied by the Company.)
e. Cover letter - optional, supplied by Insurance Company and reviewed and
approved in advance by INVESCO Legal.
5. The above contents should be received by the Insurance Company
approximately 3-5 business days before mail date. Individual in charge at
Insurance Company reviews and approves the contents of the mailing package
to ensure correctness and completeness. Copy of this approval sent to
INVESCO Legal.
6. Package mailed by the Insurance Company.
The Company must allow at least a 15-day solicitation time to the
Insurance Company as the shareowner. (A 5-week period is
recommended.) Solicitation time is calculated as calendar days from
(but not including) the meeting, counting backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An
often used procedure is to sort cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for
postmark information would be due to an insurance
company's internal procedure.
B. If Cards are mutilated, or for any reason are illegible
or are not signed properly, they are sent back to the
Customer with an explanatory letter, a new Card and
return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for
purposes of vote tabulation. Such mutilated or
illegible Cards are "hand verified," i.e., examined as
to why they did not complete the system. Any questions
on those Cards are usually remedied individually.
9. There are various control procedures used to ensure
proper tabulation of votes and accuracy of the
tabulation. The most prevalent is to sort the Cards as
they first arrive into categories depending upon their
vote; an estimate of how the vote is progressing may
then be calculated. If the initial estimates and the
actual vote do not coincide, then an internal audit of
that vote should occur. This may entail a recount.
10. The actual tabulation of votes is done in units which are then converted
to shares. (It is very important that the Company receives the tabulations
stated in terms of a percentage and the number of shares.)
INVESCO Legal must review and approve tabulation format.
11. Final tabulation in shares is verbally given by the Insurance Company to
INVESCO Legal on the morning of the meeting not later than 10:00 a.m.
Denver time. INVESCO Legal may request an earlier deadline if required to
calculate the vote in time for the meeting.
12. A Certificate of Mailing and Authorization to Vote Shares will be required
from the Insurance Company as well as an original copy of the final vote.
INVESCO Legal will provided a standard form for each Certification.
13. The Insurance Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged or
if otherwise necessary for legal, regulatory, or accounting purposes,
INVESCO Legal will be permitted reasonable access to such Cards.
14. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
