EXHIBIT (8)(e)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this 4th day of June, 1995, between
XXXXXXX XXXXX VARIABLE SERIES FUNDS, INC., an open-end management
investment company organized as a Maryland corporation (the "Fund"), and
ANNUITY INVESTORS LIFE INSURANCE COMPANY, a life insurance company
organized under the laws of the State of Ohio (the "Company"), on its own
behalf and on behalf of each segregated asset account of the Company set
forth on Schedule A, as may be amended from time to time (the "Accounts").
W I T N E S S E T H:
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WHEREAS, the Fund has filed a registration statement with the
Securities and Exchange Commission to register itself as an open-end
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and to register the offer and sale of its shares
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires 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 that have
entered into participation agreements with the Fund (the "Participating
Insurance Companies"); and
WHEREAS, Xxxxxxx Xxxxx Funds Distributors, Inc. (the "Under-
writer") is registered as a broker-dealer with the Securities and Exchange
Commission (the "SEC") 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 capital stock of the Fund is divided into several
series of shares, each series representing an interest in a particular
managed portfolio of securities and other assets; and
WHEREAS, the series of shares of the Fund offered by the Fund to
the Company and the Accounts are set forth on Schedule B attached hereto
(each, a "Portfolio," and, collectively, the "Portfolios"); and
WHEREAS, the Fund has applied for an order from the Securities
and Exchange Commission 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 1940 Act, and rules 6e-2(b)(15) and 6e-
3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Fund to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life
insurance companies and certain qualified pension and retirement plans
(the "Shared Fund Exemptive Order");
WHEREAS, Xxxxxxx Xxxxx Asset Management, L.P. is duly registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended, and any applicable state securities law, and is the Fund's
investment adviser; and
WHEREAS, the Company has registered or will register certain
variable life insurance policies and/or variable annuity contracts under
the 1933 Act (the "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 one or more of the
Portfolios specified in Schedule B attached hereto (the "Shares") on
behalf of the Accounts to fund the Contracts, and the Fund intends to sell
such Shares to the Accounts at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
ARTICLE 1
Sale of Fund Shares
-------------------
1.1 The Fund shall cause the Underwriter to make shares of
its Portfolios available to the Accounts at the net asset value next
computed after receipt of such purchase order by the Fund (or its agent),
as established in accordance with the provisions of the then current
prospectus of the Fund. Shares of a particular Portfolio of the Fund
shall be ordered in such quantities and at such times as determined by the
Company to be necessary to meet the requirements of the Contracts. The
Directors of the Fund (the "Directors") may refuse to sell shares of any
Portfolio to any person (including the Company and the Accounts), or
suspend or terminate the offering of shares of any Portfolio if such
action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Directors acting in good faith and in
light of their fiduciary duties under federal and any applicable state
laws, necessary in the best interests of the shareholders of such
Portfolio.
1.2 The Fund will redeem any full or fractional shares of any
Portfolio when requested by the Company on behalf of an Account at the net
asset value next computed after receipt by the Fund (or its agent) of the
request for redemption, as established in accordance with the provisions
of the then current prospectus of the Fund. The Fund shall make payment
for such shares in the manner established from time to time by the Fund,
but in no event shall payment be delayed for a greater period than is
permitted by the 1940 Act (including any Rule or order of the SEC
thereunder).
1.3 The Fund shall accept purchase and redemption orders
resulting from investment in and payments under the Contracts on each
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Business Day, provided that such orders are received prior to such time as
the Fund may, from time to time, inform the Company is the deadline for
such orders and reflect instructions received by the Company from Contract
holders in good order prior to the time the net asset value of each
Portfolio is priced in accordance with its prospectus on the prior
Business Day. "Business Day" shall mean any day on which the New York
Stock Exchange is open for trading and on which the Fund calculates its
net asset value pursuant to the rules of the SEC.
1.4 Purchase orders that are transmitted to the Fund in
accordance with section 1.3 shall be paid for no later than such time as
the Fund may, from time to time, inform the Company is the deadline for
such payment on the same Business Day that the Fund receives notice of the
order. Payments shall be made in federal funds transmitted by wire.
1.5 Issuance and transfer of the Fund's shares will be by
book entry only. Stock certificates will not be issued to the Company or
the Account. Shares ordered from the Fund will be recorded in the
appropriate title for each Account or the appropriate subaccount of each
Account.
1.6 The Fund shall furnish prompt notice to the Company of
any income, dividends or capital gain distributions payable on the Fund's
shares. The Company hereby elects to receive all such income dividends
and capital gain distributions as are payable on a Portfolio's shares in
additional shares of that Portfolio. The Fund shall notify the Company of
the number of shares so issued as payment of such dividends and
distributions.
1.7 The Fund shall make the net asset value per share for
each Portfolio 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 5:00 P.M., New York time.
1.8 The Company agrees that it will not take any action to
operate the Account as a management investment company under the 1940 Act
without the Fund's and the Underwriter's prior written consent.
1.9 The Fund agrees that its shares will be sold only to
Participating Insurance Companies and their separate accounts. No shares
of any Portfolio will be sold directly to the general public. The Company
agrees that Fund shares will be used only for the purposes of funding the
Contacts and Accounts listed in Schedule A, as amended from time to time.
1.10 The Fund agrees that all Participating Insurance
Companies shall have the obligations and responsibilities regarding pass-
through voting and conflicts of interest corresponding to those contained
in section 2.8 and Article 4 of this Agreement.
1.11 As long as it shall be the intention of the Fund to
maintain the net asset value per share of any Portfolio at $1.00, on any
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day on which (a) the net asset value per share of the Shares is
determined, (b) Xxxxxxx Xxxxx Asset Management, L.P. ("MLAM") determines,
in the manner described in the then current prospectus of the Fund that
the net income of such Portfolio on such day is negative, and (c) MLAM
delivers a certificate to the Company setting forth the reduction in the
number of outstanding Shares to be effected as described in the then
current prospectus of the Fund in connection with such determination, the
Company, on behalf of itself and the Accounts, agrees to return to the
Fund its pro rata share of the number of Shares to be reduced and agrees
that, upon delivery of such certificate, (a) its ownership interest in the
Shares so to be returned shall immediately cease, (b) such Shares shall be
deemed to have been cancelled and to be no longer outstanding, and (c) all
rights in respect of such Shares shall cease.
ARTICLE 2
Obligations of the Parties
--------------------------
2.1 The Fund shall prepare and be responsible for filing with
the SEC and any state securities regulators requiring such filing, all
shareholder reports, notices, proxy materials (or similar materials such
as voting instruction solicitation materials), prospectuses and statements
of additional information of the Fund. The Fund shall bear the costs of
registration and qualification of its shares, preparation and filing of
the documents listed in this section 2.1 and all taxes to which an issuer
is subject on the issuance and transfer of its shares.
2.2 At least annually, the Fund or its designee shall provide
the Company, free of charge, with as many copies of the current prospectus
(describing only the Portfolios listed in Schedule B hereto) for the
Shares as the Company may reasonably request for distribution to existing
Contract owners whose Contracts are funded by such Shares. The Fund or
its designee shall provide the Company, at the Company's expense, with as
many copies of the current prospectus for the Shares as the Company may
reasonably request for distribution to prospective purchasers of
Contracts. If requested by the Company in lieu thereof, the Fund or its
designee shall provide such documentation (including a "camera ready" copy
of the new prospectus as set in type or, at the request of the Company, a
diskette in the form sent to the financial printer) and other assistance
as is reasonably necessary in order for the parties hereto once each year
(or more frequently if the prospectus for the Shares is supplemented or
amended) to have the prospectus for the Contracts and the prospectus for
the Shares printed together in one document; the expenses of such printing
to be borne by the Company. In the event that the Company requests that
the Fund or its designee provide the Fund's prospectus in a "camera ready"
or diskette format, the Fund shall be responsible solely for providing the
prospectus in the format in which it is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in
such format (e.g., typesetting expenses), and the Company shall bear the
expense of adjusting or changing the format to conform with any of its
prospectuses.
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2.3 The prospectus for the Shares shall state that the
statement of additional information for the Shares is available from the
Fund or its designee. The Fund or its designee, at its expense, shall
print and provide such statement of additional information to the Company
(or a master of such statement suitable for duplication by the Company)
for distribution to any owner of a Contract funded by the Shares. The
Fund or its designee, at the Company's expense, shall print and provide
such statement to the Company (or a master of such statement suitable for
duplication by the Company) for distribution to a prospective purchaser
who requests such statement.
2.4 The Fund or its designee shall provide the Company free
of charge copies, if and to the extent applicable to the Shares, of the
Fund's proxy materials, reports to Shareholders and other communications
to Shareholders in such quantity as the Company shall reasonably require
for distribution to Contract owners.
2.5 The Company shall furnish, or cause to be furnished, to
the Fund or its designee, a copy of each Contract prospectus or statement
of additional information in which the Fund or its investment adviser is
named prior to the filing of such document with the SEC. The Company
shall furnish, or shall cause to be furnished, to the Fund or its
designee, each piece of sales literature or other promotional material in
which the Fund or its investment adviser is named, at least five Business
Days prior to its use. No such prospectus, statement of additional
information or material shall be used if the Fund or its designee
reasonably objects to such use within five Business Days after receipt of
such material.
2.6 The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
or its investment adviser in connection with the sale of the Contracts
other than information or representations contained in and accurately
derived from the registration statement or prospectus for the Fund shares
(as such registration statement and prospectus may be amended or
supplemented from time to time), reports of the Fund, Fund-sponsored proxy
statements, or in sales literature or other promotional material approved
by the Fund or its designee, except with the written permission of the
Fund or its designee.
2.7 The Fund shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such registration statement
and prospectus may be amended or supplemented from time to time), or in
materials approved by the Company for distribution including sales
literature or other promotional materials, except with the written
permission of the Company.
2.8 The Company shall amend the Registration Statement of the
Contracts under the 1933 Act and the Registration Statement for the
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Account under the 1940 Act from time to time as required in order to
effect the continuous offering of the Contracts or as may otherwise be
required by applicable law. The Company shall register and qualify the
Contracts for sale to the extent required by applicable securities laws of
the various states.
2.9 The Company shall be responsible for assuring that any
prospectus offering a Contract that is a life insurance contract where it
is reasonably probable that such Contract would be a "modified endowment
contract," as that term is defined in Section 7702A of the Internal
Revenue Code of 1986, as amended (the "Code"), will identify such Contract
as a modified endowment contract (or policy).
2.10 So long as, and to the extent that the SEC interprets the
1940 Act to require pass-through voting privileges for variable
policyowners; (a) the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the
Accounts, in shares of the Fund; (b) the Fund shall require all
Participating Insurance Companies to calculate voting privileges in the
same manner and the Company shall be responsible for assuring that the
Accounts calculate voting privileges in the manner established by the
Fund; (c) 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 policyowners are received as well as shares it owns that are held by
that Account, in the same proportion as those shares for which voting
instructions are received; and (d) the Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for
Fund shares held by Contract owners without the prior written consent of
the Fund, which consent may be withheld in the Fund's sole discretion.
ARTICLE 3
Representations and Warranties
------------------------------
3.1 The Company represents and warrants that it is an
insurance company duly organized and in good standing under the laws of
the State of Ohio and has established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2 The Company represents and warrants that it 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.
3.3 The Company represents and warrants that the Contracts
will be registered under the 1933 Act prior to any issuance or sale of the
Contracts; the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws; and the sale
of the Contracts shall comply in all material respects with state
insurance suitability requirements.
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3.4 The Company represents and warrants that the Contracts
are currently and at the time of issuance will be treated as annuity
contracts or life insurance policies, whichever is appropriate, under
applicable provisions of the Code. The Company shall make every effort to
maintain such treatment and shall notify the Fund and the Underwriter
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.
3.5 The Company represents and warrants that no affiliated
person (as such term is defined in the 0000 Xxx) is currently ineligible
to be affiliated with the Company pursuant to the eligibility restrictions
of Section 9(a) of the 1940 Act, and the Company shall notify the Fund and
the Underwriter immediately if any affiliated person becomes ineligible.
3.6 The Fund represents and warrants that it is duly
organized and validly existing under the laws of the State of Maryland.
3.7 The Fund represents and warrants that the Fund Shares
offered and sold pursuant to this Agreement will be registered under the
1933 Act and the Fund is registered under the 1940 Act. The Fund shall
use its best efforts to amend its registration statement 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 advise the Fund of
any state requirements to register the Shares for sale in such states. If
the Fund determines registration is appropriate, the Fund shall use its
best efforts to register and qualify its shares for sale in accordance
with the laws of all fifty states, the District of Columbia, Virgin
Islands and Puerto Rico and such other jurisdictions reasonably requested
by the Company.
3.8 The Fund represents and warrants that the investments of
each Portfolio will comply with the diversification requirements set forth
in section 817(h) of the Code and the rules and regulations thereunder.
ARTICLE 4
Potential Conflicts
-------------------
4.1 The parties acknowledge that the Fund's shares may be
made available for investment to other Participating Insurance Companies.
In such event, the Directors will monitor the Fund for the existence of
any material irreconcilable conflict between the interests of the contract
owners of all Participating Insurance Companies. 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
interpretative letter, or any similar action by insurance, tax, or
securities decision in any relevant proceeding; (d) the manner in which
the investments of any Portfolio are being managed; (e) a difference in
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voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard
the voting instructions of contract owners. The Trustees shall promptly
inform the Company if they determine that an irreconcilable material
conflict exists and the implications thereof.
4.2 The Company agrees to promptly report any potential or
existing conflicts of which it is aware to the Directors. The Company
will assist the Directors in carrying out their responsibilities under the
Shared Trust Exemptive Order by providing the Directors with all
information reasonably necessary for the Directors to consider any issues
raised, including, but not limited to, information as to a decision by the
Company to disregard Contract owner voting instructions.
4.3 If it is determined by a majority of the Directors, or a
majority of the Fund's Directors who are not affiliated with Xxxxxxx Xxxxx
Asset Management, L.P. or the Underwriter (the "Disinterested Directors"),
that a material irreconcilable conflict exists that affects the interests
of Contract owners, the Company shall, in cooperation with other
Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by
the Directors) take whatever steps are necessary to remedy or eliminate
the irreconcilable material conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from the
Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question of whether or not such segregation should
be implemented to a vote of all affected Contracts owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
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 Contract
owners the option of making such a charge; and (b) establishing a new
registered management investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions
and that decision represents a minority position or would preclude a
majority vote, the Company may be required, at the Fund's election, to
withdraw the affected Account's investment in the Fund and terminate this
Agreement with respect to such 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 Disinterested Directors. Any such withdrawal and termination must
take place within 30 days after the Fund gives written notice that this
provision is being implemented. Until the end of such 30 day period, the
Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.5 If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the Company
conflicts with the majority of other state regulators, then the Company
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will withdraw the affected Account's investment in the Fund and terminate
this Agreement with respect to such Account within 30 days after the Fund
informs the Company in writing that it has determined that such 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 Disinterested Directors. Until the end of such 30 day period, the
Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.6 For purposes of sections 4.3 through 4.6 of this Agree-
ment, a majority of the Disinterested 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 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 Directors
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the company will withdraw the
Account's investment in the Fund and terminate this Agreement within
thirty days after the Directors inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such material
irreconcilable conflict as determined by a majority of the Disinterested
Directors.
4.7 The Company shall at least annually submit to the
Directors such reports, materials or data as the Directors may reasonably
request so that the Directors may fully carry out the duties imposed upon
them by the Shared Trust Exemptive Order, and said reports, materials and
data shall be submitted more frequently if deemed appropriate by the
Directors.
4.8 If and to the extent that (a) 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 1940 Act or the rules promulgated thereunder with respect
to mixed or shared funding (as defined in the application for the Shared
Fund Exemptive Order) on terms and conditions materially different from
those contained in the application for the Shared Fund Exemptive Order, or
(b) the Shared Fund Exemptive Order is granted on terms and conditions
that differ from those set forth in this Article 4, then the Fund and/or
the Participating Insurance Companies, as appropriate, shall take such
steps as may be necessary (a) to comply with Rules 6e-2 and 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable, or (b) to conform this Article 4 to the terms and conditions
contained in the Shared Fund Exemptive Order, as the case may be.
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ARTICLE 5
Indemnification
---------------
5.1 Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Fund and each of its Directors, officers,
employees and agents and each person, if any, who controls the Fund within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Article 5) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or expenses (including the reasonable
costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in
connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or common law
or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue
statements or alleged untrue statements of any material
fact contained in a registration statement or prospectus
for the Contracts or in the Contracts themselves or in
sales literature generated or approved by the Company on
behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article 5),
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
indemnity 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 was accurately
derived from written information furnished to the Company
by or on behalf of the Fund for use in Company Documents
or otherwise for use in connection with the sale of the
Contracts or Shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Fund Documents
as defined in section 5.2(a)) or wrongful conduct of the
Company or persons under its control, with respect to the
sale or acquisition of the Contracts or Shares; or
(c) arise out of or result from any untrue
statement or alleged untrue statement of a material fact
contained in Fund Documents as defined in section 5.2(a)
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary
to make the statements therein not misleading if such
statement or omission was made in reliance upon and
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accurately derived from written information furnished to
the Fund by or on behalf of the Company; or
(d) arise out of or result from any failure by
the Company to provide the services or furnish the
materials required under the terms of this Agreement; or
(e) 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.
5.2 Indemnification by the Fund. The Fund agrees to
indemnify and hold harmless the Company and each of its directors,
officers, employees and agents 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 Article 5) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or expenses (including
the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees
incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or
at common law or otherwise, insofar as such Losses:
(a) 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 Fund (or any amendment or supplement
thereto) or in sales literature approved by the Fund (but
solely with respect to statements regarding the Fund),
(collectively, "Fund Documents" for the purposes of this
Article 5), or arise out of or are based upon the omis-
sion 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
indemnity 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 was accurately
derived from written information furnished to the Fund by
or on behalf of the Company for use in Fund Documents or
otherwise for use in connection with the sale of the
Contracts or Shares; or
(b) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Company Docu-
ments) or wrongful conduct of the Fund or persons under
its control, with respect to the sale or acquisition of
the Contracts or Shares; or
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(c) arise out of or result from any untrue
statement or alleged untrue statement of a material fact
contained in Company Documents or the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements
therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written
information furnished to the Company by or on behalf of
the Fund; or
(d) arise out of or result from any failure by
the Fund to provide the services or furnish the materials
required under the terms of this Agreement; or
(e) arise out of or result from any material
breach of any representation and/or warranty made by the
Fund in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund.
5.3 Neither the Company nor the Fund shall be liable under
the indemnification provisions of section 5.1 or 5.2, as applicable, with
respect to any Losses incurred or assessed against an Indemnified Party
that 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.
5.4 Neither the Company nor the Fund shall be liable under
the indemnification provisions of section 5.1 or 5.2, as applicable, with
respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the other party in writing within a
reasonable time after the summons, or other first written notification,
giving information of the nature of the claim shall have been served upon
or otherwise received by such Indemnified Party (or after such Indemnified
Party shall have received notice of service upon or other notification to
any designated agent), but failure to notify the party against whom
indemnification is sought of any such claim or shall not relieve that
party from any liability which it may have to the Indemnified Party in the
absence of sections 5.1 and 5.2.
5.5 In case any such action is brought against the Indemni-
fied Parties, the indemnifying party shall be entitled to participate, at
its own expense, in the defense of such action. The indemnifying party
also shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to the party named in the action. After notice
from the indemnifying party to the Indemnified Party of an election to
assume such defense, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the indemnifying
party will not be liable to the Indemnified 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.
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ARTICLE 6
Termination
-----------
6.1 This Agreement may be terminated by either party for any
reason by six (6) months' advance written notice delivered to the other
party.
6.2 This Agreement may be terminated at the option of the
Fund upon institution of formal proceedings against the Company by the
NASD, the SEC, the insurance commission of any state or any other
regulatory body regarding the Company's duties under this Agreement or
related to the sale of the Contracts, the operation of the Account, the
administration of the Contracts or the purchase of the Shares, or an
expected or anticipated ruling, judgment or outcome which would, in the
Fund's reasonable judgment, materially impair the Company's ability to
meet and perform the Company's obligations and duties hereunder.
6.3 This Agreement may be terminated at the option of the
Fund if the Contracts cease to qualify as annuity contracts or life
insurance policies, as applicable, under the Code, or if the Fund
reasonably believes that the Contracts may fail to so qualify.
6.4 This Agreement may be terminated at the option of either
the Fund or the Underwriter if the Fund or the Underwriter, respectively,
shall determine, in their sole judgment exercised in good faith, that
either (1) the Company shall have suffered a material adverse change in
its business or financial condition or (2) the Company shall have been the
subject of material adverse publicity which is likely to have a material
adverse impact upon the business and operations of either the Fund or the
Underwriter.
6.5 Notwithstanding any termination of this Agreement
pursuant to this Article 6, the Fund and the Underwriter may, at the
option of the Fund, continue to make available additional Fund Shares for
so long after the termination of this Agreement as the Fund desires
pursuant to the terms and conditions of this Agreement as provided in
Section 6.6 below, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, if the Fund or Underwriter
so elects to make additional Shares available, the owners of the Existing
Contracts or the Company, whichever shall have legal authority to do so,
shall be permitted to reallocate investments in the Fund, redeem
investments in the Fund and/or invest in the Fund upon the making of
additional purchase payments under the Existing Contracts.
6.6 In the event of a termination of this Agreement pursuant
to this Article 6, the Fund and the Underwriter shall promptly notify the
Company whether the Underwriter and the Fund will continue to make Fund
Shares available after such termination. If Fund Shares continue to be
made available after such termination, the provisions of this Agreement
shall remain in effect except for Section 6.1 and thereafter either the
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Fund or the Company may terminate the Agreement, as so continued pursuant
to this Section 6.6, upon prior written notice to the other party, such
notice to be for a period that is reasonable under the circumstances but,
if given by the Fund, need not be greater than six months.
6.7 The provisions of Article 5 shall survive the termination
of this Agreement, and the provisions of Article 4 and Sections 2.4 and
2.10 shall survive the termination of this Agreement as long as shares of
the Fund are held on behalf of Contract owners in accordance with section
6.5.
ARTICLE 7
Notices
-------
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund:
Xxxxxxx Xxxxx Variable Series Funds, Inc.
c/o Merrill Xxxxx Asset Management, L.P.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
If to the Company:
Annuity Investors Life Insurance Company
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
ARTICLE 8
Miscellaneous
-------------
8.1 The captions in this Agreement are included for con-
venience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or
more counterparts, each of which taken together shall constitute one and
the same instrument.
8.3 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.
- 14 -
8.4 This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the State of
New York, shall be subject to the provisions of the 1933, 1934 and 1940
Acts, and the rules, 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.
8.5 The parties to this Agreement acknowledge and agree that
all liabilities of the Fund arising, directly or indirectly, under this
Agreement, of any and every nature whatsoever, shall be satisfied solely
out of the assets of the Fund and that no Director, officer, agent or
holder of shares of beneficial interest of the Fund shall be personally
liable for any such liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
SEC, the NASD and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection with
any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
8.7 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.
8.8 The parties to this Agreement acknowledge and agree that
this Agreement shall not be exclusive in any respect.
8.9 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written
approval of the other party.
8.10 No provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized
and executed by both parties.
- 15 -
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and
year first above written.
ANNUITY INVESTORS LIFE
INSURANCE COMPANY
By: /s/ Xxxx X. Xxxxxxxx
__________________________
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
XXXXXXX XXXXX VARIABLE SERIES
FUNDS, INC.
By: /s/ Xxxxxxx Henewinkel
__________________________
Name: Xxxxxxx Henewinkel
Title: Vice President, Secretary
- 16 -
Schedule A
----------
Separate Accounts and Associated Contracts
------------------------------------------
Name of Separate Account and Contracts Funded By
Date Established by Board of Directors Separate Account
______________________________________ ___________________
Annuity Investors Variable Account A Group Flexible Premium
May 26, 1995 Deferred Annuity
- 17 -
Schedule B
----------
Portfolio Subject To Participation Agreement
--------------------------------------------
Xxxxxxx Xxxxx Variable Series Funds, Inc.:
Basic Value Focus Fund
Global Strategy Focus Fund
High Current Income Fund
Domestic Money Market Fund
- 18 -
