Exhibit (8)(h)
PARTICIPATION AGREEMENT
AMONG
AMERICAN GENERAL LIFE INSURANCE COMPANY,
AMERICAN GENERAL SECURITIES INCORPORATED,
THE VICTORY VARIABLE INSURANCE FUNDS
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
DATED AS OF
DECEMBER 9, 1999
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into as of the 9th day of DECEMBER, 1999
("Agreement"), by and among AMERICAN GENERAL LIFE INSURANCE COMPANY, a Texas
life insurance company ("AGL") (on behalf of itself and its "Separate Account,"
defined below), AMERICAN GENERAL SECURITIES INCORPORATED, a Texas corporation
("AGSI"), the principal underwriter and distributor with respect to the Policies
referred to below, __THE VICTORY VARIABLE INSURANCE FUNDS, an unincorporated
business trust organized under the laws of the state of Delaware, (the "Fund"),
and BISYS FUND SERVICES LIMITED PARTNERSHIP, an Ohio limited partnership, (the
"Distributor"), the Fund's principal underwriter (collectively, the "Parties").
WITNESSETH THAT:
WHEREAS the Distributor and the Fund desire that shares of the Fund's
portfolios (the "Series"; reference herein to the "Fund" includes reference to
each of the Series of the Fund as to the extent the context requires) be made
available by the Distributor to serve as underlying investment media for those
variable insurance products (the "Policies") of AGL that are the subject of
AGL's Form N-4 and/or Form S-6 registration statement filed with the Securities
and Exchange Commission (the "SEC"), and to be offered through AGSI.
NOW, THEREFORE, in consideration of the mutual benefits and promises
contained herein, the Fund and the Distributor will make shares in the Series
available to AGL for this purpose at net asset value and with no sales charges,
all subject to the following provisions:
Section 1. Introduction
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1.1 Availability of Separate Account Divisions.
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AGL represents that its Separate Account(s) (the "Separate Account(s)") is
and will continue to be available to serve as an investment vehicle for its
Policies. The Policies provide for the
allocation of net amounts received by AGL to separate series (the "Divisions";
reference herein to the "Separate Account" includes reference to each Division
to the extent the context requires) of the Separate Account for investment in
the shares of corresponding Series of the Fund that are made available through
the Separate Account to act as underlying investment media. Other series of the
Fund may become subject to this Agreement, upon mutual agreement of the parties.
AGL will not unreasonably deny any request by the Distributor to create new
Divisions corresponding to such other Series.
1.2 Broker-Dealer Registration.
--------------------------
The Distributor and AGSI each represents and warrants that it is and will
remain duly registered as a broker-dealer with 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").
Section 2. Processing Transactions
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2.1 The Fund agrees, as provided in its Registration Statement, to make
available to the Separate Account, and any Division, shares of the Series for
investment of purchase payments of the Policies allocated to the Separate
Account.
2.2 The Fund agrees to sell to AGL those shares of the Series which AGL
orders. Orders which are sent by AGL to the Fund and received by the Fund by
9:00 a.m. Central time, will be executed by the Fund at the net asset value
determined on the prior Business Day. Any orders received by the Fund after
9:00 a.m. and prior to 3:00 p.m. Central time, will be executed by the Fund at
the net asset value next computed pursuant to the rules of the SEC. For
purposes of this Section 2.2, the Fund hereby appoints AGL as its designee for
receipt of such orders from the Separate Account and receipt by such designee
shall constitute receipt by the Fund; provided that the Fund receives notice
from AGL by telephone or facsimile (or by such other means as the Fund and AGL
may agree in writing) of receipt of such orders by 9:00 a.m. Central time on the
next following Business Day. "Business Day" shall mean any day on which the New
York Stock
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Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the SEC.
2.3 The Fund agrees to redeem, on AGL's request, any full or fractional
shares of the Fund held by AGL, executing such requests on each Business Day at
the net asset value next computed after receipt by the Fund or its designee of
the request for redemption, in accordance with the provisions of this Agreement
and the Fund's Registration Statement. For purposes of this Section 2.3, the
Fund hereby appoints AGL as its designee for receipt of requests for redemption
from the Separate Account and receipt by such designee shall constitute receipt
by the Fund; provided that the Fund receives notice from AGL by telephone or
facsimile (or by such other means as the Fund and AGL may agree in writing) of
receipt of such request for redemption by 9:00 a.m. Central time on the next
following Business Day.
2.4 In the event that AGL's order results in a net purchase of Series
shares, AGL shall pay for Series shares on the same Business Day that the
notice of order to purchase the Fund shares is made in accordance with the
provisions of this section. If AGL's order requests a net redemption resulting
in a payment of redemption proceeds to AGL, the Fund shall normally pay and
transmit the proceeds of redemptions of Series shares on the same Business Day
that the notice of a redemption order is received in accordance with the
provisions of this Agreement, unless doing so would require the Fund to dispose
of Series securities or otherwise incur additional costs. In any event,
proceeds shall be wired to AGL within three (3) Business Days or such longer
period permitted by the Investment Company Act of 1940, as amended (the "1940
Act") or the rules, orders or regulations thereunder, and the Fund shall notify
the person designated in writing by AGL as the recipient for such notice of such
delay by 5:00 p.m. Central time the same Business Day that AGL transmits the
redemption order to the Fund. If AGL's order requests the application of
redemption proceeds from the redemption of shares to the purchase of shares of
another fund advised by Adviser (as defined below), the Fund shall so apply such
proceeds the same Business Day that AGL transmits such order to the Fund. Any
payment made pursuant to this Section 2.4 shall be in federal funds transmitted
by wire.
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2.5 The Fund will provide to AGL closing net asset value per share for the
Series after the close of trading each Business Day. In any event, the Fund
shall use its best efforts to make the net asset value per share for each Series
available by 6:00 p.m. Central time each Business Day, and as soon as reasonably
practicable after the net asset value per share for each Series is calculated,
and shall calculate such net asset value in accordance with the Fund's
Registration Statement. Any material error in the calculation of the net asset
value of the Series shall be reported immediately to AGL.
2.6 At the end of each Business Day, AGL shall use the information
described in Section 2.5 to calculate Separate Account unit values for the day.
Using these unit values, AGL shall process each such Business Day's Separate
Account transactions based on requests and premiums received by it by the
earlier of 4:00 p.m. Eastern time or the close of trading on the floor of the
New York Stock Exchange (currently 4:00 p.m. New York time) to determine the net
dollar amount of the Fund shares which shall be purchased or redeemed at that
day's closing net asset value per share. The net purchase or redemption orders
so determined shall be transmitted to the Fund by AGL by 9:00 a.m. Central time
on the Business Day next following AGL's receipt of such requests and premiums
in accordance with the terms of Sections 2.2 and 2.3 hereof. Orders will be
sent directly, via facsimile (or by such other means as the Fund and AGL may
agree in writing), to the Fund or such other person as the Fund may designate.
2.7 The Fund shall furnish, on or before the exdividend date, notice to
AGL of any income dividends or capital gain distributions payable on the shares
of any Series. AGL hereby elects to receive all such income dividends and
capital gain distributions as are payable on a Series' shares in additional
shares of the Series, but reserves the right to revoke the election and to
receive all such income dividends and capital gain distributions in cash. The
Fund shall notify AGL or its designee of the number of shares so issued as
payment of such dividends and distributions.
2.8 The Fund may refuse to sell shares of any Series to any person or
suspend or terminate the offering of the shares of or liquidate any Series if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board of Trustees of the Fund (the "Board
of Trustees"), acting in good faith and in light of its duties under federal and
any
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applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Series. The Fund further reserves the
right to pay any portion of a redemption in kind of portfolio securities of any
Series if the Fund's Board of Trustees determines that it would be detrimental
to the best interests of the shareholders to make a redemption wholly in cash.
2.9 Issuance and transfer of Series shares will be by book entry only.
Stock certificates will not be issued to AGL or the Separate Account. Shares
ordered from the Series will be recorded in appropriate book entry titles for
the Separate Account.
2.10 Each Party has the right to rely on information or confirmations
provided by each other Party (or by any affiliate of each other Party) and shall
not be liable in the event that an error is a result of any misinformation
supplied by any other Party or any such affiliate. If a mistake is caused in
supplying such information or confirmations, which results in a reconciliation
with incorrect information, the amount required to make a Policy owner's or
participant's account whole shall be borne by the Party providing the incorrect
information.
Section 3. Costs and Expenses
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3.1 General.
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Except as otherwise specifically provided herein, each Party will bear
all expenses incident to its performance under this Agreement.
3.2 Expense allocations.
--------------------
(a) The Fund will pay the cost of keeping its registration of shares
under the Securities Act of 1933, as amended (the "1933 Act") and its
registration as a management investment company under the 1940 Act, current and
effective. AGL will pay the cost of registering the Separate Account as a unit
investment trust under the 1940 Act and registering units of interest under the
Policies under the 1933 Act and keeping such registrations current and
effective.
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(b) At least annually, the Fund or its designee shall provide AGL
with the current prospectus, statement of additional information and any
supplements thereto for the shares of the Series in the form of "camera ready"
copy as set in type or, at the request of AGL, as a diskette in the form sent to
the financial printer. The prospectuses provided by the Fund shall be limited to
only those Series of the Fund that are made available through the Separate
Account to serve as underlying investments. The Fund shall be responsible for
providing the prospectus and/or statement of additional information in the
format (i.e., "camera ready" or diskette) in which it is accustomed to
formatting prospectuses and/or statements of additional information. The
Distributor shall bear the expense of providing the prospectus and/or statement
of additional information, and any supplements thereto, in such format (e.g.
typesetting expenses), and AGL shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses and/or statements of
additional information. At AGL's option and expense, once a year (or more
frequently if the prospectus and/or statement of additional information for the
shares is supplemented or amended), AGL may cause the Fund's prospectus and/or
statement of additional information to be printed separately and/or together in
one document with the prospectus and/or statement of additional information for
other investment companies and/or for the Policies. AGL shall be responsible for
the costs of printing the Fund's prospectus and/or statement of additional
information, either separately or in combination as aforesaid, and distribution
to existing Policy owners whose Policies are funded by such shares and to
prospective purchasers of Policies.
(c) The Fund and AGL will each bear one-half of the costs of
preparing, filing with the SEC and setting for printing the Fund's periodic
reports to shareholders, the Fund proxy material and other shareholder
communications (collectively "Fund Reports") provided to existing owners under
the Policies (collectively, "Participants") and AGL will bear the costs of
delivering the Fund Reports to Participants.
(d) AGL will bear the costs of preparing, filing with the SEC,
setting for printing, printing and delivering to Participants the Separate
Account's prospectus, statement of additional information and any supplements
thereto (collectively, the "Separate Account Prospectus"), periodic reports to
Participants, voting instruction solicitation material, and other Participant
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communications.
3.3 Parties to Cooperate.
--------------------
The Fund, AGL, AGSI and the Distributor each agrees to cooperate with the
others, as applicable, in arranging to print, mail and/or deliver combined or
coordinated prospectuses or other materials of the Fund and Separate Account.
Section 4. Legal Compliance
----------------------------
4.1 Tax Laws.
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(a) The Fund represents and warrants that each Series is currently
qualified as a regulated investment company ("RIC") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), and represents that it
will make every effort to qualify and to maintain qualification of each Series
as a RIC. The Fund or the Distributor will notify AGL immediately upon having a
reasonable basis for believing that a Series has ceased to so qualify or that it
might not so qualify in the future.
(b) AGL represents and warrants that the Policies are currently and
at the time of issuance will be treated as life insurance policies under
applicable provisions of the Code and that it will make every effort to maintain
such treatment. AGL will notify the Fund and the Distributor immediately upon
having a reasonable basis for believing that any of the Policies have ceased to
be so treated or that they might not be so treated in the future.
(c) The Fund represents and warrants that each Series is currently
in compliance with the diversification requirements set forth in Section 817(h)
of the Code and Section 1.817-5 of the regulations under the Code, and the Fund
represents that it will make every effort to maintain each Series' compliance
with such diversification requirements. The Fund or the Distributor will notify
AGL immediately upon having a reasonable basis for believing that a Series has
ceased to so comply or that a Series might not so comply in the future.
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(d) AGL represents and warrants that the Separate Account is a
"segregated asset account" and that interests in the Separate Account are
offered exclusively through the purchase of or transfer into a "variable
contract," within the meaning of such terms under Section 817(h) of the Code and
the regulations thereunder. AGL will make every effort to continue to meet such
definitional requirements, and it will notify the Fund and the Distributor
immediately upon having a reasonable basis for believing that such requirements
have ceased to be met or that they might not be met in the future.
quarter.
(e) The Fund represents that, under the terms of its investment
advisory agreements with Key Asset Management Company (the "Adviser"), the
Adviser is and will be responsible for managing the Fund in compliance with the
Fund's investment objectives, policies and restrictions as set forth in the Fund
Prospectus. The Fund represents that these objectives, policies and
restrictions do and will include operating as a RIC in compliance with
Subchapter M of the Code and Section 817(h) of the Code and regulations
thereunder. The Fund has adopted and will maintain procedures for ensuring that
the Fund is managed in compliance with Subchapter M and Section 817(h) and
regulations thereunder. On request, the Fund shall also provide AGL with such
materials, cooperation and assistance as may be reasonably necessary for AGL or
any appropriate person designated by AGL to review from time to time the
procedures and practices of the Adviser or each sub-investment adviser to the
Fund for ensuring that the Fund is managed in compliance with Subchapter M and
Section 817(h) and regulations thereunder.
In the event of any noncompliance regarding its status as a RIC, the Fund will
pursue those efforts necessary to enable each affected Series to qualify once
again for treatment as a RIC in compliance with Subchapter M, including
cooperation in good faith with AGL. If the Fund does not so cure the
noncompliance regarding its status under Section 817(h), the Fund will cooperate
in good faith with AGL's efforts to obtain a ruling and closing agreement, as
provided in Revenue Procedure 92-25 issued by the Internal Revenue Service (or
any applicable ruling or procedure subsequently issued by the Internal Revenue
Service), that the Series satisfies Section 817(h) for the period or periods of
non-compliance.
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4.2 Insurance and Certain Other Laws.
--------------------------------
(a) The Distributor and the Fund make no representation as to
whether any aspect of the Fund's operations complies with the insurance laws or
regulations of the various states. The Fund will use reasonable efforts to
comply with any applicable state insurance laws or regulations, to the extent
specifically requested in writing by AGL.
(b) AGL represents and warrants that (i) it is an insurance company
duly organized, validly existing and in good standing under the insurance laws
of the State of Texas and the regulations thereunder, and has full corporate
power, authority and legal right to execute, deliver and perform its duties and
comply with its obligations under this Agreement, (ii) it has legally and
validly established and maintains the Separate Account as a segregated asset
account under Article 3.75 of the Texas Insurance Code, and (iii) the Policies
comply in all material respects with all other applicable federal and state laws
and regulations.
(c) AGL and AGSI represent and warrant that AGSI is a business
corporation duly organized, validly existing, and in good standing under the
laws of the State of Texas and has full corporate power, authority and legal
right to execute, deliver, and perform its duties and comply with its
obligations under this Agreement.
(d) The Distributor represents and warrants that it is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Ohio and has full power, authority and legal right to
execute, deliver, and perform its duties and comply with its obligations under
this Agreement.
(e) The Fund represents and warrants that the Fund is a business
trust duly organized, validly existing, and in good standing under the laws of
the state of Delaware and has full power, authority, and legal right to execute,
deliver, and perform its duties and comply with its obligations under this
Agreement.
4.3 Securities Laws.
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(a) AGL represents and warrants that (i) it has registered the
Separate Account as a unit investment trust in accordance with the provisions of
the 1940 Act to serve as a segregated investment account for its variable life
insurance policies, including the Policies, (ii) the Separate Account does and
will comply in all material respects with the requirements of the 1940 Act and
the rules thereunder, (iii) the Separate Account's 1933 Act registration
statement relating to the Policies, together with any amendments thereto, will
at all times comply in all material respects with the requirements of the 1933
Act and the rules thereunder,(iv) the Separate Account Prospectus will at all
times comply in all material respects with the requirements of the 1933 Act and
the rules thereunder; and (v) interests in the Separate Account pursuant to the
Policies will be registered under the 1933 Act to the extent required by the
1933 Act and the Policies will be duly authorized for issuance and sold in
compliance with all applicable federal and state laws and that the sale of the
Policies will comply in all material respects with state insurance suitability
requirements.
(b) The Fund represents and warrants that (i) Fund shares sold
pursuant to this Agreement will be registered under the 1933 Act to the extent
required by the 1933 Act, (ii) the Fund is and will remain registered under the
1940 Act to the extent required by the 1940 Act, and (iii) the Fund will amend
the registration statement for its shares under the 1933 Act and itself under
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares.
(c) The Fund represents and warrants that (i) the Fund does and will
comply in all material respects with the requirements of the 1940 Act and the
rules thereunder, (ii) its 1933 Act registration statement, together with any
amendments thereto, will at all times comply in all material respects with the
requirements of the 1933 Act and rules thereunder, and (iii) the Fund Prospectus
will at all times comply in all material respects with the requirements of the
1933 Act and the rules thereunder.
(d) The Fund will register and qualify its shares for sale in
accordance with the laws of any state or other jurisdiction only if and to the
extent reasonably deemed advisable by the Fund, AGL or any other life insurance
company utilizing the Fund.
(e) AGL represents and warrants that its directors, officers, and
employees, if any, dealing with the money and/or securities of the Fund are and
shall continue to be at all times
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covered by a blanket fidelity bond or similar coverage in an amount not less
than $2 million. The aforesaid bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
(f) The Fund represents and warrants that its directors, officers,
and employees, if any, dealing with the money and/or securities of the Fund are
and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage in an amount not less than the minimal coverage as required
currently by Rule 17g-1 of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
4.4 Notice of Certain Proceedings and Other Circumstances.
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(a) The Fund shall promptly notify AGL of (i) the issuance by any
court or regulatory body of any stop order, cease and desist order, or other
similar order with respect to the Fund's registration statement under the 1933
Act or the Fund Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or Fund Prospectus (other than SEC Staff comments on
filings received in the ordinary course of business), (iii) the initiation of
any proceedings for that purpose or for any other purpose relating to the
registration or offering of the Fund's shares, or (iv) any other action or
circumstances that may prevent the lawful offer or sale of Fund shares in any
state or jurisdiction, including, without limitation, any circumstances in which
(x) the Fund's shares are not registered and, in all material respects, issued
and sold in accordance with applicable state and federal law or (y) such law
precludes the use of such shares as an underlying investment medium of the
Policies issued or to be issued by AGL. The Distributor and the Fund will make
every reasonable effort to prevent the issuance of any stop order, cease and
desist order or similar order and, if any such order is issued, to obtain the
lifting thereof at the earliest possible time.
(b) AGL or AGSI shall promptly notify the Fund of (i) the issuance
by any court or regulatory body of any stop order, cease and desist order, or
other similar order with respect to the Separate Account's registration
statement under the 1933 Act relating to the Policies or the
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Separate Account Prospectus, (ii) any request by the SEC for any amendment to
such registration statement or Separate Account prospectus, (iii) the initiation
of any proceedings for that purpose or for any other purpose relating to the
registration or offering of the Separate Account interests pursuant to the
Policies, (iv) any other action or circumstances that prevent the lawful offer
or sale of said interests in any state or jurisdiction, including without
limitation, any circumstances in which said interests are not registered and in
all material respects issued and sold in accordance with applicable state and
federal law. AGL and AGSI will make every reasonable effort to prevent the
issuance of any stop order, cease and desist order or similar order and, if any
such order is issued, to obtain the lifting thereof at the earliest possible
time.
4.5 AGL to Provide Documents.
------------------------
AGL will provide to the Fund one complete copy of all SEC registration
statements, Separate Account Prospectuses, annual and semi-annual reports, any
preliminary and final voting instruction solicitation material, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Separate Account or the Policies, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
4.6 Fund to Provide Documents.
-------------------------
The Fund will provide to AGL one complete copy of all SEC registration
statements, Fund Prospectuses, annual and semi-annual reports, any preliminary
and final proxy material, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or its
shares, contemporaneously with the filing of such document with the SEC or other
regulatory authorities.
4.7 Sales Literature
----------------
(a) AGL will furnish, or will cause to be furnished, to the Fund and
Distributor for review, each piece of sales literature or other promotional
material in which the Fund, or any Series thereof, or Adviser is named, before
such material is submitted to any regulatory body for review, and in any event,
at least fifteen (15) Business Days prior to its use. No such material will
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be used if the Fund or Distributor objects to its use in writing within fifteen
(15) Business Days after receipt of such material.
(b) Advertising and sales literature with respect to AGL, the Separate
Account and/or the Policies prepared by the Fund, Distributor or any affiliate
thereof will be submitted to AGL for review before such material is submitted to
any regulatory body for review, and in any event, at least fifteen (15) Business
Days prior to its use. No such material will be used if AGL objects to its use
in writing within fifteen (15) Business Days after receipt of such material.
(c) The Fund and its affiliates and agents shall not give any
information or make any representations on behalf of AGL or concerning AGL, the
Separate Account or the Policies issued by AGL, other than the information or
representations contained in a registration statement or prospectus for such
Policies, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports of the Separate Account or reports
prepared for distribution to owners of such Policies, or in sales literature or
other promotional material approved by AGL or its designee, without the written
permission of AGL.
(d) AGL and its affiliates and agents shall not give any information
or make any representations on behalf of the Fund or concerning the Fund other
than the information or representations contained in a Registration Statement or
prospectus for the Fund, as such Registration Statement and prospectus may be
amended or supplemented from time to time, or in reports of the Fund or reports
prepared for distribution to owners of shares of the Fund or for owners of the
Policies, or in sales literature or other promotional material approved by the
Fund or its designee, without the written permission of the Fund.
(e) For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, electronic media,
telephone or tape recording, videotape display, signs or billboards, motion
pictures or other public media), sales literature (such as any written
communication
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distributed or made generally available to customers or the public, including
brochures, circulars, research reports, market letters, form letters, seminar
texts, or 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,
registration statements, prospectuses, statements of additional information,
shareholder reports and proxy materials, and any other material constituting
sales literature or advertising under National Association of Securities
Dealers, Inc. ("NASD") rules, the 1940 Act or the 1933 Act.
(f) AGL will bear the cost of printing and delivering to prospective
purchasers of the Policies Fund and Separate Account sales literature or other
promotional material and the cost of filing any such materials with, and
obtaining approval from, any state insurance regulatory authorities.
Section 5. Mixed and Shared Funding
------------------------------------
5.1 General.
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The Fund has obtained an order, and AGL has received and reviewed, a copy
of the amended and restated application for exemptive relief filed by the Fund
and certain affiliates on ________________, ________________ with the SEC and
the Exemptive Order issued by the SEC on ___________________________, _______ in
response thereto (Securities and Exchange Commission Release
No._________________ the "Mixed and Shared Funding Order") exempting it from
certain provisions of the 1940 Act and rules thereunder so that the Fund may be
available for investment by certain other entities, including, without
limitation, separate accounts funding variable life insurance policies and
variable annuity contracts, separate accounts of insurance companies
unaffiliated with AGL and trustees of qualified pension and retirement plans
("Mixed and Shared Funding"). The Parties recognize that the SEC has imposed
terms and conditions for such orders that are substantially identical to many of
the provisions of this Section 5. The Parties represent and warrant that they
will comply with the terms and conditions of the SEC order, whether or not
recited in this Section 5.
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5.2 Disinterested Directors.
-----------------------
The Fund agrees that the Board of Trustees shall at all times consist of
Trustees, a majority of whom (the "Disinterested Directors") are not interested
persons of the Adviser or the Distributor within the meaning of Section 2(a)(19)
of the 1940 Act and the rules thereunder and as modified by any applicable
orders of the SEC, except that if this condition is not met by reason of the
death, disqualification, or bona fide resignation of any Trustee or Trustees,
then the operation of this condition shall be suspended (a) for a period of 45
days if the vacancy or vacancies may be filled by the Board of Trustees; (b) for
a period of 60 days if a vote of shareholders is permitted to fill the vacancy
or vacancies; or (c) for such longer period as the SEC may permit.
5.3 Monitoring for Material Irreconcilable Conflicts.
------------------------------------------------
The Fund agrees that the Board of Trustees will monitor for the existence
of any material irreconcilable conflict between the interests of the
Participants of all separate accounts of life insurance companies utilizing the
Fund, including the Separate Account. The concept of a "material irreconcilable
conflict" is not defined by the 1940 Act or the rules thereunder, but the
Parties recognize that such a conflict may arise for a variety of reasons,
including, without limitation:
(a) an action by any state insurance or other 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 regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding;
(d) the manner in which the investments of any Series are being
managed;
(e) a difference in voting instructions given by variable insurance
life insurance policy and variable annuity contract participants or by
participants of different life insurance companies utilizing the Fund; or
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(f) a decision by a life insurance company utilizing the Fund to
disregard the voting instructions of participants. AGL will report any potential
or existing conflicts of which it becomes aware to the Fund's Board of Trustees.
AGL will assist the Board in carrying out its responsibilities under the Mixed
and Shared Funding Order by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This assistance shall
include, but is not limited to, an obligation by AGL to (i) inform the Board
whenever the voting instructions of the Policy owners or Participants are
disregarded, and (ii) to submit to the Board such reports, materials or data as
the Board may reasonably request so that the Board may fully carry out the
obligations imposed upon it by the Mixed and Shared Funding Order, and such
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board. AGL will carry out its responsibilities under this
paragraph with a view only to the interests of the Policy owners and
Participants.
5.4 Conflict Remedies.
-----------------
(a) It is agreed that if it is determined by a majority of the
members of the Board of Trustees or a majority of the Disinterested Trustees
that a material irreconcilable conflict exists affecting AGL, AGL will, at its
own expense and to the extent reasonably practicable (as determined by a
majority of the Disinterested Trustees), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, which steps may
include, but are not limited to:
(i) withdrawing the assets allocable to the separate account
from the Fund or any series and reinvesting such assets in
a different investment medium, including another series of
the Fund or another investment company, or submitting the
question whether such segregation should be implemented to a
vote of all affected Participants and, as appropriate,
segregating the assets of any particular group (e.g.,
variable life insurance contract owners, variable annuity
contract owners or all variable contract owners and
participants of one or more life insurance companies
utilizing the Fund) that votes in favor of such segregation,
or offering to the
16
affected variable contract owners or participants the option
of making such a change; and
(ii) establishing a new registered investment company of the type
defined as a "Management Company" in Section 4(3) of the
1940 Act or a new separate account that is operated as a
Management Company.
(b) If the material irreconcilable conflict arises because of AGL's
decision to disregard Participant voting instructions and that decision
represents a minority position or would preclude a majority vote, AGL may be
required, at the Fund's election, to withdraw the Separate Account's investment
in the Fund. No charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal must take place within six months after the
Fund gives notice to AGL that this provision is being implemented, and until
such withdrawal the Distributor and Fund shall continue to accept and implement
orders by AGL for the purchase and redemption of shares of the Fund.
(c) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to AGL conflicts with the
majority of other state regulators, then AGL will withdraw the Separate
Account's investment in the Fund within six months after the Fund's Board of
Directors informs AGL that it has determined that such decision has created a
material irreconcilable conflict, and until such withdrawal the Distributor and
Fund shall continue to accept and implement orders by AGL for the purchase and
redemption of shares of the Fund.
(d) AGL agrees that any remedial action taken by it in resolving any
material irreconcilable conflict will be carried out at its expense and with a
view only to the interests of Participants.
(e) For purposes hereof, a majority of the Disinterested Directors
will determine whether or not any proposed action adequately remedies any
material irreconcilable conflict. In no event, however, will the Fund or the
Distributor be required to establish a new funding medium for
17
any Policies. AGL will not be required by the terms hereof to establish a new
funding medium for any Policies if any offer to do so has been declined by vote
of a majority of Participants materially adversely affected by the material
irreconcilable conflict.
5.5 Notice to AGL.
-------------
The Fund will promptly make known in writing to AGL the Board of Trustees'
determination of the existence of a material irreconcilable conflict, a
description of the facts that give rise to such conflict and the implications of
such conflict.
5.6 Information Requested by Board of Trustees.
------------------------------------------
AGL will at least annually submit to the Board of Trustees of the Fund such
reports, materials or data as the Board of Trustees may reasonably request so
that the Board of Trustees may fully carry out the obligations imposed upon it
by the provisions hereof, and said reports, materials and data will be submitted
at any reasonable time deemed appropriate by the Board of Trustees. All reports
received by the Board of Trustees of potential or existing conflicts, and all
Board of Trustees actions with regard to determining the existence of a
conflict, notifying life insurance companies utilizing the Fund of a conflict,
and determining whether any proposed action adequately remedies a conflict, will
be properly recorded in the minutes of the Board of Trustees or other
appropriate records, and such minutes or other records will be made available to
the SEC upon request.
5.7 Compliance with SEC Rules.
-------------------------
If, at any time during which the Fund is serving as an investment medium
for variable life insurance policies, 1940 Act Rules 6e-3(T) or, if applicable,
6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with
respect to mixed and shared funding, the Parties agree that they will comply
with the terms and conditions thereof and that the terms of this Section 5 shall
be deemed modified if and only to the extent required in order also to comply
with the terms and conditions of such exemptive relief that is afforded by any
of said rules that are applicable.
Section 6. Termination
-----------------------
18
6.1 Events of Termination.
---------------------
Subject to Section 6.4 below, this Agreement will terminate as to a Series:
(a) at the option of AGL, the Distributor or the Fund upon (I) at
least six months' advance written notice to the other Parties unless a shorter
time period is agreed to by the parties,
(b)at the option of the Fund upon
(i) at least sixty days advance written notice to the other
parties, and
(ii) the approval by (x) a majority of the Disinterested
Directors or (y) a majority vote of the shares of the
affected Series that are held in the corresponding Divisions
of the Separate Account (pursuant to the procedures set
forth in Section 10 of this Agreement for voting Series
shares in accordance with Participant instructions);or
(c) at the option of the Fund upon written notice upon institution of
formal proceedings against AGL or AGSI by the SEC, the NASD, any state insurance
regulator or any other regulatory body regarding AGL's duties under this
Agreement or related to the sale of the Policies, the operation of the Separate
Account, or the purchase of the Fund shares, if, in each case, the Fund
reasonably determines that such proceedings, or the facts on which such
proceedings may be based, have a material likelihood of imposing material
adverse consequences on the Series to be terminated; or
(d) at the option of AGL upon written notice upon institution of
formal proceedings against the Fund, the Adviser or any sub-investment adviser
to the Fund, or the Distributor by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body, if, in each case, AGL
reasonably determines that such proceedings, or the facts on which such
proceedings may be based, have a material likelihood of imposing material
adverse consequences on AGL, AGSI or the Division corresponding to the Series to
be terminated; or
(e) at the option of any Party upon occurrence without written notice
in the event that (i) the Series's shares are not registered and, in all
material respects, issued and sold in accordance with applicable state and
federal law or (ii) such law precludes the use of such shares
19
as an underlying investment medium of the Policies issued or to be issued by
AGL; or
(f) upon termination of the corresponding Division's investment in
the Series pursuant to Section 5 hereof; or
(g) at the option of AGL upon written notice if the Series ceases to
qualify as a RIC under Subchapter M of the Code or under successor or similar
provisions, or if AGL reasonably believes that the Series may fail to so
qualify; or
(h) at the option of AGL upon written notice if the Series fails to
comply with Section 817(h) of the Code or with successor or similar provisions,
or if AGL reasonably believes that the Series may fail to so comply.
(i) at the option of the Fund upon written notice if the Policies
cease to qualify as annuity contracts or life insurance contracts, as
applicable, under the Code, or if the Fund reasonably believes that the Policies
may fail to so qualify; or
(j) at the option of the Fund, upon AGL's breach of any material
provision of this Agreement, which breach has not been cured to the satisfaction
of the Fund within thirty (30) days after written notice of such breach is
delivered to AGL; or
(k) at the option of AGL, upon the Fund's breach of any material
provision of this Agreement, which breach has not been cured to the satisfaction
of AGL within thirty (30) days after written notice of such breach is delivered
to the Fund; or
(l) at the option of the Fund upon written notice, if the Policies
are not registered, issued or sold in accordance with applicable federal and/or
state law and any applicable rules and regulations thereunder; or
(m) effective immediately in the event the agreement is assigned
without the prior
20
written consent of all parties; or
(n) effective immediately in the event the Distributor ceases to be
the distributor for the Funds, unless a successor distributor of the Fund agrees
to assume and perform all of the obligations of the Distributor hereunder.
6.2 Series to Remain Available.
--------------------------
Except (i) as necessary to implement Participant initiated transactions,
(ii) as required by state insurance laws or regulations, (iii) as required
pursuant to Section 5 of this Agreement, or (iv) with respect to any Series as
to which this Agreement has terminated, AGL shall not (x) redeem Fund shares
attributable to the Policies (as opposed to Fund shares attributable to AGL's
assets held in the Separate Account), or (y) prevent Participants from
allocating payments to or transferring amounts from a Series that was otherwise
available under the Policies, until, in either case, 90 calendar days after AGL
shall have notified the Fund or Distributor of its intention to do so.
6.3 Survival of Warranties and Indemnifications.
-------------------------------------------
All warranties and indemnifications will survive the termination of this
Agreement.
6.4 Continuance of Agreement for Certain Purposes.
---------------------------------------------
If any Party terminates this Agreement with respect to any Series pursuant
to Section 6.1 hereof, this Agreement shall nevertheless continue in effect as
to any shares of that Series that are outstanding as of the date of such
termination (the "Initial Termination Date"). This continuation shall extend to
the earlier of the date as of which the Separate Account owns no shares of the
affected Series or a date (the "Final Termination Date") six months following
the Initial Termination Date, except that (i) AGL may, by written notice to the
other Parties, shorten said six month period in the case of a termination
pursuant to Sections 6.1(d), 6.1(e) 6.1(g) 6.1(k) or 6.1(m); (ii) the Fund may,
by written notice to the other Parties, shorten said 6 month period in the case
of a termination pursuant to Sections 6.1(b), 6.1(c), 6.1(f), 6.1(h), 6.1(i),
6.1(j) 6.1(l) or 6.1(m); and (iii) the Distributor will no longer be deemed a
party to this Agreement after the Initial Termination Date in the case of a
termination pursuant to Section 6.1(n).
21
Section 7. Parties to Cooperate Respecting Termination
-------------------------------------------------------
The Parties agree to cooperate and give reasonable assistance to one
another in taking all necessary and appropriate steps for the purpose of
ensuring that the Separate Account owns no shares of a Series after the Final
Termination Date with respect thereto, or, in the case of a termination pursuant
to Section 6.1(a), the termination date specified in the notice of termination.
Section 8. Assignment
----------------------
This Agreement may not be assigned, except with the written consent of each
other Party.
Section 9. Notices
-------------------
Notices and communications required or permitted by Section 2 hereof will
be given by means mutually acceptable to the Parties concerned. Each other
notice or communication required or permitted by this Agreement will be given to
the following persons at the following addresses and facsimile numbers, or such
other persons, addresses or facsimile numbers as the Party receiving such
notices or communications may subsequently direct in writing:
American General Life Insurance
Company
2929 Allen Parkway
Houston, Texas
Attn: General Counsel
FAX: 713-831-1106
American General Securities
Incorporated
2727 Allen Parkway
Houston, Texas 77019
Attn: F. Paul Kovach, Jr.
FAX: 713-831-3366
22
The Victory Variable Insurance Funds
c/o BISYS Fund Services Limited Partnership
3435 Stelzer Road, Suite 1000
Columbus, Ohio 43219
Attn: William J. Tomko
FAX: 614-470-8715
With a copy to:
Key Asset Management
127 Public Square
Cleveland, Ohio 44114
Attn: Kathleen Dennis
FAX: 216-689-9193
BISYS Fund Services Limited Partnership
3435 Stelzer Road, Suite 1000
Columbus, Ohio 43219
Attn: William J. Tomko
FAX: 614-470-8715
Section 10. Voting Procedures
------------------------------
Subject to the cost allocation procedures set forth in Section 3 hereof,
AGL will distribute all proxy material furnished by the Fund to Participants and
will vote Fund shares in accordance with instructions received from
Participants. AGL will vote Fund shares that are (a) not attributable to
Participants or (b) attributable to Participants, but for which no instructions
have been received, in the same proportion as Fund shares for which said
instructions have been received from Participants. AGL agrees that it will
disregard Participant voting instructions only to the extent (i) it would be
permitted to do so pursuant to Rule 6e-3(T)(b)(15)(iii) under the 1940 Act if
the Policies were variable life insurance policies subject to that rule or (ii)
it is permitted under applicable state insurance laws affecting the Fund. AGL
will be responsible for assuring that the Separate Account calculates voting
privileges in a manner consistent with that of other participating life
insurance companies that utilize the Fund.
Section 11. Foreign Tax Credits
--------------------------------
The Fund agrees to consult in advance with AGL concerning any decision to
elect or not to elect pursuant to Section 853 of the Code to pass through the
benefit of any foreign tax credits to
23
its shareholders.
Section 12. Indemnification
----------------------------
12.1 Of Fund and Distributor by AGL.
------------------------------
(a) Except to the extent provided in Sections 12.1(b) and 12.1(c),
below, AGL agrees to indemnify and hold harmless the Fund and the Distributor,
each of their respective affiliates, and each of their directors and officers,
employees and agents, and each person, if any, who controls the Fund or the
Distributor within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 12.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of AGL) or actions in respect thereof (including, to the
extent 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, actions, or settlements
are related to the sale or acquisition of the Fund's shares or the Policies and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Separate Account's 1933 Act registration statement, the
Separate Account Prospectus, the Policies or, to the extent
prepared by AGL or AGSI, or agents thereof, sales literature
or advertising for the Policies (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon
and in conformity with information furnished to AGL or AGSI,
or agents thereof by or on behalf of the Fund, the
Distributor or the Adviser for use in the Separate Account's
1933 Act registration statement, the Separate Account
Prospectus, the Policies, or sales literature or advertising
(or any amendment or supplement to
24
any of the foregoing) or otherwise for use in connection
with the sale of the Policies or Fund shares; or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Fund's 1933 Act registration statement,
Fund Prospectus, sales literature or advertising of the
Fund, or any amendment or supplement to any of the
foregoing, not supplied for use therein by or on behalf of
AGL or AGSI) or wrongful conduct of AGL or AGSI or persons
under their control (including, without limitation, their
employees and "Associated Persons," as that term is defined
in paragraph (m) of Article I of the NASD's By-Laws), in
connection with the sale or distribution of the Policies or
Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Fund's 1933 Act registration statement, Fund
Prospectus, sales literature or advertising of the Fund, or
any amendment or supplement to any of the foregoing, 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 and in conformity with
information furnished to the Fund by or on behalf of AGL or
AGSI for use in the Fund's 1933 Act registration statement,
Fund Prospectus, sales literature or advertising of the
Fund, or any amendment or supplement to any of the
foregoing; or
(iv) arise as a result of any failure by AGL or AGSI to perform
the obligations, provide the services and furnish the
materials required of them under the terms of this
Agreement, or any material breach of
25
any representation and/or warranty made by AGL or AGSI in
this Agreement or arise out of or result from any other
material breach of this Agreement by AGL or AGSI.
(b) AGL shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or actions to which an
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance by that Indemnified Party of
its duties or by reason of its reckless disregard of obligations or duties under
this Agreement or to the Distributor or to the Fund.
(c) AGL shall not be liable under this indemnification provision with
respect to any action against an Indemnified Party unless such Indemnified
Party shall have notified AGL in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
action shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AGL of any such action shall not relieve AGL from
any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against an Indemnified Party, AGL shall be
entitled to participate, at its own expense, in the defense of such action. AGL
also shall be entitled to assume the defense thereof, with counsel approved by
the Indemnified Party named in the action, which approval shall not be
unreasonably withheld. After notice from AGL to such Indemnified Party of AGL's
election to assume the defense thereof, the Indemnified Party will cooperate
fully with AGL and shall bear the fees and expenses of any additional counsel
retained by it, and AGL will not be liable to such Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such
Indemnified Party independently in connection with the defense thereof, other
than reasonable costs of investigation.
12.2 Of AGL and AGSI by Distributor and Fund.
---------------------------------------
(a) Except to the extent provided in Sections 12.2(b) and 12.2 (c)
hereof, the Distributor (but only with respect to the matters described in
clauses (i), (ii) and (iii) below) and the
26
Fund (but only with respect to the matters described in clause (iv) below) agree
to indemnify and hold harmless AGL, AGSI, each of their respective affiliates,
and each of their directors and officers, employees and agents, and each person,
if any, who controls AGL or AGSI, within the meaning of Section 15 of the 1933
Act (collectively, the "Indemnified Parties" for purposes of this Section 12.2)
against any and all losses, claims, damages, liabilities (including amounts paid
in settlement with the written consent of the Distributor) or actions in respect
thereof (including, to the extent 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,
actions, or settlements are related to the sale or acquisition of the Fund's
shares or the Policies and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Fund's 1933 Act registration statement, Fund Prospectus,
sales literature or advertising of the Fund or, to the
extent not prepared by AGL or AGSI or agents thereof, sales
literature or advertising for the Policies (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, if
such statements or omission was made in relaince upon and in
conformity with information furnished by or on behalf of the
Distributor for use in the Fund's registration statement,
the Fund's Prospectus, Fund sales literature or advertising,
or sales literature or advertising covering the Policies or
any amendments or supplements to any of the foregoing.
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations
contained in the Separate Account's 1933 Act registration
statement, Separate Account Prospectus, sales literature or
advertising for the Policies, or any
27
amendment or supplement to any of the foregoing, not
supplied for use therein by or on behalf of the
Distributor, Fund or Adviser) or the wrongful conduct of
the Distributor, or persons under its control (including,
without limitation, their employees and Associated
Persons), in connection with the sale or distribution of
the Policies or Fund shares; or
(iii) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the Separate Account's 1933 Act registration statement,
Separate Account Prospectus, sales literature or
advertising covering the Policies, or any amendment or
supplement to any of the foregoing, 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 in conformity with information
furnished to AGL or AGSI by or on behalf of the Distributor
for use in the Separate Account's 1933 Act registration
statement, Separate Account Prospectus, sales literature or
advertising covering the Policies, or any amendment or
supplement to any of the foregoing; or arise as a result of
any failure by the Distributor to perform the obligations,
provide the services and furnish the materials required of
them under the terms of this Agreement, or any material
breach of any representation and/or warranty made by the
Distributor in this Agreement or arise out of or result
from any other material breach of this Agreement by the
Distributor;
(iv) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
the prospectus covering the Policies, or any amendment or
supplement to any of the foregoing, or
28
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 in conformity with
information furnished to AGL or AGSI by or on behalf of the
Fund for use in the prospectus covering the Policies, or any
amendment or supplement to any of the foregoing; or arise as
a result of any failure by the Fund to perform the
obligations, provide the services and furnish the materials
required of it under the terms of this Agreement, or 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.
(b) Except to the extent provided in Sections 12.2 (c) and 12.2(d)
hereof, the Fund agrees to indemnify and hold harmless the Indemnified Parties
from and against any and all losses, claims, damages, liabilities (including
amounts paid in settlement thereof with the written consent of the Fund) or
actions in respect thereof (including, to the extent reasonable, legal and other
expenses) to which the Indemnified Parties may become subject directly or
indirectly under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or actions directly or indirectly result
from or arise out of the failure of any Series to operate as a regulated
investment company in compliance with (i) Subchapter M of the Code and
regulations thereunder or (ii) Section 817(h) of the Code and regulations
thereunder, including without limitation, any income taxes and related
penalties, rescission charges, liability under state law to Participants
asserting liability against AGL or AGSI pursuant to the Policies, the costs of
any ruling and closing agreement or other settlement with the IRS, and the cost
of any substitution by AGL of shares of another investment company or portfolio
for those of any adversely affected Series as a funding medium for each Separate
Account that AGL reasonably deems necessary or appropriate as a result of the
noncompliance.
(c) The Fund and the Distributor shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or actions to which an Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or
29
negligence in the performance by that Indemnified Party of its duties or by
reason of its reckless disregard of obligations and duties under this Agreement
or to AGL, AGSI or the Separate Account.
(d) The Fund and the Distributor shall not be liable under this
indemnification provision with respect to any action against an Indemnified
Party unless such Indemnified Party shall have notified the Fund and the
Distributor in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the action shall have been
served upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to notify
the Distributor of any such action shall not relieve the Distributor from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case
any such action is brought against an Indemnified Party, the Distributor will be
entitled to participate, at its own expense, in the defense of such action. The
Distributor also shall be entitled to assume the defense thereof, with counsel
approved by the Indemnified Party named in the action, which approval shall not
be unreasonably withheld. After notice from the Distributor to such Indemnified
Party of the Distributor's election to assume the defense thereof, the
Indemnified Party will cooperate fully with the Distributor and shall bear the
fees and expenses of any additional counsel retained by it, and the Distributor
will not be liable to such Indemnified Party under this Agreement for any legal
or other expenses subsequently incurred by such Indemnified Party independently
in connection with the defense thereof, other than reasonable costs of
investigation.
12.3 Effect of Notice.
----------------
Any notice given by the indemnifying Party to an Indemnified Party referred
to in Section 12.1 or 12.2 above of participation in or control of any action by
the indemnifying Party will in no event be deemed to be an admission by the
indemnifying Party of liability, culpability or responsibility, and the
indemnifying Party will remain free to contest liability with respect to the
claim among the Parties or otherwise.
12.4 Successors.
----------
30
A successor by law of any Party shall be entitled to the benefits of the
indemnification contained in this Section 12.
Section 13. Applicable Law
---------------------------
This Agreement will be construed and the provisions hereof interpreted
under and in accordance with Texas law, without regard for that state's
principles of conflict of laws.
Section 14. Execution in Counterparts
--------------------------------------
This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
Section 15. Severability
-------------------------
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement will not
be affected thereby.
Section 16. Rights Cumulative
------------------------------
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, that the Parties are entitled to under federal and state
laws.
Section 17. Headings
--------------------
The Table of Contents and headings used in this Agreement are for purposes
of reference only and shall not limit or define the meaning of the provisions of
this Agreement.
Section 18. Limitation of Liability
-----------------------------------
It is understood and expressly stipulated that neither the shareholders of
shares of any Series nor the
31
Trustees or officers of the Fund or any Series shall be personally liable
hereunder. No Series shall be liable for the liabilities of any other Series.
All persons dealing with the Fund or a Series must look solely to the property
of the Fund or that Series, respectively, for enforcement of any claims against
the Fund or that Series. It is also understood that each of the Series shall be
deemed to be entering into a separate Agreement with AGL so that it is as if
each of the Series had signed a separate Agreement with AGL and that a single
document is being signed simply to facilitate the execution and administration
of the Agreement.
Section 19
----------
No provision of this Agreement may be amended or modified in any manner except
by a written agreement properly authorized and executed by all Parties.
32
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized officers
signing below.
AMERICAN GENERAL LIFE INSURANCE COMPANY
By:_________________________________
Title:______________________________
AMERICAN GENERAL SECURITIES INCORPORATED
By:_________________________________
Title:______________________________
THE VICTORY VARIABLE INSURANCE FUNDS
By:_________________________________
Title:______________________________
BISYS FUND SERVICES LIMITED PARTNERSHIP
BISYS Fund Services, Inc.
Its General Partner
By:_________________________________
Title:______________________________
33