Exhibit (8)(j)(i)
SALES AGREEMENT
THIS AGREEMENT is made by an between NEUBERGER & BERMAN ADVISERS MANAGEMENT
TRUST ("TRUST"), a Massachusetts business trust, NEUBERGER & BERMAN MANAGEMENT
INCORPORATED ("N&B MANAGEMENT"), a New York corporation, and AMERICAN GENERAL
LIFE INSURANCE COMPANY ("LIFE COMPANY"), a life insurance company organized
under the laws of the State of Texas.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940 ("'40 Act") as an open-end
diversified management investment company; and
WHEREAS, TRUST is organized as a series fund, comprised of several
Portfolios which are listed on Appendix A hereto; and
WHEREAS, TRUST was initially organized to act as the funding vehicle for
certain variable life insurance and/or variable annuity contracts ("variable
contracts") offered by life insurance companies through separate accounts of
such life insurance companies and now also offers its shares to certain
qualified pension and retirement plans; and
WHEREAS, N&B MANAGEMENT is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and as a broker-dealer under the
Securities Exchange Act of 1934, as amended; and
WHEREAS, N&B MANAGEMENT is the investment adviser to the TRUST and the
distributor of the shares of the TRUST; and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer variable contracts and is
desirous of having the TRUST as one of the underlying funding vehicles for such
variable contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned variable contracts and the TRUST is authorized to sell such
shares to LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST and N&B MANAGEMENT agree as follows:
1. TRUST will make available to the designated Separate Accounts of LIFE
COMPANY shares of the selected Portfolios for investment of purchase payments of
variable contracts allocated to the designated Separate Accounts as provided in
the TRUST's Prospectus.
2. TRUST represents and warrants that all shares of the Portfolios of
TRUST will be sold only to other insurance companies which have agreed to
participate in TRUST to fund their
separate accounts and/or to certain qualified pension and other retirement
plans, all in accordance with the requirements of Section 817(h) of the Internal
Revenue Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5.
Shares of the Portfolios of TRUST will not be sold directly to the general
public.
3. (a) TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section
3(a), LIFE COMPANY shall be the designee of TRUST for receipt of such orders
from LIFE COMPANY and receipt by such designee shall constitute receipt by
TRUST; provided that TRUST receives notice of such order by 9:30 a.m. New York
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which TRUST
calculates its net asset value pursuant to the rules of the SEC.
(b) TRUST agrees to redeem for cash, on LIFE COMPANY's request, any
full or fractional shares of TRUST held by LIFE COMPANY, executing such requests
on a daily basis at the net asset value next computed after receipt by TRUST or
its designee of the request for redemption. For purposes of this Section 3(b),
LIFE COMPANY shall be the designee of TRUST for receipt of requests for
redemption from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such request for
redemption by 9:30 a.m. New York time on the next following Business Day.
(c) TRUST shall make the net asset value per share for the selected
Portfolio)s) available to LIFE COMPANY on a daily basis as soon as reasonably
practical after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:15 p.m. New York time.
If the TRUST provides LIFE COMPANY with the incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any error in
the calculation of net asset value, dividend and capital gain information
greater than or equal to $.01 per share of the TRUST, shall be reported
immediately upon discovery to LIFE COMPANY. Any error of a lesser amount shall
be corrected in the next Business Day's net asset value per share for the TRUST.
(d) At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 3(c) to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by 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 TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase of redemption orders so determined shall
be transmitted to the TRUST by LIFE COMPANY by 9:30 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 3(a) and 3(b) hereof.
(e) If LIFE COMPANY's order requests the purchase of TRUST shares,
LIFE COMPANY shall pay for such purchase by wiring federal funds to the TRUST or
its designated
custodial account on the day the order is transmitted by LIFE COMPANY. If LIFE
COMPANY's order requests a net redemption resulting in a payment of redemption
proceeds to LIFE COMPANY, the TRUST shall wire the redemption proceeds to LIFE
COMPANY by the next Business Day, unless doing so would require the TRUST to
dispose of portfolio securities or otherwise incur additional costs, but in such
event, proceeds shall be wired to LIFE COMPANY within seven days and the TRUST
shall notify the person designated in writing by LIFE COMPANY as the recipient
for such notice of such delay by 3:00 p.m. New York Time the same Business Day
that LIFE COMPANY transmits the redemption order to the TRUST. If LIFE COMPANY's
order requests the application of redemption proceeds from the redemption of
shares to the purchase of shares of another fund managed or distributed by N&B
MANAGEMENT, the TRUST shall so apply such proceeds the same Business Day that
LIFE COMPANY transmits such order to the TRUST.
4. (a) TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual portfolio) documents,
and any supplements thereto, to existing variable contract owners of LIFE
COMPANY:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
LIFE COMPANY will submit any bills for printing, duplicating and/or mailing
costs, relating to the TRUST documents described above, to the TRUST for
reimbursement by the TRUST. LIFE COMPANY shall monitor such costs and shall use
its best efforts to control these costs. LIFE COMPANY will provide the TRUST on
a semi-annual basis, or more frequently as reasonably requested by the TRUST,
with a current tabulation of the number of existing variable contract owners of
LIFE COMPANY whose variable contract values are invested in the TRUST. This
tabulation will be sent to the TRUST in the form of a letter signed by a duly
authorized officer of LIFE COMPANY attesting to the accuracy of the information
contained in the letter.
(b) TRUST will provide LIFE COMPANY, with respect to prospective
variable contract owners of LIFE COMPANY, the following TRUST (or individual
Portfolio) documents, and any supplements thereto:
(i) camera ready copy of the current prospectus for printing by
the LIFE COMPANY;
(ii) a copy of the statement of additional information suitable
for duplication;
(iii) camera ready copy of proxy material suitable for printing;
and
(iv) camera ready copy of the annual and semi-annual reports for
printing by the LIFE COMPANY.
5. (a) LIFE COMPANY will furnish, or will cause to be furnished, to the
TRUST and N&B MANAGEMENT, each piece of sales literature or other promotional
material in which the TRUST or N&B MANAGEMENT is named, at least 15 Business
Days prior to its intended use. No such material will be used if the TRUST or
N&B MANAGEMENT objects to its use in writing within 10 Business Days after
receipt of such material.
(b) The TRUST and N&B MANAGEMENT will furnish, or will cause to be
furnished, to LIFE COMPANY, each piece of sales literature or other promotional
material in which LIFE COMPANY is named, at least 15 Business Days prior to its
intended use. No such material will be used if LIFE COMPANY objects to its use
in writing within 10 Business Days after receipt of such material.
(c) 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, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication 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.
rules, the Act or the Securities Act of 1933 ("'33 Act").
6. Each Portfolio of the TRUST will comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, relating to the diversification
requirements for variable annuity, endowment, or life insurance contracts and
any amendments or other modifications to such Section or Regulations. In the
event the TRUST becomes aware that any Portfolio of the TRUST has failed to
comply, it will take all reasonable steps (a) to notify LIFE COMPANY of such
failure, and (b) to adequately diversify the Portfolio so as to achieve
compliance.
7.(a) LIFE COMPANY agrees to indemnify and hold harmless TRUST and N&B
MANAGEMENT and each trustee of the Board of Trustees of TRUST and officers and
each person, if any, who controls TRUST and each of the directors and officers
of N&B MANAGEMENT and each person, if any, who controls N&B MANAGEMENT within
the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of LIFE COMPANY, which consent shall not be unreasonably withheld) or
litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or holding of
TRUST's shares or the variable contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in
the Registration Statement or
prospectus for the variable contracts or contained in the
variable contracts or sales literature for the variable
contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and
in conformity with information furnished to LIFE COMPANY by
or on behalf of TRUST or N&B MANAGEMENT for use in the
Registration Statement or prospectus for the variable
contracts or in the variable contracts or sales literature
(or any amendment or supplement) or otherwise for use in
connection with the sale of the variable contracts or TRUST
shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or
sales literature of TRUST not supplied by LIFE COMPANY, or
persons under its control) or wrongful conduct of LIFE
COMPANY or persons under its control, with respect to the
sale or distribution of the variable contracts or TRUST
shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature of TRUST or any
amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading if such statement or omission or
such alleged statement or omission was made in reliance
upon and in conformity with information furnished to TRUST
for inclusion therein by or on behalf of LIFE COMPANY; or
(iv) arise as a result of any failure by LIFE COMPANY to
substantially provide the services and furnish the
materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY, as limited by and
in accordance with the provisions of Sections 7(b) and 7(c)
hereof.
(b) LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
TRUST, whichever is applicable.
(c) LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify LIFE COMPANY of any
such claim shall not relieve LIFE COMPANY from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
COMPANY's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
8. (a) N&B MANAGEMENT agrees to indemnify and hold harmless LIFE
COMPANY and each of its directors and officers and each person, if any, who
controls LIFE COMPANY within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8) against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of N&B MANAGEMENT, which consent shall not
be required with respect to any settlement pursuant to a "Procedure" referred to
in paragraph 8.(d) below), or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or holding of the TRUST's shares or the variable contracts and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained
in the Registration Statement or prospectus or sales
literature of TRUST (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 N&B
MANAGEMENT or TRUST by or on behalf of LIFE COMPANY for
use in the Registration Statement or prospectus for TRUST
or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
variable contracts or TRUST shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the Registration Statement, prospectus or
sales literature for the variable contracts not supplied
by N&B MANAGEMENT or persons under its control) or
wrongful conduct of
TRUST, its adviser or N&B MANAGEMENT or persons under
their control, with respect to the sale or distribution
of the variable contracts or TRUST shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a Registration
Statement, prospectus, or sales literature covering the
variable contracts, or any amendment thereof or
supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in
conformity with information furnished to LIFE COMPANY for
inclusion therein by or on behalf of TRUST or N&B
MANAGEMENT; or
(iv) arise as a result of (a) a failure by TRUST to
substantially provide the services and furnish the
materials under the terms of this Agreement; or (b) a
failure by TRUST to comply with the diversification
requirements of Section 817(h) of the Code; or (c) a
failure by TRUST to qualify as a Regulated Investment
Company under Subchapter M of the Code;
(v) arise out of or result from any material breach of any
representation and/or warranty made by N&B MANAGEMENT in
this Agreement or arise out of or result from any other
material breach of this Agreement by N&B MANAGEMENT, as
limited by and in accordance with the provisions of
Sections 8(b) and 8(c) hereof.
(b) N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
LIFE COMPANY.
(c) N&B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified N&B MANAGEMENT in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify N&B MANAGEMENT of
any such claim shall not relieve N&B MANAGEMENT from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, N&B MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof. N&B MANAGEMENT also shall be entitled
to assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from N&B MANAGEMENT to such party of N&B MANAGEMENT's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and N&B MANAGEMENT
will not be liable to such party under this Agreement for
any legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
(d) In the event of an occurrence described in (iv) (b) or (c) of
paragraph 8. (a) above, the parties hereto agree to cooperate fully in
connection with any efforts by LIFE COMPANY to comply with (a) procedures set
forth in Internal Revenue Service Revenue Procedure 92-25 by which LIFE COMPANY
may request the relief described in Section 1.817-5(a)(2) of the income tax
regulations, to the effect that the Internal Revenue Service treat the
investments of the Separate Account as satisfying the diversification
requirements of Section 817(h) of the Code and the regulations thereunder for
periods during which there was an inadvertent failure to satisfy those
requirements or (b) any modifications or alternatives to such procedures that
the Treasury Department implements in the future. (The procedures described in
clause (a) and (b) of the preceding sentence are referred to herein as the
"Procedures".) Such cooperation shall include, but not be limited to, a full
documentation of the actions that caused the diversification failure and any
reasons why the failure was inadvertent. LIFE COMPANY shall consult with N&B
MANAGEMENT as to how to minimize any liability that may arise as a result of the
Procedure, including, without limitation, demonstrating, pursuant to Section
1.817-5(a) (2) of the income tax regulations, to the Commissioner of the
Internal Revenue Service that such failure was inadvertent. LIFE COMPANY shall
permit N&B MANAGEMENT and its legal and accounting advisors to participate (at
N&B MANAGEMENT's Expense) in any conferences, settlement discussions or other
administrative proceedings with the Internal Revenue Service in connection with
the Procedure. Any written materials to be submitted by LIFE COMPANY to the
Internal Revenue Service in connection with the Procedure (including, without
limitation, any such materials to be submitted to the Internal Revenue Service
pursuant to Section 1.817-5(a)(2) of the income tax regulations), shall be
provided in draft by LIFE COMPANY to N&B MANAGEMENT (together with any
supporting information or analysis) prior to their submission. LIFE COMPANY
shall provide N&B MANAGEMENT and its advisors with such cooperation as N&B
MANAGEMENT shall reasonably request (including, without limitation, by
permitting N&B MANAGEMENT and its accounting and legal advisors to review the
relevant books and records of LIFE COMPANY) in order to facilitate N&B
MANAGEMENT's review of any written submissions provided to it pursuant to the
preceding clause or its assessment of the validity or amount of any claim
against it arising from the Procedure.
9.(a) LIFE COMPANY and its agents will not, in connection with the sale
of TRUST shares, give any information or make any representations on behalf of
the TRUST or concerning the TRUST or N&B MANAGEMENT other than the information
or representations contained in a registration statement or prospectus for the
TRUST, as it may be amended or supplemented from time to time, or in published
reports for the TRUST which are in the public domain or approved by the TRUST or
N&B MANAGEMENT for distribution, or in sales literature or other promotional
material approved by the TRUST or N&B MANAGEMENT.
(b) Neither TRUST nor N&B MANAGEMENT will give any information or
make any representations regarding LIFE COMPANY, or in connection with the sale
of the variable contracts, without the prior written approval of LIFE COMPANY.
10. TRUST represents and warrants that TRUST shares sold pursuant to
this Agreement
shall be registered under the 1933 Act and duly authorized for issuance, and
shall be issued, in compliance in all material respects with applicable law, and
that TRUST is and shall remain registered under the '40 Act for so long as
required thereunder. TRUST further represents and warrants that TRUST currently
qualifies and will make every effort to continue to qualify as a Regulated
Investment Company under Subchapter M of the Code, and to maintain such
qualification (under Subchapter M or any successor or similar provision), and
that TRUST will notify LIFE COMPANY immediately upon having a reasonable basis
for believing that it has ceased to so qualify or that it might not so qualify
in the future. The TRUST will register and qualify its shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by the TRUST or N&B MANAGEMENT.
11. TRUST will provide LIFE COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that related to a separate account promptly after the filing of each
such document with the SEC or other regulatory authority.
12. LIFE COMPANY agrees to inform the Board of Trustees of TRUST of the
existence of or any potential for any material irreconcilable conflict of
interest between the interests of the contract owners of the Separate Accounts
of LIFE COMPANY investing in the TRUST and/or any other separate account of any
other insurance company investing in TRUST upon LIFE COMPANY having knowledge of
same.
Any material irreconcilable 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, 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 Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity contract
owners and variable life insurance contract owners or by contract
owners of different life insurance companies utilizing TRUST; or
(f) a decision by a participating life insurance company to disregard the
voting instructions of contract owners.
LIFE COMPANY will be responsible for assisting the Board of Trustees of
TRUST in carrying out its responsibilities by providing the Board with all
information reasonably necessary for the Board to consider any issue raised
including information as to a decision by LIFE COMPANY to disregard voting
instructions of contract owners.
It is agreed that if it is determined by a majority of the members of the
Board of Trustees of TRUST or a majority of its disinterested Trustees that a
material irreconcilable conflict exists affecting LIFE COMPANY, LIFE COMPANY
shall, at its own expense, take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, which steps may include, but are
not limited to,
(a) withdrawing the assets allocable to some or all of the Separate
Accounts from TRUST or any Portfolio and reinvesting such assets
in a different investment medium, including another Portfolio of
the TRUST or submitting the questions of whether such segregation
should be implemented to a vote of all affected contract owners
and, as appropriate, segregating the assets of any particular
group (i.e. annuity contract owners, life insurance contract
owners or qualified contract owners) that votes in favor of such
segregation, or offering to the affected contract owners the
option of making such a change;
(b) establishing a new registered management investment company or
managed separate account.
If a material irreconcilable conflict arises because of LIFE COMPANY's
decision to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the LIFE
COMPANY may be required, at the TRUST's election, to withdraw its Separate
Account's investment in TRUST. No charge or penalty will be imposed against a
Separate Account of LIFE COMPANY as a result of such a withdrawal. LIFE COMPANY
agrees that any remedial action taken by it in resolving any material conflicts
of interest will be carried out with a view only to the interests of contract
owners.
For purposes hereof, a majority of the disinterested members of the Board
of Trustees of TRUST shall determine whether or not any proposed action
adequately remedies any material irreconcilable conflict. In no event will TRUST
be required to establish a new funding medium for any variable contracts. LIFE
COMPANY shall not be required by the terms hereof to establish a new funding
medium for any variable contracts if an offer to do so has been declined by vote
of a majority of affected contract owners.
TRUST agrees to inform LIFE COMPANY of the existence of or any potential
for any material irreconcilable conflict of interest between the interests of
the contractowners of the Separate Accounts of LIFE COMPANY investing in TRUST
and/or any other separate account of any other insurance company investing in
TRUST (upon TRUST having knowledge of same).
Any material irreconcilable 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, 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 Portfolio are being
managed;
(e) a difference in voting instructions given by variable annuity
contract owners and variable life insurance contract owners or by
contract owners of different participating life insurance companies
utilizing TRUST; or
(f) a decision by a participating life insurance company to disregard the
voting instructions of contract owners.
The Board of Trustees of TRUST shall promptly inform LIFE COMPANY if it
determines that an irreconcilable material conflict exists and the implications
thereof.
13. LIFE COMPANY shall provide pass-through voting privileges, as provided
in this paragraph, to all variable contract owners so long as the staff of the
SEC continues to interpret the '40 Act to require such pass-through voting
privileges for variable contract owners. LIFE COMPANY shall be responsible for
assuring that each of its Separate Accounts participating in TRUST calculates
voting privileges in a manner consistent with other life companies utilizing
TRUST provided that each participating life insurance company enters into an
agreement containing a provision or provisions, which do not vary in any
material respects, from the terms of Section 12 hereof. It is a condition of
this Agreement that LIFE COMPANY will vote shares for which it has not received
voting instructions as well as shares attributable to it in the same proportion
as it votes shares for which it has received instructions.
14. This Agreement shall terminate automatically in the event of its
assignment unless made with the written consent of LIFE COMPANY and TRUST.
15. (a) This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
(b) This Agreement shall terminate without penalty at the option of the
terminating party in accordance with the following provisions:
(i) At the option of LIFE COMPANY or the TRUST at any time from
the date hereof upon 180 days' notice, unless a shorter
time is agreed to by the parties;
(ii) At the option of LIFE COMPANY, if TRUST shares are not
reasonably available to meet the requirements of the
variable contracts as determined by LIFE COMPANY. Prompt
notice of election to terminate shall be furnished by LIFE
COMPANY, said termination to be effective ten days after
receipt of notice unless the TRUST makes available a
sufficient number of shares to reasonably meet the
requirements of the variable contracts within said ten-day
period;
(iii) At the option of LIFE COMPANY, upon the institution of
formal proceedings against the TRUST by the SEC, the
National Association of Securities Dealers, Inc., or any
other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in LIFE COMPANY's
reasonable judgment, materially impair the TRUST's ability
to meet and perform the TRUST's obligations and duties
hereunder. Prompt notice of election to terminate shall be
furnished by LIFE COMPANY with said termination to be
effective upon receipt of notice;
(iv) At the option of LIFE COMPANY, upon a good faith
determination, or at the option of the TRUST upon a
determination by a majority of the Board, or a majority of
disinterested Board members, that an irreconcilable
material conflict exists among the interests of (i) owners
of variable contacts issued by participating life insurance
companies; or (ii) the interest of participating life
insurance companies, with said termination to be effective
upon receipt of notice;
(v) At the option of the TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the National
Association of Securities Dealers, Inc., or any other
regulatory body, the expected or anticipated ruling,
judgment or outcome which would, in the TRUST's reasonable
judgment, materially impair LIFE COMPANY's ability to meet
and perform its obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by the
TRUST with said termination to be effective upon receipt
of notice;
(vi) At the option of the TRUST, if the TRUST shall determine
in its sole judgment reasonably exercised in good faith,
that LIFE COMPANY has suffered a material adverse change
in its business or financial condition or is the subject
of material adverse publicity and such material adverse
change or material adverse publicity is likely to have a
material adverse impact upon the business and operation of
the TRUST and N&B MANAGEMENT, the TRUST shall have
notified LIFE COMPANY in writing of such determination and
its intent to terminate this Agreement, and, if after
consideration of the actions taken by LIFE COMPANY and any
other changes in circumstances since the giving of such
notice, the determination of the TRUST shall continue to
apply on the sixtieth (60/th/) day since giving of such
notice, then such sixtieth day shall be the effective date
of termination;
(vii) At the option of LIFE COMPANY after having been notified
by the TRUST of a termination or proposed termination of
the Investment Advisory Agreement between the TRUST and
N&B MANAGEMENT or its successors, which notice the TRUST
shall provide promptly to LIFE COMPANY, the effective date
of termination of the Agreement to be as determined by
LIFE COMPANY;
(viii) At the option of LIFE COMPANY, in the event the TRUST's
shares are not registered, issued or sold in accordance
with applicable federal law, or such law precludes the use
of such shares of the underlying investment medium of
variable contracts issued or to be issued by LIFE COMPANY.
Prompt notice of election to terminate shall be furnished
by LIFE COMPANY with said termination to be effective upon
receipt of notice;
(ix) At the option of the TRUST upon a reasonable determination
by the Board in good faith that it is no longer advisable
and in the best interests of shareholders for the TRUST to
continue to operate pursuant to this Agreement. Prompt
notice of election to terminate shall be furnished by the
TRUST with said termination to be effective 90 days after
receipt of notice;
(x) At the option of the TRUST if the variable contracts cease
to qualify as annuity contracts or life insurance
contracts, as applicable, under the Code, or if the TRUST
reasonably believes that the variable contacts may fail to
so qualify, with said termination to be effective upon
receipt of notice;
(xi) At the option of LIFE COMPANY, upon the TRUST's breach of
any material provision of this Agreement, which breach has
not been cured to the satisfaction of LIFE COMPANY within
ten days after written notice of such breach is delivered
to the TRUST;
(xii) At the option of the TRUST, upon LIFE COMPANY's breach of
any material provision of this Agreement, which breach has
not been cured to the satisfaction of the TRUST within ten
days after written notice of such breach is delivered to
LIFE COMPANY;
(xiii) At the option of the TRUST, if the variable contracts are
not registered, issued or sold in accordance with
applicable federal and/or state law. Termination shall be
effective immediately upon such occurrence without notice;
or
(xiv) At the option of LIFE COMPANY, if LIFE COMPANY shall
determine, in its sole judgment reasonably exercised in
good faith, that the TRUST is the subject of material
adverse publicity and such material adverse publicity is
likely to have a material adverse impact on the sale of
the variable contracts and/or the operations or business
reputation of LIFE COMPANY, the LIFE COMPANY shall have
notified TRUST in writing of such determination and its
intent to terminate this Agreement, and, if after
consideration of the actions taken by TRUST and any other
changes in circumstances since the giving of such notice,
the determination of the LIFE COMPANY shall continue to
apply on the sixtieth (60/th/) day since giving of such
notice, then such sixtieth day shall be the effective date
of termination.
(c) Notwithstanding any termination of this Agreement pursuant to Section
15(b) hereof, the TRUST at its option may elect to continue to make available
the TRUST's existing shares and additional TRUST shares, as provided below, for
so long as the TRUST desires pursuant to the terms and conditions of this
Agreement, for all variable contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, if the TRUST so elects to make additional
TRUST shares available, the owners of the Existing Contracts or LIFE COMPANY,
whichever shall have legal authority to do so, shall be permitted to reallocate
investments in the TRUST, redeem investments in the TRUST and/or invest in the
TRUST upon the payment of additional premiums under the Existing Contracts. In
the event of a termination of this Agreement pursuant to Section 15(b) hereof,
the TRUST and N&B MANAGEMENT, as promptly as is practicable under the
circumstances, shall notify LIFE COMPANY whether the TRUST shall elect to
continue to make TRUST shares available after such termination. If TRUST shares
continue to be made available after such termination, the provisions of this
Agreement shall remain in effect and thereafter either the TRUST or LIFE COMPANY
may terminate the agreement, as so continued pursuant to this Section 15(c),
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 TRUST, need not be
for more than six months. In determining whether to elect to continue to make
available existing or additional TRUST shares, the TRUST shall act in good
faith, giving due consideration to the interests of existing shareholders,
including holders of Existing Contracts.
16. This Agreement shall be subject to the provisions of the '40 Act and
the rules and regulations thereunder, including any exemptive relief therefrom
and the orders of the SEC setting forth such relief.
17. It is understood by the parties that this Agreement is not to be
deemed an exclusive arrangement.
18. This Agreement is made by TRUST pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on any of the
Trustees or shareholders of TRUST individually, but bind only the property of
TRUST.
Executed this 7/th/ day of July, 1994.
NEUBERGER & BERMAN
ADVISER MANAGEMENT TRUST
ATTEST: CLAUDIA A. BRANDON By: STANLEY EGENER
----------------------- --------------------------------
Stanley Egener, chairman
AMERICAN GENERAL LIFE INSURANCE COMPANY
ATTEST: STEVEN A. GLOVER By: LAWRENCE S. AUSTER
------------------------ --------------------------------
Lawrence S. Auster, Sr. Vice President
NEUBERGER & BERMAN MANAGEMENT
INCORPORATED
ATTEST: ELLEN METZGER By: MICHAEL J. WEINER
------------------------ --------------------------------
Michael J. Weiner
APPENDIX A
Balanced Portfolio
Partners Portfolio