EXHIBIT 8(f)
PARTICIPATION AGREEMENT
AMONG
PUTNAM VARIABLE TRUST
PUTNAM MUTUAL FUNDS CORP.
AND
AMERICAN GENERAL LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of this ________ day of __________,
1998, among American General Life Insurance Company] (the "Company"), a Texas
corporation, on its own behalf and on behalf of each separate account of the
Company set forth on Schedule A hereto, as such Schedule may be amended from
time to time (each such account hereinafter referred to as the "Account"),
PUTNAM VARIABLE TRUST (the "Trust"), a Massachusetts business trust, and
PUTNAM MUTUAL FUNDS CORP. (the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Trust is an open-end diversified management investment company
and is available to act as the investment vehicle for separate accounts
established for variable life insurance policies and variable annuity
contracts (collectively, the "Variable Insurance Products") to be offered by
insurance companies which have entered into Participation Agreements with the
Trust and the Underwriter (the "Participating Insurance Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several series
of shares, each designated a "Fund" and representing the interest in a
particular managed portfolio of securities and other assets; and
WHEREAS, the Trust has obtained an order from the Securities and Exchange
Commission, dated December 29, 1993 (File No. 812-8612), granting the variable
annuity and variable life insurance separate accounts participating in the
Trust exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b)
of the Investment Company Act of 1940, as amended (the "1940 Act"), and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit
shares of the Trust to be sold to and held by variable annuity and variable
life insurance separate accounts of the Participating Insurance Companies (the
"Shared Funding Exemptive Order"); and WHEREAS, the Trust is registered as an
open-end management investment company under the 1940 Act and the sale of its
shares is registered under the Securities Act of 1933, as amended (the " 1933
Act"); and
WHEREAS, the Company has registered or will register certain variable life
and/or variable annuity contracts under the 1933 Act and any applicable state
securities and insurance law; and
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WHEREAS, each Account is a duly organized, validly existing separate account,
established by resolution of the Board of Directors of the Company, on the
date shown for such Account on Schedule A hereto, to set aside and invest
assets attributable to one or more variable insurance contracts (the
"Contracts"); and
WHEREAS, the Company has registered or will register the Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
(the " 1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares in certain Funds ("Authorized Funds")
on behalf of each Account to fund certain of the Contracts and the Underwriter
is authorized to sell such shares to unit investment trusts
such as each Account at net asset value;
NOW, THEREFORE, in consideration of the promises herein, the Company, the
Trust and the Underwriter agree as follows:
ARTICLE 1. SALE OF TRUST SHARES
1.1 The Underwriter agrees, subject to the Trust's rights under
Section 1.2 and otherwise under this Agreement, to sell to the Company those
Trust shares representing interests in Authorized Funds which each Account
orders, executing such orders on a daily basis at the net asset value next
computed after receipt by the Trust or its designee of the order for the
shares of the Trust. For purposes of this Section 1. 1, the Company shall be
the designee of the Trust for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Trust; provided that
the Trust receives notice of such order by 9:30 a.m. Eastern time on the next
following Business Day. "Business Day" shall mean any day on which the New
York Stock Exchange is open for trading and on which the Trust calculates its
net asset value pursuant to the rules of the Securities and Exchange
Commission. The initial Authorized Funds are set forth in Schedule B, as such
schedule is amended from time to time.
1.2 The Trust agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Trust
shall use reasonable efforts to calculate such net asset value on each day on
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Trustees of the Trust (the "Trustees") may refuse to sell
shares of any Fund to the Company or any other person, or suspend or terminate
the offering of shares of any Fund if such action is required by law or by
regulatory authorities having jurisdiction over the Trust or if the Trustees
determine, in the exercise of their fiduciary responsibilities, that to do so
would be in
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the best interests of shareholders.
1.3 The Trust and the Underwriter agree that shares of the Trust will
be sold only to Participating Insurance Companies and their separate accounts.
No shares of any Fund will be sold to the general public.
1.4 The Trust shall redeem its shares in accordance with the terms of
its then current prospectus. For purposes of this Section 1.4, the Company
shall be the designee of the Trust for receipt of requests for redemption from
each Account and receipt by such designee shall constitute receipt by the
Trust; provided that the Trust receives notice of such request for redemption
by 9:30 a.m., Eastern time, on the next following Business Day.
1.5 The Company shall purchase and redeem the shares of Authorized
Funds offered by the then current prospectus of the Trust in accordance with
the provisions of such prospectus.
1.6 The Company shall pay for Trust shares on the next Business Day
after an order to purchase Trust shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire.
1.7 Issuance and transfer of the Trust's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Trust will be recorded as instructed by the Company to
the Underwriter in an appropriate title for each Account or the appropriate
sub-account of each Account.
1.8 The Underwriter shall furnish prompt notice (by wire or telephone,
followed by written confirmation) to the Company of the declaration of any
income, dividends or capital gain distributions payable on the Trust's shares.
The Company hereby elects to receive all such income dividends and capital
gain distributions as are payable on the Fund shares in additional shares of
that Fund. The Company reserves the right to revoke this election and to
receive all such income dividends and capital gain distributions in cash. The
Underwriter shall notify the Company of the number of shares so issued as
payment of such dividends and distributions.
1.9 The Underwriter shall make the net asset value per share for each
Fund available to the Company on a daily basis as soon as reasonably practical
after the Trust calculates its net asset value per share and each of the Trust
and the Underwriter shall use its best efforts to make such net asset value
per share available by 7:00 p.m. Eastern time.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that
(a) at all times during the term of this Agreement the Contracts
are or will be registered under
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the 1933 Act; the Contracts will be issued and sold in compliance in all
material respects with all applicable laws and the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
The Company further represents and warrants that it is an insurance company
duly organized and in good standing under applicable law and that it has
legally and validly established each Account prior to any issuance or sale
thereof as a separate account under applicable law and has registered or,
prior to any issuance or sale of the Contracts, will register each Account as
a unit investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated investment account for the Contracts; and
(b) the Contracts are currently treated as endowment, annuity or
life insurance contracts, under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), and that it will make every effort to
maintain such treatment and that it will notify the Trust and the Underwriter
immediately upon having a reasonable basis for believing that the Contracts
have ceased to be so treated or that they might not be so treated in the
future.
2.2 The Trust represents and warrants that
(a) at all times during the term of this Agreement Trust shares
sold pursuant to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold by the Trust to the Company in compliance
with all applicable laws, subject to the terms of Section 2.4 below, and the
Trust is and shall remain registered under the 1940 Act. The Trust shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Trust shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Trust or the Underwriter in connection with their sale
by the Trust to the Company and only as required by Section 2.4;
(b) it is currently qualified as a Regulated Investment Company
under Subchapter M of the Code, and that it will use its best efforts to
maintain such qualification (under Subchapter M or any successor provision)
and that it will notify the 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; and
(c) it is lawfully organized and validly existing under the laws
of the Commonwealth of Massachusetts and that it does and will comply in all
material respects with the 1940 Act.
2.3 The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the Trust
shares in accordance with all applicable securities laws applicable to it,
including without limitation the 1933 Act, the 1934 Act, and the 1940 Act.
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2.4 Notwithstanding any other provision of this Agreement, the Trust
shall be responsible for the registration and qualification of its shares and
of the Trust itself under the laws of any jurisdiction only in connection with
the sales of shares directly to the Company through the Underwriter. The Trust
shall not be responsible, and the Company shall take full responsibility, for
determining any jurisdiction in which any qualification or registration of
Trust shares or the Trust by the Trust may be required in connection with the
sale of the Contracts or the indirect interest of any Contract in any shares
of the Trust and advising the Trust thereof at such time and in such manner as
is necessary to permit the Trust to comply.
2.5 The Trust makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
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ARTICLE III. PROSPECTUSES AND PROXY STATEMENTS; VOTING
3.1 The Trust shall provide such documentation (including a
camera-ready copy of its prospectus) and other assistance as is reasonably
necessary in order for the Company once each year (or more frequently if the
prospectus for the Trust is amended) to have the prospectus for the Contracts
and the Trust's prospectus printed together in one or more documents (such
printing to be at the Company's expense).
3.2 The Trust's Prospectus shall state that the Statement of
Additional Information for the Trust is available from the Underwriter or its
designee (or in the Trust's discretion, the Prospectus shall state that such
Statement is available from the Trust), and the Underwriter (or the Trust), at
its expense, shall print and provide such Statement free of charge to the
Company and to any owner of a Contract or prospective owner who requests such
Statement.
3.3 The Trust, at its expense, shall provide the Company with copies
of its reports to shareholders, proxy material and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to the Contract owners, such distribution to be at the expense of
the Company.
3.4 The Company shall vote all Trust shares as required by law and the
Shared Funding Exemptive Order. The Company reserves the right to vote Trust
shares held in any separate account in its own right, to the extent permitted
by law and the Shared Funding Exemptive Order. The Company shall be
responsible for assuring that each of its separate accounts participating in
the Trust calculates voting privileges in a manner consistent with all legal
requirements and the Shared Funding Exemptive Order.
3.5 The Trust will comply with all applicable provisions of the 1940
Act requiring voting by shareholders, and in particular the Trust will either
provide for annual meetings or comply with Section 16(c) of the 1940 Act
(although the Trust is not one of the trusts described in Section 16(c) of
that Act) as well as with Sections 16(a) and, if and when applicable, 16(b).
Further, the Trust will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect
to periodic elections of trustees and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1 Without limiting the scope or effect of Section 4.2 hereof, the
Company shall furnish, or shall cause to be furnished, to the Underwriter each
piece of sales literature or other promotional material (as defined hereafter)
in which the Trust, its investment adviser or the Underwriter is named at
least 15 days prior to its use. No such material shall be used if the
Underwriter objects to such use within five Business Days after receipt of
such
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material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in annual or semi-annual reports or proxy
statements for the Trust, or in sales literature or other promotional material
approved by the Trust or its designee or by the Underwriter, except with the
written permission of the Trust or the Underwriter or the designee of either
or as is required by law.
4.3 The Underwriter or its designee shall furnish, or shall cause to
be furnished, to the Company or its designee, each piece of sales literature
or other promotional material prepared by the Underwriter in which the Company
and/or its separate account(s) is named at least 15 days prior to its use. No
such material shall be used if the Company or its designee objects to such use
within five Business Days after receipt of such material.
4.4 Neither the Trust nor the Underwriter shall give any information
or make any representations on behalf of the Company or concerning the
Company, each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account which
are in the public domain or approved by the Company for distribution to
Contract owners, or in sales literature or other promotional material approved
by the Company or its designee, except with the written permission of the
Company or as is required by law.
4.5 For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e. any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational
or training materials or other communications distributed or made generally
available to some or all registered representatives.
ARTICLE V. FEES AND EXPENSES
5.1 Except as provided in Article VI, the Trust and Underwriter shall
pay no fee or other compensation to the Company under this agreement.
5.2 All expenses incident to performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall bear the expenses for
the cost of registration and
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qualification of the Trust's shares, preparation and filing of the Trust's
prospectus and registration statement, proxy materials and reports, setting
the prospectus and shareholder reports in type, setting in type and printing
the proxy materials, and the preparation of all statements and notices
required by any federal or state law, in each case as may reasonably be
necessary for the performance by it of its obligations under this Agreement.
5.3 The Company shall bear the expenses of (a) printing and
distributing the Trust's prospectus in connection with sales of the Contracts
and (b) distributing the reports to Trust's Shareholders and (c) of
distributing the Trust's proxy materials to owners of the Contracts.
ARTICLE VI. SERVICE FEES
6.1 Provided the Company complies with its obligations under this
Agreement, the Underwriter shall pay the Company a service fee (the "Service
Fee") on shares of the Funds held in the Accounts at the annual rates
specified in Schedule B (excluding any accounts for the Company's own
corporate retirement plans), subject to Section 6.2 hereof.
6.2 The Company understands and agrees that all Service Fee payments
are subject to the limitations contained in each Fund's Distribution Plan,
which may be varied or discontinued at any time, and understands and agrees
that it will cease to receive such Service Fee payments with respect to a Fund
if the Fund ceases to pay fees to the Underwriter pursuant to its Distribution
Plan.
6.3 (a) The Company's failure to provide the services described in
Section 6.4 or otherwise to comply with the terms of this Agreement will
render it ineligible to receive Service Fees; and
(b) the Underwriter may, without the consent of the Company,
amend this Article VI to change the amount of Service Fees or the terms on
which Service Fees are paid or to terminate further payments of Service Fees
upon written notice to the Company.
6.4 The Company will provide the following services to the Contract
Owners purchasing Fund shares:
(i) Maintaining regular contact with Contract owners and
assisting in answering inquiries concerning the Funds;
(ii) Assisting in printing and distributing shareholder reports,
prospectuses and other sale and service literature provided by the
Underwriter;
(iii) Assisting the Underwriter and its affiliates in the
establishment and maintenance of Contract owner and shareholder accounts
and records;
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(iv) Assisting Contract owners in effecting administrative
changes, such as exchanging shares in or out of the Funds;
(v) Assisting in processing purchasing purchase and redemption
transactions; and
(vi) Providing any other information or services as the Contract
owners or the Underwriter may reasonably request.
The Company will support the Underwriter's marketing and servicing
efforts by granting reasonable requests for visits to the Company's offices by
representatives of the Underwriter.
6.5 The Company's compliance with the service requirement set forth in
this Agreement will be evaluated from time to time by the Underwriter's
monitoring of redemption levels of Fund shares held in any Account and by such
other methods as the Underwriter deems appropriate.
ARTICLE VII. DIVERSIFICATION
7.1 The Trust shall use its best efforts to cause each Authorized Fund
to maintain a diversified pool of investments that would, if such Fund were a
segregated asset account, satisfy the diversification provisions of Treas.
Reg. ss. 1.817-5(b)(1) or (2).
ARTICLE VIII. POTENTIAL CONFLICTS
8.1 The Trustees will monitor the Trust for the existence of any
material irreconcilable conflict between the interests of the contract owners
of all separate accounts investing in the Trust. A 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 law 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 Fund are being managed; (e) a difference in
voting instructions given by variable annuity contract and variable life
insurance contract owners; or (f) a decision by an insurer to disregard the
voting instructions of contract owners. The Trust shall promptly inform the
Company if the Trustees determine that a material irreconcilable conflict
exists and the implications thereof.
8.2 The Company will report any potential or existing conflicts of
which it is aware to the Trustees. The Company will assist the Trustees in
carrying out their responsibilities under the Shared Funding Exemptive Order,
by providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised. This includes, but is not limited to,
an obligation by the Company to inform the Trustees whenever Contract owner
voting instructions are disregarded.
8.3 If it is determined by a majority of the Trustees, or a majority
of the
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disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall to the extent reasonably practicable (as determined by a
majority of the disinterested Trustees), take, at the Company's expense,
whatever steps are necessary to remedy or eliminate the material
irreconcilable conflict, up to and including: (1) withdrawing the assets
allocable to some or all of the separate accounts from the Trust or any Fund
and reinvesting such assets in a different investment medium, including (but
not limited to) another Fund of the Trust, or submitting the question whether
such segregation should be implemented to a vote of all affected contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that votes
in favor of such segregation, or offering to the affected contract owners the
option of making such a change; and (2) establishing a new registered
management investment company or managed separate account.
8.4 If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Trust's election, to withdraw the affected
Account's investment in one or more portfolios of the Trust and terminate this
Agreement with respect to such Account; provided, however, that such
withdrawal and termination shall be limited to the extent required by the
foregoing material irreconcilable conflict as determined by a majority of the
disinterested Trustees. No charge or penalty shall be imposed as a result of
such withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this provision is
being implemented, and until the end of that six month period the Underwriter
and Trust shall, to the extent permitted by law and any exemptive relief
previously granted to the Trust, continue to accept and implement orders by
the Company for the purchase (or redemption) of shares of the Trust.
8.5 If a material irreconcilable conflict arises because of a
particular state insurance regulator's decision applicable to the Company to
disregard Contract owner voting instructions and that decision represents a
minority position that would preclude a majority vote, then the Company may be
required, at the Trust's direction, to withdraw the affected Account's
investment in one or more Authorized Funds of the Trust; provided, however,
that such withdrawal and termination shall be limited to the extent required
by the foregoing material irreconcilable conflict as determined by a majority
of the disinterested Trustees. Any such withdrawal and termination must take
place within six (6) months after the Trust gives written notice that this
provision is being implemented, unless a shorter period is required by law,
and until the end of the foregoing six month period (or such shorter period if
required by law), the Underwriter and Trust shall, to the extent permitted by
law and any exemptive relief previously granted to the Trust, continue to
accept and implement orders by the Company for the purchase (and redemption)
of shares of the Trust. No charge or penalty will be imposed as a result of
such withdrawal.
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8.6 For purposes of Sections 8.3 through 8.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any material irreconcilable conflict. Neither the
Trust nor the Underwriter shall be required to establish a new finding medium
for the Contracts, nor shall the Company be required to do so, if an offer to
do so has been declined by vote of a majority of Contract owners materially
adversely affected by the material irreconcilable conflict. In the event that
the Trustees determine that any proposed action does not adequately remedy any
material irreconcilable conflict, then the Company will withdraw the Account's
investment in one or more Authorized Funds of the Trust and terminate this
Agreement within six (6) months (or such shorter period as may be required by
law or any exemptive relief previously granted to the Trust) after the
Trustees inform the Company in writing of the foregoing determination;
provided, however, that such withdrawal and termination shall be limited to
the extent required by any such material irreconcilable conflict as determined
by a majority of the disinterested Trustees. No charge or penalty will be
imposed as a result of such withdrawal.
8.7 The responsibility to take remedial action in the event of the
Trustees' determination of a material irreconcilable conflict and to bear the
cost of such remedial action shall be the obligation of the Company, and the
obligation of the Company set forth in this Article VII shall be carried out
with a view only to the interests of Contract owners.
8.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Trust and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to comply
with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Sections 3.4, 3.5, 8.1, 8.2, 8.3,
8.4 and 8.5 of this Agreement shall continue in effect only to the extent that
terms and conditions substantially identical to such Sections are contained in
such Rule(s) as so amended or adopted.
8.9 The Company has reviewed the Shared Funding Exemption Order and
hereby assumes all obligations referred to therein which are required,
including, without limitation, the obligation to provide reports, material or
data as the Trustees may request as conditions to such Order, to be assumed or
undertaken by the Company.
ARTICLE IX. INDEMNIFICATION
9.1. INDEMNIFICATION BY THE COMPANY
9.1 (a). The Company shall indemnify and hold harmless the Trust and the
Underwriter and each of the Trustees, directors of the Underwriter, officers,
employees or agents of the Trust or the Underwriter and each person, if any,
who controls the Trust or the Underwriter within the
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meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 9.1) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company which consent may not be unreasonably withheld) or litigation
(including reasonable legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) or settlements are related to the sale or
acquisition of the Trust's shares or the Contracts or the performance by the
parties of their obligations hereunder and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
Registration Statement, Prospectus or Statement of Additional
Information for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of
the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Trust for
use in the Registration Statement, Prospectus or Statement of Additional
Information for the Contracts or in the Contracts or sales literature
(or any amendment or supplement) or otherwise for use in connection with
the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations contained in
the Trust's Registration Statement or Prospectus, or in sales literature
for Trust shares not supplied by the Company, or persons under its
control) or wrongful conduct of the Company or persons under its
control, with respect to the sale or distribution of the Contracts or
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 the 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 a statement or omission was
made in reliance upon information furnished to the Trust or the
Underwriter by or on behalf of the Company; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Sections 9.1(b) and
9.1(c) hereof.
9.1 (b) The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified
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Party to the extent 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 the
Trust, whichever is applicable.
9.1 (c) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), on the basis of which the
Indemnified Party should reasonably know of the availability of indemnity
hereunder in respect of such claim but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have
to the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at its own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
Indemnified Party named in the action. After notice from the Company to such
Indemnified Party of the Company's election to assume the defense thereof the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the Company will not be liable to such 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.
9.1 (d) The Underwriter shall promptly notify the Company of the
commencement of any litigation or proceedings against the Trust or the
Underwriter in connection with the issuance or sale of the Trust Shares or the
Contracts or the operation of the Trust.
9.1 (e) The provisions of this Section 9.1 shall survive any termination
of this Agreement.
9.2 INDEMNIFICATION BY THE UNDERWRITER
9.2 (a) The Underwriter shall indemnify and hold harmless the Company
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of this
Section 9.2) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter which consent may not be unreasonably withheld) or litigation
(including reasonable legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions
in respect thereof) or settlements are related to the sale or acquisition of
the Trust's shares or the
13
Contracts or the performance by the parties of their obligations hereunder
and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the sales
literature of the Trust prepared by or approved by the Trust or
Underwriter (or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if
such statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information furnished to
the Underwriter or Trust by or on behalf of the Company for use in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of written statements or
representations (other than statements or representations contained in
the Registration Statement, Prospectus, Statement of Additional
Information or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) of the Underwriter or persons
under its control, with respect to the sale or distribution of the
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, Statement of Additional Information or sales literature
covering the Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission was
made in reliance upon information furnished to the Company by or on
behalf of the Underwriter; or
(iv) arise out of or result from any breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out
of or result from any other breach of this Agreement by the Underwriter;
as limited by and in accordance with the provisions of Sections 9.2(b)
and 9.2(c) hereof.
9.2 (b) The Underwriter 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 and duties under
this Agreement or to each Company or the Account, whichever is applicable.
9.2 (c) The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall
14
have notified the Underwriter 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) on the basis of which the Indemnified Party should reasonably know of
the availability of indemnity hereunder in respect of such claim, but failure
to notify the Underwriter of any such claim shall not relieve the Underwriter
from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the Underwriter will be entitled to participate, at its own expense, in the
defense thereof. The Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the Indemnified Party named in the
action. After notice from the Underwriter to such Indemnified Party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter 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.
9.2 (d) The Company shall promptly notify the Underwriter of the Trust
of the commencement of any litigation or proceedings against it or any of its
officers or directors, in connection with the issuance or sale of the
Contracts or the operation of each Account.
9.2 (e) The provisions of this Section 9.2 shall survive any termination
of this Agreement.
9.3 INDEMNIFICATION BY THE TRUST
9.3 (a) The Trust shall indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act and any director, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section 9.3)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Trust which consent may not
be unreasonably withheld) or litigation (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under any
statute, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the operations of the Trust and:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in a
Registration Statement, Prospectus and Statement of Additional
Information of the 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
15
apply as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the Underwriter or Trust by or
on behalf of the Company for use in the Registration Statement,
Prospectus, or Statement of Additional Information for the Trust (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Trust shares; or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust, as limited by and in accordance with the provisions of
Sections 9.3(b) and 9.3(c) hereof.
9.3 (b) The Trust shall not be liable under the 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 or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Company, the Trust, the
Underwriter or each Account, whichever is applicable.
9.3 (c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against any Indemnified Party unless
such Indemnified Party shall have notified the Trust 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) on the basis of which the Indemnified
Party should reasonably know of the availability of indemnity hereunder in
respect of such claim, but failure to notify the Trust of any such claim shall
not relieve the Trust from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Trust will be entitled to participate, at its own
expense, in the defense thereof. The Trust also shall be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the Indemnified
Party named in the action. After notice from the Trust to such Indemnified
Party of the Trust's election to assume the defense thereof, the Indemnified
Party shall bear the fees and expenses of any additional counsel retained by
it, and the Trust 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.
9.3 (d) The Company agrees promptly to notify the Trust of the
commencement of any litigation or proceedings against it or any of its
officers or, directors, in connection with this Agreement, the issuance or
sale of the Contracts or the sale or acquisition of shares of the Trust.
16
9.3 (e) The provisions of this Section 9.3 shall survive any termination
of this Agreement.
ARTICLE X. APPLICABLE LAW
10.1 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
10.2 This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to,
the Shared Funding Exemptive Order) and the terms hereof shall be interpreted
and construed in accordance therewith.
ARTICLE XI. TERMINATION
11.1. This Agreement shall terminate:
(a) at the option of any party upon 90 days advance written
notice to the other parties; or
(b) at the option of the Trust or the Underwriter in the event
that formal administrative proceedings are instituted against the Company by
the NASD, the Securities and Exchange Commission, the Insurance Commissioner
of the State of Missouri or any other regulatory body regarding the Company's
duties under this Agreement or related to the sales of the Contracts, with
respect to the operation of any Account, or the purchase of the Trust shares,
provided, however, that the Trust or the Underwriter determines in its sole
judgment exercised in good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of the Company to perform
its obligations under this Agreement; or
(c) at the option of the Company in the event that formal
administrative proceedings are instituted against the Trust or Underwriter by
the NASD, the Securities and Exchange Commission, or any state securities or
insurance department or any other regulatory body in respect of the sale of
shares of the Trust to the Company, provided, however, that the Company
determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the
ability of the Trust or Underwriter to perform its obligations under this
Agreement; or
(d) with respect to any Account, upon requisite vote of the
Contract owners having an interest in such Account (or any subaccount) to
substitute the shares of another investment company for the corresponding Fund
shares of the Trust in accordance with the terms of the Contracts for which
those Fund shares had been selected to serve as the underlying investment
17
media. The Company will give 30 days' prior written notice to the Trust of the
date of any proposed vote to replace the Trust's shares; or
(e) with respect to any Authorized Fund, upon 30 days advance
written notice from the Underwriter to the Company, upon a decision by the
Underwriter to cease offering shares of the Fund for sale.
11.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 11.1 (a) may be exercised for any
reason or for no reason.
11.3 No termination of this Agreement shall be effective unless and
until the party terminating this Agreement gives prior written notice to all
other parties to this Agreement of its intent to terminate, which notice shall
set forth the basis for such termination. Such prior written notice shall be
given in advance of the effective date of termination as required by this
Article XI.
11.4 Notwithstanding any termination of this Agreement, subject to
Section 1.2 of this Agreement, the Trust and the Underwriter shall, at the
option of the Company, continue to make available additional shares of the
Trust pursuant to the terms and conditions of this Agreement, for all
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, subject to Section 1.2 of this Agreement, the owners of the
Existing Contracts shall be permitted to reallocate investments in the Trust,
redeem investments in the Trust and/or invest in the Trust upon the making of
additional purchase payments under the Existing Contracts. The parties agree
that this Section 11.4 shall not apply to any termination under Article VIII
and the effect of such Article VIII termination shall be governed by Article
VIII of this Agreement.
11.5 The Company shall not redeem Trust shares attributable to the
Contracts (as opposed to Trust shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract owner
initiated transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally required Redemption"). Upon request,
the Company will promptly furnish to the Trust and the Underwriter an opinion
of counsel for the Company, reasonably satisfactory to the Trust, to the
effect that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms of
the Contracts, subject to Section 1.2 of this Agreement, the Company shall not
prevent Contract owners from allocating payments to an Authorized Fund that
was otherwise available under the Contracts without first giving the Trust or
the Underwriter 90 days notice of its intention to do.
ARTICLE XII. NOTICES
Any notice shall be sufficiently given when sent by registered or
certified mail to the
18
other party at the address of such party set forth below or at such other
address as such party may from time to time specify in writing to the other
party.
If to the Trust:
One Post Office Square
Boston, MA 02109
Attention: John R. Verani
If to the Underwriter:
One Post Office Square
Boston, MA 02109
Attention: General Counsel
If to the Company:
2727-A Allen Parkway
Houston, Tx 77019
Attention: Steven A. Glover
19
ARTICLE XIII. MISCELLANEOUS
13.1 A copy of the Agreement and Declaration of Trust of the Trust is
on file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the
obligations of or arising out of this instrument, including without limitation
Article VII, are not binding upon any of the Trustees or shareholders
individually but binding only upon the assets and property of the Trust.
13.2 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof
or otherwise affect their construction or effect.
13.3 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.4 If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
13.5 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance regulators)
and shall pertmit such authorities reasonable access to its books and records
in connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
13.6 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
13.7 Notwithstanding any other provision of this Agreement, the
obligations of the Trust and the Underwriter are several and, without limiting
in any way the generality of the foregoing, neither such party shall have any
liability for any action or failure to act by the other party, or any person
acting on such other party's behalf.
20
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
AMERICAN GENERAL LIFE INSURANCE COMPANY
By its authorized officer,
Name: _________________________________________
Don M. Ward
Title: Senior Vice President - Variable Products
PUTNAM VARIABLE TRUST
By its authorized officer,
Name: _________________________________________
Title: ________________________________________
PUTNAM MUTUAL FUNDS CORP.
By its authorized officer,
Name: _________________________________________
Title: ________________________________________
21
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
Name of Separate Account and Form Numbers and Names of
Date Established by Board of Directors Contracts Funded by Separate Account
-------------------------------------- ------------------------------------
American General Life Insurance CONTRACT FORM NUMBERS:
Company Separate Account VL-R 97600
Established: May 6, 1997 97610
NAME OF CONTRACT:
Platinum Investor I and Platinum Investor II
Flexible Premium Variable Life Insurance
Policies
SCHEDULE B
FUNDS OF PUTNAM VARIABLE TRUST
AVAILABLE FOR
PURCHASE BY AMERICAN GENERAL LIFE
INSURANCE COMPANY UNDER THIS AGREEMENT
Putnam VT Diversified Income
Putnam VT Growth and Income
Putnam VT International Growth and Income