EX-99 B. 8.(iii)
SHAREHOLDER SERVICES AGREEMENT
THIS SHAREHOLDER SERVICES AGREEMENT is made and entered into as of
OCTOBER 1, 1998 BY and between FIRST COVA LIFE INSURANCE COMPANY (the
"Company"), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC. ("ACIM").
WHEREAS, the Company offers to the public certain group and individual
variable annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options
under the Contracts, VP Balanced, VP Income & Growth, VP International and VP
Value (the "Funds"), each of which is a series of mutual fund shares registered
under the Investment Company Act of 1940, as amended, and issued by American
Century Variable Portfolios, Inc. (the "Issuer"); and
WHEREAS, on the terms and conditions hereinafter set forth, ACIM
desires to make shares of the Funds available as investment options under the
Contracts and to retain the Company to perform certain administrative services
on behalf of the Funds, and the Company is willing and able to furnish such
services;
NOW, THEREFORE, the Company and ACIM agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of
this Agreement, ACIM will cause the Issuer to make shares of the Funds available
to be purchased, exchanged, or redeemed, by or on behalf of the Accounts
(defined in Section 7(a) below) through a single account per Fund at the net
asset value applicable to each order. The Funds' shares shall be purchased and
redeemed on a net basis in such quantity and at such time as determined by the
Company to satisfy the requirements of the Contracts for which the Funds serve
as underlying investment media. Dividends and capital gains distributions will
be automatically reinvested in full and fractional shares of the Funds.
2. ADMINISTRATIVE SERVICES. The Company agrees to provide all
administrative services for the Contract owners, including but not limited to
those services specified in EXHIBIT A (the "Administrative Services"). Neither
ACIM nor the Issuer shall be required to provide Administrative Services for the
benefit of Contract owners. The Company agrees that it will maintain and
preserve all records as required by law to be maintained and preserved in
connection with providing the Administrative Services, and will otherwise comply
with all laws, rules and regulations applicable to the marketing of the
Contracts and the provision of the Administrative Services. Upon request, the
Company will provide ACIM or its representatives reasonable information
regarding the quality of the Administrative Services being provided and its
compliance with the terms of this Agreement.
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3. TIMING OF TRANSACTIONS. ACIM hereby appoints the Company as agent
for the Funds for the limited purpose of accepting purchase and redemption
orders for Fund shares from the Contract owners. On each day the New York Stock
Exchange (the "Exchange") is open for business (each, a "Business Day"), the
Company may receive instructions from the Contract owners for the purchase or
redemption of shares of the Funds ("Orders"). Orders received and accepted by
the Company prior to the close of regular trading on the Exchange (the "Close of
Trading") on any given Business Day (currently, 4:00 p.m. Eastern time) and
transmitted to the Funds' transfer agent by 8:30 a.m. Eastern time on the next
Business Day, will be executed at the net asset value determined as of the Close
of Trading on such Business Day. Any Orders received by the Company on such day
but after the Close of Trading, and all Orders that are transmitted to the
Funds' transfer agent after 8:30 a.m. Eastern time on the next Business Day,
will be executed at the net asset value determined as of the Close of Trading on
the next Business Day following the day of receipt of such Order. The day as of
which an Order is executed by the Funds' transfer agent pursuant to the
provisions set forth above is referred to herein as the "Trade Date".
4. PROCESSING OF TRANSACTIONS.
(a) If transactions in Fund shares are to be settled through the
National Securities Clearing Corporation's Mutual Fund Settlement, Entry, and
Registration Verification (Fund/SERV) system, the terms of the FUND/SERV
AGREEMENT, between Company and American Century Services Corporation, shall
apply.
(b) If transactions in Fund shares are to be settled directly with the
Funds' transfer agent, the following provisions shall apply:
(1) By 6:30 p.m. Eastern time on each Business Day, ACIM (or
one of its affiliates) will provide to the Company via facsimile or other
electronic transmission acceptable to the Company the Funds' net asset value,
dividend and capital gain information and, in the case of income funds, the
daily accrual for interest rate factor (mil rate), determined at the Close of
Trading. If ACIM (or one of its affiliates) provides the Company with a
materially incorrect net asset value for any Fund, the Company, on behalf of the
Accounts, shall be entitled to an adjustment to the number of shares purchased
or redeemed to reflect the correct share net asset value. Any material error in
the calculation of net asset value per share, dividend or capital-gain
information shall be reported to the Company promptly upon discovery.
(2) By 8:30 a.m. Eastern time on each Business Day, the
Company will provide to ACIM via facsimile or other electronic transmission
acceptable to ACIM a report stating whether the instructions received by the
Company from Contract owners by the Close of Trading on the immediately prior
Business Day resulted in the Accounts being a net purchaser or net seller of
shares of the Funds. As used in this Agreement, the phrase "other electronic
transmission acceptable to ACIM" includes the use of remote computer terminals
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located at the premises of the Company, its agents or affiliates, which
terminals may be linked electronically to the computer system of ACIM, its
agents or affiliates (hereinafter, "Remote Computer Terminals").
(3) Upon the timely receipt from the Company of the report
described in (2) above, the Funds' transfer agent will execute the purchase or
redemption transactions (as the case may be) at the net asset value computed as
of the Close of Trading on the Trade Date. Payment for net purchase transactions
shall be made by wire transfer to the applicable Fund custodial account
designated by the Funds on the Business Day next following the Trade Date. Such
wire transfers shall be initiated by the Company's bank prior to 4:00 p.m.
Eastern time and received by the Funds prior to 6:00 p.m. Eastern time on the
Business Day next following the Trade Date ("T+l"). If payment for a purchase
Order is not timely received, such Order will be executed at the net asset value
next computed following receipt of payment. Payments for net redemption
transactions shall be made by wire transfer by the Issuer to the account(s)
designated by the Company on T+l; PROVIDED, HOWEVER, the Issuer reserves the
right to settle redemption transactions within the time period set forth in the
applicable Fund's then-current prospectus. On any Business Day when the Federal
Reserve Wire Transfer System is closed, all communication and processing rules
will be suspended for the settlement of Orders. Orders will be settled on the
next Business Day on which the Federal Reserve Wire Transfer System is open and
the original Trade Date will apply.
5. PROSPECTUS AND PROXY MATERIALS.
(a) ACIM shall provide the Company with copies of the Issuer's proxy
materials, periodic fund reports to shareholders and other materials that are
required by law to be sent to the Issuer's shareholders. In addition, ACIM shall
provide the Company with a sufficient quantity of prospectuses of the Funds to
be used in conjunction with the transactions contemplated by this Agreement,
together with such additional copies of the Issuer's prospectuses as may be
reasonably requested by Company. If the Company provides for pass-through voting
by the Contract owners, or if the Company determines that pass-through voting is
required by law, ACIM will provide the Company with a sufficient quantity of
proxy materials for each, as directed by the Company. If requested by the
Company, ACIM shall provide such documentation (including a "camera ready" copy
of the new prospectus as set in type or, at the request of the Company, as a
diskette in the form sent to the printer) and other assistance as is reasonably
necessary in order for the parties hereto once a year (or more frequently if the
Funds' prospectuses are supplemented or amended) to have the prospectus or
private offering memorandum for the Contracts and the prospectuses for the Funds
printed together in one document together with other funds available under the
Contracts.
(b) ACIM will provide the Company with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements and all amendments or supplements to any of the above
that relate to the Funds as soon as reasonably practicable after the filing of
each such document with the Securities and Exchange Commission (the "SEC") or
other regulatory authority or is available for shareholders. The Company will
provide ACIM with at least one complete copy of all prospectuses, private
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offering memoranda, statements of additional information, annual and semi-annual
reports, proxy statements and all amendments or supplements to any of the above
that relate to an Account as soon as reasonably practicable after the filing, if
applicable, of each such document with the SEC or other regulatory authority or
after it is available for shareholders.
(c) The cost of preparing, printing and shipping of the prospectuses,
proxy materials, periodic fund reports and other materials of the Issuer to the
Company shall be paid by ACIM or its agents or affiliates; PROVIDED, HOWEVER,
that if at any time ACIM or its agent reasonably deems the usage by the Company
of such items to be excessive, it may, prior to the delivery of any quantity of
materials in excess of what is deemed reasonable, request that the Company
demonstrate the reasonableness of such usage. If ACIM believes the
reasonableness of such usage has not been adequately demonstrated, it may
request that the party responsible for such excess usage pay the cost of
printing (including press time) and delivery of any excess copies of such
materials. Unless the Company agrees to make such payments, ACIM may refuse to
supply such additional materials and ACIM shall be deemed in compliance with
this Section 5 if it delivers to the Company at least the number of prospectuses
and other materials as may be required by the Issuer under applicable law.
(d) The cost of any distribution of prospectuses, proxy materials,
periodic fund reports and other materials of the Issuer to the Contract owners
shall be paid by the Company and shall not be the responsibility of ACIM or the
Issuer.
6. COMPENSATION AND EXPENSES.
(a) The Accounts shall be the sole shareholder of Fund shares
purchased for the Contract owners pursuant to this Agreement (the "Record
Owner"). The Record Owner shall properly complete any applications or other
forms required by ACIM or the Issuer from time to time.
(b) ACIM acknowledges that it will derive a substantial savings in
administrative expenses, such as a reduction in expenses related to postage,
shareholder communications and recordkeeping, by virtue of having a single
shareholder account per Fund for the Accounts rather than having each Contract
owner as a shareholder. In consideration of the Administrative Services and
performance of all other obligations under this Agreement by the Company, ACIM
will pay the Company a fee (the "Administrative Services Fee") equal to 20 basis
points (0.20%) per annum of the average aggregate amount invested by the Company
under this Agreement.
(c) The payments received by the Company under this Agreement are for
administrative and shareholder services only and do not constitute payment in
any manner for investment advisory services or for costs of distribution.
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(d) For the purposes of computing the payment to the Company
contemplated by this Section 6, the average aggregate amount invested by the
Company on behalf of the Accounts in the Funds over a one month period shall be
computed by totaling the Company's aggregate investment (share net asset value
multiplied by total number of shares of the Funds held by the Company) on each
Business Day during the month and dividing by the total number of Business Days
during such month.
(e) ACIM will calculate the amount of the payment to be made pursuant
to this Section 6 at the end of each calendar quarter and will make such payment
to the Company within 30 days thereafter. The check for such payment will be
accompanied by a statement showing the calculation of the amounts being paid by
ACIM for the relevant months and such other supporting data as may be reasonably
requested by the Company and shall be mailed to:
First Cova Life Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
7. REPRESENTATIONS.
(a) The Company represents and warrants that (i) this Agreement has
been duly authorized by all necessary corporate action and, when executed and
delivered, shall constitute the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
First Cova Variable Life Account One (the "Account"), which is a duly authorized
and established separate account under New York insurance law, is exempt from
being registered as a unit investment trust under the Investment Company Act of
1940 (the "1940 Act"), and will serve as an investment vehicle for the
Contracts; (iii) each Contract provides for the allocation of net amounts
received by the Company to an Account for investment in the shares of one or
more specified investment companies selected among those companies available
through the Account to act as underlying investment media; (iv) selection of a
particular investment company is made by the Contract owner under a particular
Contract, who may change such selection from time to time in accordance with the
terms of the applicable Contract; and (v) the activities of the Company
contemplated by this Agreement comply in all material respects with all
provisions of federal and state securities laws applicable to such activities.
(b) ACIM represents that (i) this Agreement has been duly authorized
by all necessary corporate action and, when executed and delivered, shall
constitute the legal, valid and binding obligation of ACIM, enforceable in
accordance with its terms; (ii) the investments of the Funds will at all times
be adequately diversified within the meaning of Section 817(h) of the Internal
Revenue Service Code of 1986, as amended (the "Code"), and the regulations
thereunder, and that at all times while this Agreement is in effect, all
beneficial interests in each of the Funds will be owned by one or more insurance
companies' segregated asset accounts or by any other party permitted under
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Section 1.817-5(f)(3) of the Regulations promulgated under the Code; (iii) each
Fund has elected to be taxed as a "regulated investment company" under
Subchapter M of the Code; (iv) the prospectus of each Fund complies in all
material respects with federal and state securities laws; (v) shares of the
Issuer are registered and authorized for sale in accordance with all federal and
state securities laws; and (vi) it is duly registered and licensed under all
applicable federal and state securities laws where the failure to be so
registered would have a material adverse effect on its business.
8. ADDITIONAL COVENANTS AND AGREEMENTS.
(a) Each party shall comply with all provisions of federal and state
laws applicable to its respective activities under this Agreement. All
obligations of each party under this Agreement are subject to compliance with
applicable federal and state laws.
(b) Each party shall promptly notify the other parties in the event
that it is, for any reason, unable to perform any of its obligations under this
Agreement.
(c) The Company covenants and agrees that all Orders accepted and
transmitted by it hereunder with respect to each Account on any Business Day
will be based upon instructions that it received from the Contract owners, in
proper form prior to the Close of Trading of the Exchange on that Business Day.
The Company shall time stamp all Orders or otherwise maintain records that will
enable the Company to demonstrate compliance with Section 8(c) hereof.
(d) The Company covenants and agrees that all Orders transmitted to
the Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to ACM, shall be sent by or under the authority and direction of a
person designated by the Company as being duly authorized to act on behalf of
the owner of the Accounts. ACIM shall be entitled to rely on the existence of
such authority and to assume that any person transmitting Orders for the
purchase, redemption or transfer of Fund shares on behalf of the Company is "an
appropriate person" as used in Sections 8-107 and 8-401 of the Uniform
Commercial Code with respect to the transmission of instructions regarding Fund
shares on behalf of the owner of such Fund shares. The Company shall maintain
the confidentiality of all passwords and security procedures issued, installed
or otherwise put in place with respect to the use of Remote Computer Terminals
and assumes full responsibility for the security therefor. The Company further
agrees to be responsible for the accuracy, propriety and consequences of all
data transmitted to ACIM by the Company by telephone, telecopy or other
electronic transmission acceptable to ACIM.
(e) The Company agrees that, to the extent it is able to do so, it
will use its best efforts to give equal emphasis and promotion to shares of the
Funds as is given to other underlying investments of the Accounts, subject to
applicable Securities and Exchange Commission rules. In addition, the Company
shall not impose any fee, condition, or requirement for the use of the Funds
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as investment options for the Contracts that operates to the specific prejudice
of the Funds vis-a-vis the other investment media made available for the
Contracts by the Company.
(f) The Company will furnish, or will cause to be furnished, to ACIM
each piece of sales literature or other promotional material in which the Issuer
or ACIM is named, at least fifteen (15) Business Days prior to its intended use.
No such sales literature or promotional material will be used if ACIM objects to
its use in writing within ten (10) Business Days after receipt of such material.
(g) ACIM will furnish, or will cause to be furnished, to the Company,
each piece of sales literature or other promotional material in which the
Company or its Separate Accounts are named, at least fifteen (15) Business Days
prior to its intended use. No such material will be used if the Company objects
to its use in writing within ten (10) Business Days after receipt of such
material.
(h) The Company, its affiliates and agents shall not, without the
written consent of ACIM, make representations concerning the Issuer or the
shares of the Funds except those contained in the then-current prospectus and in
current printed sales literature approved by ACIM or the Issuer. ACIM, its
affiliates and agents, shall not, without the written consent of the Company,
make representations concerning the Company, the Account or the Contracts except
those contained in the then-current registration statement, prospectus or
private offering memorandum and in current printed sales literature or other
promotional material produced or approved by the Company or its designee.
(i) 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.
(the "NASD") rules, the 1940 Act or the Securities Act of 1933.
(j) ACIM will notify the Company as soon as reasonably practicable if
a Fund has ceased to be qualified as a regulated investment company under
Subchapter M of the Code.
9. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither ACIM nor any of its affiliates or the Funds shall use any
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trademark, trade name, service ▇▇▇▇ or logo of the Company, or any variation of
any such trademark, trade name, service ▇▇▇▇ or logo, without the Company's
prior written consent, the granting of which shall be at the Company's sole
option. Except as otherwise expressly provided for in this Agreement, the
Company shall not use any trademark, trade name, service ▇▇▇▇ or logo of the
Issuer, ACIM or any of its affiliates or any variation of any such trademarks,
trade names, service marks, or logos, without the prior written consent of
either the Issuer or ACIM, as appropriate, the granting of which shall be at the
sole option of ACIM and/or the Issuer.
10. PROXY VOTING.
(a) The Company shall provide pass-through voting privileges to all
Contract owners so long as the SEC continues to interpret the 1940 Act as
requiring such privileges. It shall be the responsibility of the Company to
assure that it and the separate accounts of the other Participating Companies
(as defined in Section 12(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners all proxy material
furnished by ACIM and will vote shares in accordance with instructions received
from such Contract owners. The Company shall vote Fund shares for which no
voting instructions are received in the same proportion as shares for which such
instructions have been received. The Company and its agents shall not oppose or
interfere with the solicitation of proxies for Fund shares held for such
Contract owners.
11. INDEMNITY.
(a) ACIM agrees to indemnify and hold harmless the Company and its
officers, directors, employees, agents, affiliates and each person, if any, who
controls the Company within the meaning of the Securities Act of 1933
(collectively, the "Indemnified Parties" for purposes of this Section 11(a))
against any losses, claims, expenses, damages or liabilities (including amounts
paid in settlement thereof) or litigation expenses (including legal and other
expenses) (collectively, "Losses"), to which the Indemnified Parties may become
subject, insofar as such Losses:
(i) arise out of or are based upon any untrue statement of
material fact contained in the registration statement or prospectus of the
Issuer (or any amendment or supplement to any of the foregoing), or arise out of
or are based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that this indemnification shall not apply as to any Indemnified Party
if such statement or omission was made in reliance upon and in conformity with
information furnished to ACIM or the Issuer by or on behalf of the Company for
use in the Issuer's registration statement or prospectus (or any amendment or
supplement) or otherwise for use in connection with the sale of the Contracts or
the Issuer's shares;
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(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in the
registration statement, prospectus, or private placement memorandum for the
Contracts not supplied by ACIM or the Issuer or their agents) or wrongful
conduct of the Issuer or its agents, with respect to the sale or distribution of
the Contracts or the Issuer's shares;
(iii) arise out of any untrue statement of a material fact
contained in a registration statement or prospectus covering the Account or the
Contracts, or any amendment thereof or supplement thereto or the omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if such statement or omission was made in
reliance upon and in conformity with information furnished to the Company for
inclusion therein by or on behalf of the Issuer; or
(iv) result from a breach by ACIM of a material provision
of this Agreement.
ACIM will reimburse any legal or other expenses reasonably incurred by the
Indemnified Parties in connection with investigating or defending any such
Losses. ACIM shall not be liable for indemnification hereunder if such Losses
are attributable to the willful misfeasance, bad faith or negligence of the
Company in performing its obligations under this Agreement or the Company's
reckless disregard of its obligations or duties hereunder.
(b) The Company agrees to indemnify and hold harmless ACIM and the
Issuer, and their respective officers, directors, employees, agents, affiliates
and each person, if any, who controls Issuer or ACIM within the meaning of the
Securities Act of 1933 (collectively, the "Indemnified Parties" for purposes of
this Section 11(b)) against any Losses to which the Indemnified Parties may
become subject, insofar as such Losses:
(i) arise out of or are based upon any untrue statement of any
material fact contained in the registration statement, prospectus or private
offering memorandum for the Contracts or contained in the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or are based
upon the 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 was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Issuer for use in
the registration statement, prospectus or private offering memorandum for the
Contracts or in the Contracts (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or the Issuer's shares;
(ii) arise out of or as a result of statements or
representations (other than statements or representations contained in the
registration statement or prospectus of the Issuer not supplied by the Company
or its agents) or wrongful conduct of the Company or its agents, with respect to
the sale or distribution of the Contracts or the Issuer's shares;
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(iii) arise out of any untrue statement of material fact
contained in a registration statement or prospectus of the Issuer or any
amendment thereof or supplement thereto or the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
and in conformity with information furnished to the Issuer by or on behalf of
the Company;
(iv) result from a breach by the Company of a material
provision of this Agreement; or
(v) result from the use by any person of the Remote Computer
Terminals.
The Company will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. The Company shall not be liable for indemnification hereunder if such
Losses are attributable to the willful misfeasance, bad faith or negligence of
ACIM or the Issuer in performing their obligations under this Agreement or their
reckless disregard of their obligations or duties hereunder.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section 11. In case
any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish to, assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 11 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
(d) If the indemnifying party assumes the defense of any such action,
the indemnifying party shall not, without the prior written consent of the
indemnified parties in such action, settle or compromise the liability of the
indemnified parties in such action, or permit a default or consent to the entry
of any judgment in respect thereof, unless in connection with such settlement,
compromise or consent, each indemnified party receives from such claimant an
unconditional release from all liability in respect of such claim.
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12. POTENTIAL CONFLICTS
(a) The Company has received a copy of an application for exemptive
relief, as amended, filed by the Issuer on December 21, 1987, with the SEC and
the order issued by the SEC in response thereto (the "Shared Funding Exemptive
Order"). The Company has reviewed the conditions to the requested relief set
forth in such application for exemptive relief. As set forth in such
application, the Board of Directors of the Issuer (the "Board") will monitor the
Issuer for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts ("Participating
Companies") investing in funds of the Issuer. An irreconcilable material
conflict may arise for a variety of reasons, including: (i) an action by any
state insurance regulatory authority; (ii) a change in applicable federal or
state insurance, tax, or securities laws or regulations, or a public ruling,
private letter ruling, no-action or interpretative letter, or any similar
actions by insurance, tax or securities regulatory authorities; (iii) an
administrative or judicial decision in any relevant proceeding; (iv) the manner
in which the investments of any portfolio are being managed; (v) a difference in
voting instructions given by variable annuity contract owners and variable life
insurance contract owners; or (vi) a decision by an insurer to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and the
implications thereof
(b) The Company will report any potential or existing conflicts of
which it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order by providing
the Board with all information reasonably necessary for the Board to consider
any issues raised. This includes, but is not limited to, an obligation by the
Company to inform the Board whenever contract owner voting instructions are
disregarded.
(c) If a majority of the Board, or a majority of its disinterested
Board members, determines that a material irreconcilable conflict exists with
regard to contract owner investments in a Fund, the Board shall give prompt
notice to all Participating Companies. If the Board determines that the Company
is responsible for causing or creating said conflict, the Company shall at its
sole cost and expense, and to the extent reasonably practicable (as determined
by a majority of the disinterested Board members), take such action as is
necessary to remedy or eliminate the irreconcilable material conflict. Such
necessary action may include but shall not be limited to:
(i) withdrawing the assets allocable to the Accounts from the
Fund and reinvesting such assets in a different investment medium or submitting
the question of 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 Companies) that
votes in favor of such segregation, or offering to the affected contract owners
the option of making such a change; and/or
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(ii) establishing a new registered management investment
company or managed separate account.
(d) If a material irreconcilable conflict arises as a result of a
decision by the Company to disregard its contract owner voting instructions and
said decision represents a minority position or would preclude a majority vote
by all of its contract owners having an interest in the Issuer, the Company at
its sole cost, may be required, at the Board's election, to withdraw an
Account's investment in the Issuer and terminate this Agreement; 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 members of the Board.
(e) For the purpose of this Section 12, a majority of the
disinterested Board members shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Issuer be required to establish a new funding medium for any Contract. The
Company shall not be required by this Section 12 to establish a new funding
medium for any Contract if an offer to do so has been declined by vote of a
majority of the Contract owners materially adversely affected by the
irreconcilable material conflict.
13. TERMINATION; WITHDRAWAL OF OFFERING.
(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 in accordance with the following
provisions:
(i) At the option of the Company or ACIM 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 the Company, if the Issuer's shares are
not reasonably available to meet the requirements of the Contracts as determined
by the Company. Prompt notice of election to terminate shall be furnished by the
Company, said termination to be effective ten days after receipt of notice
unless the Issuer makes available a sufficient number of shares to reasonably
meet the requirements of the Contracts within said ten-day period;
(iii) At the option of the Company, upon the institution of
formal proceedings against the Issuer or ACIM by the SEC, the NASD, or any other
regulatory body, the expected or anticipated ruling, judgment or outcome of
which would, in the Company's reasonable judgment, materially impair the
Issuer's or ACIM's ability to meet and perform theft obligations and duties
hereunder. Prompt notice of election to terminate shall be furnished by the
Company with said termination to be effective upon receipt of notice;
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(iv) At the option of ACIM, upon the institution of formal
proceedings against the Company by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which would, in
ACIM's reasonable judgment, materially impair the Company's ability to meet and
perform its obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by ACIM with said termination to be effective upon
receipt of notice;
(v) In the event ACIM's shares are not registered, issued or
sold in accordance with applicable state or federal law, or such law precludes
the use of such shares as the underlying investment medium of Contracts issued
or to be issued by the Company. Termination shall be effective upon receipt of
notice by the Company, which ACIM shall provide promptly upon such occurrence;
(vi) At the option of the Issuer if the Contracts cease to
qualify as annuity contracts or life insurance contracts, as applicable, under
the Code, or if ACIM reasonably believes that the Contracts may fail to so
qualify. Termination shall be effective upon receipt of notice by the Company;
(vii) At the option of either party, upon the other party's
breach of any material provision of this Agreement, which breach has not been
cured to the satisfaction of the non-breaching party within ten days after
written notice of such breach is delivered to the breaching party;
(viii) At the option of ACIM, if the Contracts are not
registered, issued or sold in accordance with applicable federal and/or state
law. Termination shall be effective upon receipt of notice by ACIM, which the
Company shall provide promptly upon such occurrence.
Notwithstanding any termination of this Agreement, ACIM will cause the
Issuer to continue to make available additional shares, as provided below, for
so long as the Company desires 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, the owners of the Existing Contracts or the Company,
whichever shall have legal authority to do so, shall be permitted to reallocate
or redeem investments in the Funds. In addition, for a period of 2 years after
the date of termination, ACIM will remain obligated to pay the Company the
Administrative Services Fee for assets attributable to the Existing Contracts.
This Agreement shall survive termination to the extent necessary for each party
to perform its obligations with respect to shares for which the Administrative
Services Fee continues to be due subsequent to such termination.
14. NON-EXCLUSIVITY. Each of the parties acknowledges and agrees that
this Agreement and the arrangement described herein are intended to be
non-exclusive and that each of the parties is free to enter into similar
agreements and arrangements with other entities.
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15. SURVIVAL The provisions of Section 9 (use of names) and Section 11
(indemnity) of this Agreement shall survive termination of this Agreement.
16. AMENDMENT Neither this Agreement, nor any provision hereof, may be
amended, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties hereto.
17. NOTICES. All notices and other communications hereunder shall be
given or made in writing and shall be delivered personally, or sent by telex,
telecopier, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Company:
Cova Financial Services Life Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
To the Issuer or ACIM:
American Century Investment Management, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (office number)
(▇▇▇) ▇▇▇-▇▇▇▇ (telecopy number)
Any notice, demand or other communication given in a manner prescribed in this
Section 17 shall be deemed to have been delivered on receipt.
18. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without
the written consent of all parties to the Agreement at the time of such
assignment. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
14
20. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
21. ENTIRE AGREEMENT. This Agreement, including the attachments
hereto, constitutes the entire agreement between the parties with respect to the
matters dealt with herein, and supersedes all previous agreements, written or
oral, with respect to such matters.
22. COOPERATION. Each party shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
This covenant shall survive any termination of the Agreement.
23. CUMULATIVE RIGHTS. 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.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
FIRST COVA LIFE INSURANCE AMERICAN CENTURY INVESTMENT
COMPANY MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------- ----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President and Director, Executive Vice President
Agency Contracting
15
EXHIBIT A
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
all administrative and shareholder services required or requested under the
Contracts with respect to the Contract owners, including, but not limited to,
the following:
1. Maintain separate records for each Contract owner, which records
shall reflect the shares purchased and redeemed and share balances of such
Contract owners. The Company will maintain a single master account with each
Fund on behalf of the Contract owners and such account shall be in the name of
the Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of
redemptions of shares of the Funds and all dividends and other distributions not
reinvested in shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or
the Contracts, periodic statements showing the total number of shares owned by
the Contract owners as of the statement closing date, purchases and redemptions
of Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf of
the Contract owners in accordance with the procedures set forth in Section 4 to
the Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus,
proxy materials, periodic fluid reports to shareholders and other materials that
the Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be
maintained and preserved in connection with providing the Administrative
Services for the Contracts.
A-1