Exhibit 99.(h)(4)
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into as of November 11,
2003 by and between COUNTRY INVESTORS LIFE ASSURANCE COMPANY (the "Company"),
and AMERICAN CENTURY INVESTMENT SERVICES, INC. ("Distributor").
WHEREAS, the Company offers to the public certain individual variable
annuity and variable life insurance contracts (the "Contracts"); and
WHEREAS, the Company wishes to make available as investment options under
certain of the Contracts as listed in Exhibit A, designated series of mutual
fund shares as listed in Exhibit B (the "Funds") mutual funds registered under
the Investment Company Act of 1940 (the "1940 Act") and issued by American
Century Variable Portfolios, Inc. (the "Issuer"), and
WHEREAS, on the terms and conditions hereinafter set forth, Distributor
desires to make shares of the Funds available as investment options under the
Contracts.
NOW, THEREFORE, the Company and Distributor agree as follows:
1. TRANSACTIONS IN THE FUNDS. Subject to the terms and conditions of this
Agreement, Distributor 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. TIMING OF TRANSACTIONS. Distributor 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") and the Company are 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 9:30 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 that 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 9:30 a.m. Eastern time on the
next Business Day, will be executed at the net asset value determined as of the
Close
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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". A
Fund may refuse to sell shares to the Company if such action is required by law
or by regulatory authorities having jurisdiction, or, in the sole discretion of
the board of Directors of such Fund, acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in the
best interests of the shareholders of such Fund (it being understood that for
this purpose shareholders means Contract owners).
3. PROCESSING OF TRANSACTIONS
The transactions in Fund shares are to be settled directly
with the Funds' transfer agent and the following provisions shall apply:
(a) By 6:30 p.m. Eastern time on each Business Day, Distributor (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.
(b) By 9:30 a.m. Eastern time on the Business Day next following the
Trade Date, the Company will provide to Distributor via facsimile or other
electronic transmission acceptable to Distributor a report stating whether
the instructions received by the Company from Contract owners by the Close
of Trading on such 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 Distributor"
includes the use of remote computer terminals located at the premises of
the Company, its agents or affiliates, which terminals may be linked
electronically to the computer system of Distributor, its agents or
affiliates (hereinafter, "Remote Computer Terminals"). Distributor shall
provide additional time to Company to forward the report described herein
in the event that Distributor (or one of its affiliates) is unable to meet
the 6:30 p.m. time referenced in Section 3(a) above. Such additional time
shall be at least equal to the additional time that the Distributor takes
to make net asset values available to the Company to allow Company to
arrive at a net order.
(c) Upon the timely receipt from the Company of the report described
in (2b) 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. If the Company is a
net purchaser (proceeds from the redemption of shares of the Funds are not
sufficient to pay for the purchase of shares of other Funds by the
Account), then payment 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
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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+1"). If payment for a
purchase Order is not timely received, such Order will be, at Distributor's
option, either (i) executed at the net asset value determined on the Trade
Date, and the Company shall be responsible for all costs to Distributor or
the Funds resulting from such delay, or (ii) 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+1; PROVIDED, HOWEVER, the Issuer
reserves the right to settle redemption transactions within a reasonably
sufficient time after the date the order is placed in order to enable the
Company to pay redemption proceeds within the time specified in Section
22(e) of the 1940 Act or such shorter period of time as may be required by
law. 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.
4. PRICING ERRORS.
(a) In the event any adjustment is required to correct any error in the
computation of the net asset value of a Fund's shares at the shareholder level
as a result of a pricing error that is deemed to be material under the pricing
policy of the Fund's Board of Directors or which Distributor otherwise deems
necessary to correct at the shareholder level, Distributor shall notify Company
as soon as reasonably practical after discovering the need for such adjustment.
(b) Any such notice shall state for each day for which the error occurred
the incorrect price, the correct price and, to the extent communicated to the
Fund's shareholders, the reason for the price change. Company may send this
notice or a derivation thereof (so long as such derivation is approved in
advance by Distributor) to Contract owners whose accounts are affected by the
price change.
(c) If as a result of any such error the Account maintained by the Fund
receives an amount in excess of the amount to which it otherwise would be
entitled, Distributor and Company agree to evaluate the situation together, on a
case by case basis, with a goal toward pursuing an appropriate course of action.
In the event the Company makes any overpayments to Contract owners attributable
to the provision of materially incorrect share net asset value information that
is not subsequently corrected and communicated to the Company in sufficient time
to prevent overpayment, Distributor agrees to reimburse the Company for the
amount of overpayments. If an adjustment to the Account is necessary,
Distributor shall reimburse Company its reasonable out-of-pocket expenses in
correcting each Contract owner's records, communicating with Contract owners
regarding any adjustment to their accounts, and mailing out corrected statements
to Contract owners.
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5. PROSPECTUS AND PROXY MATERIALS.
(a) Distributor 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,
Distributor 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 and statements of additional information 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, Distributor will provide the Company with a sufficient quantity
of proxy materials for each Contract owner, as directed by the Company.
(b) The cost of preparing, printing and shipping of the prospectuses,
statements of additional information, periodic fund reports and other materials
of the Issuer to the Company shall be paid by Distributor or its agents or
affiliates; PROVIDED, HOWEVER, that if at any time Distributor or its agent in
good faith 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 Distributor believes in good faith 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, Distributor may
refuse to supply such additional materials and Distributor 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.
(c) If the Company so requests, Distributor shall provide the Issuer's
prospectuses, statements of additional information, periodic fund reports and
other materials of the Issuer to the Company by electronic file instead of
by paper copy. If the Company chooses to receive electronic files, the Company
shall be responsible for any costs of preparing, printing and shipping such
documents.
(d) The cost of any distribution of prospectuses, statements of additional
information, 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 Distributor or the Issuer.
6. RECORD OWNER. The Separate Accounts listed in Exhibit A 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 Distributor or the Issuer from time
to time.
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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 a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms; (ii) it has established the
Separate Accounts listed in Schedule A hereto (the "Accounts"), each of which is
a duly authorized and established separate account under Iowa Insurance law, and
has registered each Account as a unit investment trust under the 1940 Act to
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 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) Distributor 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 Distributor,
enforceable in accordance with its terms; (ii) the prospectus of each Fund
complies in all material respects with federal and state securities laws; (iii)
shares of the Issuer are registered and authorized for sale in accordance with
all federal and state securities laws; (iv) each Fund engages in business as an
open-end, diversified management investment company and was established for the
purpose of serving as the investment vehicle for separate accounts established
for variable life insurance contracts and variable annuity contracts offered by
insurance companies which have entered into agreements substantially similar to
this Agreement; (v) each Fund shall sell shares only to Participating Companies
(as defined in Section 14) and their separate accounts, and no shares of any
Fund will be sold to the general public; (vi) each Fund is currently qualified
as a Regulated Investment Company under Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), they will maintain such qualification
(under Subchapter M or any successor or similar provision and the Distributor
will notify the Company immediately upon having a reasonable basis for believing
that a Fund has ceased to qualify or that it might not so qualify in the
future); (vii) each Fund will at all times be adequately diversified within the
meaning of Section 817(h) of the Code and Treasury Regulation 1.817-5 relating
to the diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such Section or
Regulations or successors thereto and Distributor will notify the Company
immediately upon having a reasonable basis for believing that a Fund has ceased
to qualify or that it might not so qualify in the future; (viii) the Issuer is
lawfully organized and validly existing under the laws of the State of Maryland
and it does and will comply with applicable provisions of the 1940 Act; (ix) the
Funds and all of their directors, officers, employees and
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other individuals/entities having access to the funds and/or securities of the
Funds are and continue to be at all times covered by a blanket fidelity bond or
similar coverage issued by a reputable bonding company (including coverage for
larceny and embezzlement) for the benefit of each Fund in an amount not less
than the minimal coverage as required currently by Rule 17g-1 of the 1940 Act or
related provisions as may be promulgated from time to time; (x) the Distributor
is a member in good standing of the NASD and is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended (the "1934 Act"); and (xi)
the Distributor will sell and distribute the Funds' shares in accordance with
all applicable federal and state securities laws.
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 party in writing 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(d) hereof.
(d) The Company covenants and agrees that all Orders transmitted to the
Issuer, whether by telephone, telecopy, or other electronic transmission
acceptable to Distributor, 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 Accounts. Distributor 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 properly
authorized to act in such capacity. 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.
(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 as
investment options for the Contracts that operate to the specific prejudice of
the Funds VIS-A-
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VIS the other investment media made available for the Contracts by the Company.
9. COMPANY TO PROVIDE DOCUMENTS AND INFORMATION ABOUT ISSUER.
(a) The Company will provide to Distributor or its designated agent at
least one (1) complete copy of Account prospectuses, reports, final voting
instruction solicitation material applications for exemptions, requests for
no-action letters and notices, orders or responses relating thereto, and all
amendments and supplements to any of the above, that relate to each Account or
the Contracts, within a reasonable time of the filing of such document with
the SEC or NASD.
(b) The Company will provide to Distributor or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which Issuer, any Fund, Distributor or any of their
affiliates are named, at least fifteen (15) Business Days prior to its use or
such shorter period as the parties hereto may, from time to time, agree upon. No
such material shall be used if Distributor or its designated agent objects to
such use within ten (10) Business Days after receipt of such material or such
shorter period as the parties hereto may, from time to time, agree upon.
Distributor or its designee reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which Issuer, any Fund, Distributor or any of their affiliates is named, and no
such material shall be used if Distributor or its designee so object.
(c) Neither the Company nor any of its affiliates, will give any
information or make any representations or statements on behalf of or concerning
Issuer, any Fund, Distributor or their affiliates in connection with the sale of
the Contracts other than (i) the information or representations contained in the
registration statement, including the Fund prospectus contained therein,
relating to shares, as such registration statement and Fund prospectus may be
amended from time to time; or (ii) in reports or proxy materials for Issuer or
any Fund; or (iii) in published reports for Issuer or any Fund that are in the
public domain; or (iv) in sales literature or other promotional material
approved by Distributor, except with the express written permission of
Distributor.
(d) For the purposes of Sections 10 and 11 of this Agreement, 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, telephone
directories (other than routine listings), electronic media, computerized media,
or other public media (e.g., on-line networks such as the Internet or other
electronic messages), sales literature (i.e., any written or electronic
communication distributed or made generally available to customers or the
public, including, but not limited to, brochures, circulars, research reports,
market letters, performance reports or summaries, form letters, telemarketing
scripts, seminar texts, reprints or excerpts of any other advertisement, sales
literature, or published article),
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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 the NASD rules, the Securities Act of 1933 Act (the "1933
Act") or the ▇▇▇▇ ▇▇▇.
10. DISTRIBUTOR TO PROVIDE DOCUMENTS AND INFORMATION ABOUT THE COMPANY.
(a) Distributor will provide to the Company at least one (1) complete copy
of Fund prospectuses, statements of additional information, reports and final
proxy material and all amendments and supplements to any of the above.
Distributor will also provide to the Company at least one (1) complete copy of
applications for exemptions, requests for no-action letters and notices, orders
or responses relating thereto, and all amendments and supplements to any of the
above, that are reasonably likely to affect the Company's business, within a
reasonable time of the filing of such document with the SEC or NASD.
(b) Distributor will provide to the Company or its designated agent at
least one (1) complete copy of each piece of sales literature or other
promotional material in which the Company, or any of its respective affiliates
is named, or that refers to the Accounts or the Contracts, at least fifteen (15)
Business Days prior to its use or such shorter period as the parties hereto may,
from time to time, agree upon. No such material shall be used if the Company or
its designated agent objects to such use within ten (10) Business Days after
receipt of such material or such shorter period as the parties hereto may, from
time to time, agree upon. The Company or its designee reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Company or any of its affiliates is named or
that refers to the Accounts or the Contracts, and no such material shall be used
if the Company or its designee so object.
(c) Neither Distributor, Issuer nor any of their affiliates will give any
information or make any representations or statements on behalf of or concerning
the Company, each Account, or the Contracts other than (i) the information or
representations contained in the registration statement, including each Account
prospectus contained therein, relating to the Contracts, as such registration
statement and Account prospectus may be amended from time to time; or (ii) in
published reports for the Account or the Contracts that are in the public domain
and approved by the Company for distribution; or (iii) in sales literature or
other promotional material approved by the Company or its affiliates, except
with the express written permission of the Company.
(d) Distributor will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Fund, and of any change
in the Fund's registration statement or prospectus, particularly any change
resulting in a change to the registration statement or prospectus for any
Account. Distributor will work with the Company so as to
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enable the Company to solicit proxies from Contract owners, or to make changes
to its registration statement or prospectus, in an orderly manner.
11. USE OF NAMES. Except as otherwise expressly provided for in this
Agreement, neither Distributor nor any of its affiliates nor the Funds shall use
any 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 or Distributor, or any variation of any such trademarks, trade names,
service marks, or logos, without the prior written consent of either the Issuer
or Distributor, as appropriate, the granting of which shall be at the sole
option of Distributor and/or the Issuer.
12. 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 14(a) below) participating in any Fund calculate voting
privileges in a consistent manner.
(b) The Company will distribute to Contract owners proxy material
furnished by Distributor 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 as long as required by applicable law. The
Company and its agents shall not oppose or interfere with the solicitation of
proxies for Fund shares held for such Contract owners.
13. INDEMNITY.
(a) Distributor 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 1933 Act (collectively, the
"Indemnified Parties" for purposes of this SECTION 13(a)) against any losses,
claims, expenses, fines, 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 or alleged
untrue statement of any material fact contained in the Issuer's 1933 Act
registration statement, Fund prospectus or sales literature or advertising
of any Fund (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
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therein not misleading; provided, that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission or was
made in reliance upon and in conformity with the information furnished to
Distributor or its affiliates by or on behalf of the Company or its
affiliates for use in Issuer's 1933 Act registration statement, Fund
prospectus, or in sales literature or advertising or otherwise for use in
connection with the sale of Contracts or shares (or any amendment or
supplement to any of the foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in any
Account's 1933 Act registration statement, any Account prospectus, sales
literature or advertising for the Contracts, or any amendment or supplement
to any of the foregoing, not supplied for use therein by or on behalf of
Distributor, Issuer or other affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent conduct of
Distributor, Issuer or their affiliates or persons under their control in
connection with the sale or distribution of Fund Shares; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Account's 1933 Act
registration statement, any Account prospectus, sales literature or
advertising covering the Contracts, or any amendment or supplement to any
of the foregoing, 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 in reliance upon and in
conformity with information furnished to the Company or its affiliates by
or on behalf of Distributor, Issuer or its affiliates for use in any
Account's 1933 Act registration statement, any Account Prospectus, sales
literature or advertising covering the Contracts, or any amendment or
supplement to any of the foregoing; or
(iv) arise as a result of any failure by Distributor to perform the
obligations, provide the services and furnish the materials required of it
under the terms of this Agreement, or any material breach of any
representation and/or warranty made by Distributor in this Agreement
(including a failure, whether unintentional or in good faith or otherwise,
to comply with the diversification and other qualification requirements
specified in Section 7(b) of this Agreement) or arise out of or
result from any other material breach of this Agreement by Distributor or
the Issuer.
Distributor will reimburse any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any such
Losses. Distributor shall not be liable for indemnification hereunder if such
Losses are attributable to the negligence or misconduct of the Company in
performing its obligations under this Agreement.
(b) The Company agrees to indemnify and hold harmless Distributor and the
Issuer, and their respective officers, directors, employees, agents, affiliates
and each person, if any, who
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controls Issuer or Distributor within the meaning of the 1933 Act (but not
including any participating insurance company) (collectively, the "Indemnified
Parties" for purposes of this SECTION 13(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
or alleged untrue statement of any material fact contained in any Account's
1933 Act registration statement, any Account prospectus or sales literature
or advertising for 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 made in reliance upon and in conformity with information furnished
to the Company by or on behalf of Distributor or Issuer for use in any
Account's 1933 Act registration statement, any Account prospectus or sales
literature or advertising or otherwise for use in connection with the sale
of Contracts or shares (or any amendment or supplement to any of the
foregoing); or
(ii) arise out of or as a result of any other statements or
representations (other than statements or representations contained in the
Issuer's 1933 Act registration statement, any Fund prospectus, sales
literature or advertising of any Fund, or any amendment or supplement to
any of the foregoing, not supplied for use therein by or on behalf of the
Company or its respective affiliates and on which such persons have
reasonably relied) or the negligent, illegal or fraudulent conduct of the
Company or its respective affiliates or persons under their control; or
(iii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Issuer's 1933 Act
registration statement, Fund Prospectus, sales literature or advertising of
any Fund, or any amendment or supplement to any of the foregoing, 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 a statement
or omission was made in reliance upon and in conformity with information
furnished to Distributor, Issuer or their affiliates by or on behalf of the
Company, or its respective affiliates for use in Issuer's 1933 Act
registration statement, Fund prospectus, sales literature or advertising of
any Fund, or any amendment or supplement to any of the foregoing; or
(iv) arise as a result of any failure by the Company to perform the
obligations, provide the services and furnish the materials required of it
under the terms of this Agreement, or the material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of
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this Agreement by the Company.
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 negligence or misconduct of Distributor or the
Issuer in performing their obligations under this Agreement.
(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 13. 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 13 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.
14. 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
12
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
(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.
13
(e) For the purpose of this SECTION 14, 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 14 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.
15. TERMINATION; WITHDRAWAL OF OFFERING. This Agreement may be terminated
by either party upon 180 days' prior written notice to the other party.
Notwithstanding the above, the Issuer reserves the right, without prior notice,
to suspend sales of shares of any Fund, in whole or in part, or to make a
limited offering of shares of any of the Funds in the event that (A) any
regulatory body commences formal proceedings against the Company, Distributor,
affiliates of Distributor, or the Issuer, which proceedings Distributor
reasonably believes may have a material adverse impact on the ability of
Distributor, the Issuer or the Company to perform its obligations under this
Agreement or (B) in the judgment of the board of directors of the Funds, acting
in good faith and in light of their fiduciary duties under federal and
applicable state laws, such action is deemed necessary in the best interests of
the shareholders. (For purposes of this Section 14(e), "shareholders" means
Contract owners.)
The Company reserves the right to terminate the Agreement:
(a) if shares of the Funds are not reasonably available to meet the
requirements of the Contracts as determined by the Company;
(b) upon institution of formal proceedings against a Fund or Distributor
by the National Association of Securities Dealers, the Securities and Exchange
Commission, or any state securities or insurance department or any other
regulatory body, which would have a material adverse effect on the Distributor's
or a Fund's ability to perform its obligations under this Agreement;
(c) upon a determination by a majority of the Board of Issuer, or a
majority of the disinterested Directors, that a material irreconcilable conflict
exists among the interests of (i) all contract owners of variable insurance
products of all separate accounts, or (ii) the interests of the participating
insurance companies investing in the Funds, as discussed in Section 13 above;
(d) if the Fund ceases to qualify as a Regulated Investment Company under
Subchapter M of the Code, or under any successor or similar provision, or if the
Company reasonably believes that the Fund may fail to so qualify;
(e) if the Fund fails to meet the diversification requirements of Section
817(h) of the Code or if the Company reasonably believes that the Fund will fail
to meet such requirements; or
14
(f) upon the "assignment" of the Agreement (as defined in the ▇▇▇▇ ▇▇▇)
unless made with the written consent of each party;
(g) if the Fund's adviser is acquired; or
(h) if the Company determines in its sole judgment exercised in good
faith, that either any Fund or the Distributor has suffered a material adverse
change in its business, operations, or financial condition or is the subject of
material adverse publicity which is likely to have a material adverse impact
upon the business and operations of the Company or the Contracts (including the
sale thereof).
Notwithstanding the foregoing, this Agreement may be terminated immediately
(i) by any party as a result of any other breach of this Agreement by another
party, which breach is not cured within 30 days after receipt of notice from the
other party, or (ii) by any party upon a determination that continuing to
perform under this Agreement would, in the reasonable opinion of the terminating
party's counsel, violate any applicable federal or state law, rule, regulation
or judicial order.
Notwithstanding any termination of this Agreement, Issuer and Distributor
will, at the option of the Company, continue to make available additional shares
of each Fund 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 will be permitted to reallocate
investments in the Funds (as in effect on such date), redeem investments in the
Funds and/or invest in the Funds upon the making of additional purchase payments
under the Existing Contracts.
16. NON-EXCLUSIVITY. Both parties acknowledge and agree that this
Agreement and the arrangement described herein are intended to be non-exclusive
and that each party is free to enter into similar agreements and arrangements
with other entities.
17. SURVIVAL. The provisions OF SECTION 11 (Use of Names), SECTION 13
(Indemnity) and Section 15 (Termination; Withdrawal of Offering) of this
Agreement shall survive termination of this Agreement. In addition, to the
extent necessary to implement the provisions of SECTION 15, the following
provisions shall also survive the termination of this Agreement: SECTION 1
(Transactions in the Funds), SECTION 2 (Timing of Transactions), SECTION 3
(Processing of Transactions), SECTION 4 (Pricing Errors), SECTION 7
(Representations), SECTION 8 (Additional Covenants and Agreements), and SECTION
12 (Proxy Voting).
18. 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.
15
19. 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:
Country Investors Life Assurance Company
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
and Farm Bureau Life Insurance Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Investment Administration
(▇▇▇) ▇▇▇-▇▇▇▇ (office number)
(▇▇▇) ▇▇▇▇-▇▇▇▇ (facsimile number)
To the Issuer or Distributor:
American Century Investment Services, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (office number)
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
Any notice, demand or other communication given in a manner prescribed in this
SECTION 19 shall be deemed to have been delivered on receipt.
20. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned without the
written consent of both parties to the Agreement at the time of such assignment.
This Agreement shall be binding upon and inure to the benefit both parties
hereto and their respective permitted successors and assigns.
21. 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
16
Agreement by signing any such counterpart.
22. 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.
23. CONFIDENTIALITY. Subject to requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of Contract owners and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
24. CAPTIONS. 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.
25. RIGHTS AND REMEDIES. The rights, remedies and obligations contained in
this Agreement are cumulative and are in addition to any and all rights,
remedies an obligations, at law or in equity, which the parties hereto are
entitled to under state and federal laws.
26. 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.
17
If the foregoing correctly sets forth our understanding, please indicate
your agreement to and acceptance thereof by signing below, whereupon this
Agreement shall become a binding agreement between us as of the latest date
indicated.
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Title: President
-------------------------------
Date: November 11, 2003
--------------------------------
We agree to and accept the terms of the foregoing Agreement.
COUNTRY INVESTORS LIFE
ASSURANCE COMPANY
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Vice President - Life/Health
Operations
-------------------------------
Date: October 23, 2003
--------------------------------
18
EXHIBIT A
SEPARATE ACCOUNTS AND CONTRACTS
COUNTRY Investors Variable Annuity Contract
Individual Flexible Premium Deferred Variable Annuity Contract
COUNTRY Investors Variable Life Account
Flexible Premium Variable Life Insurance Contract
EXHIBIT B
FUNDS OF AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. (CLASS I)
OFFERED TO THE SEPARATE ACCOUNTS LISTED IN SCHEDULE A
VP Ultra Fund
VP Vista Fund