As filed with the Securities and Exchange Commission
on February 2, 1998
Registration Nos. 333-22633
811-8079
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
(Check appropriate box or boxes.)
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
_________________________________________________
(Exact name of registrant as specified in charter)
One East Liberty, Third Floor
Reno, Nevada 89501
________________________________________ __________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 1-800-887-8671
Louis G. Navellier
One East Liberty, Third Floor
Reno, Nevada 89501
(Name and Address of Agent For Service)
Copies to:
Raymond A. O'Hara III, Esq. and to Dennis A. Holtorf
Blazzard, Grodd & Hasenauer, P.C. Navellier & Associates, Inc.
P.O. Box 5108 One East Liberty, Third Floor
Westport, CT 06881 Reno, Nevada 89501
(203) 226-7866 (702) 785-9402
Approximate Date of
Proposed Public Offering:
As soon as practicable after the effective date of this Filing.
Calculation of Registration Fee under the Securities Act of 1933:
Registrant is registering an indefinite number of securities under
the Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
CROSS REFERENCE SHEET
(as required by Rule 404 (c))
<TABLE>
<CAPTION>
Part A
N-1A
Item No. Location
<C> <S> <C>
1. Cover Page........................... Cover Page
2. Synopsis............................. Shareholder Transaction
Expenses and Annual Fund
Operating Expenses; Summary
3. Condensed Financial Information...... Not Applicable
4. General Description of Registrant.... Investment Objective and
Policies; Risk Considerations;
Special Investment Methods and
Risks; Investment Restrictions
5. Management of the Fund............... Management of the Fund
6. Capital Stock and Other Securities... Description of Shares - Voting
Rights; Tax Status, Dividends
and Distributions
7. Purchase of Securities Being Offered. Purchases and Redemptions;
Risk Factors - Net Asset Value
8. Redemption or Repurchase............. Purchases and Redemptions
9. Pending Legal Proceedings............ Not Applicable
Part B
10. Cover Page........................... Cover Page
11. Table of Contents.................... Table of Contents
12. General Information and History...... General Information and
History
13. Investment Objectives and Policies... Investment Objective and
Policies; Investment
Restrictions
14. Management of the Fund............... Directors and Officers of the
Fund
15. Control Persons and Principal Holders
of Securities........................ Control Persons and Principal
Holders of Securities
16. Investment Advisory and Other
Services............................. The Investment Adviser,
Custodian and Transfer Agent;
The Distributor; Independent
Accountants
17. Brokerage Allocation and Other
Practices............................ Brokerage Allocation and Other
Practices
18. Capital Stock and Other Securities... Capital Stock and Other
Securities
19. Purchase, Redemption and Pricing of
Securities Being Offered............. Purchase, Redemption and
Pricing of Shares
20. Tax Status........................... Taxes
21. Underwriters......................... Not Applicable
22. Calculation of Performance Data...... Calculation of Performance
Data
23. Financial Statements................. Not Applicable
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of the Registration Statement.
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
FUND PROFILE
Navellier Variable Insurance Series Fund, Inc.
One East Liberty, Third Floor
Reno, NV 89501
February __, 1998
Navellier & Associates, Inc.
Investment Adviser
For Fund information, call 1-800-___-____
1. WHAT IS THE PORTFOLIO'S GOAL?
The Fund currently has authorized one series - the Navellier Growth Portfolio
("Growth Portfolio"). The investment objective of the Growth Portfolio is to
achieve long-term growth of capital primarily through investment in companies
with appreciation potential. It seeks to achieve this objective by investing in
equity securities traded in all United States markets including dollar
denominated foreign securities traded in United States markets.
2. HOW IS THE PORTFOLIO INVESTED?
The Growth Portfolio will invest up to 100% of its capital in equity securities
selected for their capital growth potential. Navellier & Associates, Inc. will
screen over 6,000 stocks, taking into account various factors and basing its
stock selection on its own model portfolio theory concepts. The Growth Portfolio
invests primarily in what Navellier & Associates, Inc. believes are undervalued
common stocks believed to have long-term growth potential.
3. WHAT ARE THE RISKS OF INVESTING IN THE PORTFOLIO?
The performance of the Growth Portfolio depends on the market value of its
holdings. Securities prices fluctuate in response to general political, economic
and market conditions as well as to the performance of individual companies.
Common stock prices can fluctuate dramatically in response to these factors.
Since many of the securities in which the Growth Portfolio may invest may have a
smaller number of shares to trade than more conventional companies, a liquidity
problem could be created by a lack of shares available for trade at a given
time. A high portfolio turnover rate may result in increased brokerage
commissions. Investments in foreign securities may involve considerations which
are not ordinarily associated with investing in domestic issuers. These
considerations include, among others, changes in currency rates, and the impact
of political, social or diplomatic developments. The Growth Portfolio uses
aggressive investment strategies and can experience substantial fluctuations so
that shares may at any time be worth more or less than you paid for them.
4. IS THE PORTFOLIO APPROPRIATE FOR YOU?
The Growth Portfolio is appropriate for investors who are willing to risk stock
market fluctuations in pursuit of long-term growth.
5. WHAT ARE THE PORTFOLIO'S EXPENSES?
The Growth Portfolio has no sales charge or fee for initial purchases,
reinvestment of distributions or redemptions. Portfolio operating expenses are
paid out of the Portfolio's assets and are not charged directly to the
Participating Insurance Company Separate Account ("Separate Account") or other
shareholders. Since the Growth Portfolio has no operating history, "Other
Expenses" and "Total Portfolio Operating Expenses" are based on estimated
amounts.
Annual Portfolio Operating Expenses/1/
(As a percentage of average net assets after applicable
expense reimbursements or fee waivers)
Management Fees 0.85%
12b-1 Fees None
Other Expenses/2/ 0.65%
-----
Total Portfolio Operating Expenses/1/ 1.50%
/1/Navellier & Associates, Inc. has agreed to waive its advisory fee and/or
reimburse expenses until Total Portfolio Operating Expenses (including the
advisory fee) are at or below 1.50%. Therefore, the amounts shown above reflect
the anticipated fee waiver and/or expense reimbursement. This undertaking is
subject to termination at any time without notice to shareholders after the
expiration of twelve months from the date shares of the Portfolio are first
offered to the public. The estimated Total Portfolio Operating Expenses, before
any advisory fee waiver and/or any expense reimbursement, are 5%.
/2/The figure of 0.65% shown here includes the annual fee of 0.25% received
by the Adviser pursuant to the Administrative Services Agreement.
EXAMPLE
1 Year 3 Year
------ ------
$------- $-------
You could expect to pay this much in total expenses, maintaining an average
annual investment of $1,000. The example assumes a 5% annual return, expenses as
described above and reinvestment of all dividends and distributions. The example
reflects the current fee waiver arrangement and does not reflect additional
charges and expenses which are, or may be, imposed under the variable annuity
contracts ("VA Contracts") or variable life insurance policies ("VLI Policies")
or qualified pension and retirement plans ("Qualified Plans"). Such charges and
expenses are described in the Prospectus of the Separate Account or in the
Qualified Plan documents or other informational materials supplied by Qualified
Plan sponsors. The example should not be considered a representation of past or
future expenses.
6. HOW HAS THE PORTFOLIO PERFORMED?
The Growth Portfolio is newly organized and, therefore, has no history of
operations.
7. WHO MANAGES THE PORTFOLIO?
Navellier & Associates, Inc. acts as the Growth Portfolio's investment adviser.
It presently manages over $2.02 billion in investor funds. Its owner has been in
the business of rendering advisory services to significant pools of capital such
as retirement plans and large investors since 1987.
8. HOW CAN YOU BUY SHARES?
Shares may be purchased or redeemed only through VA Contracts and VLI Policies
offered by Separate Accounts of Participating Insurance Companies or through
Qualified Plans. Individual investors may not purchase or redeem shares
directly. Please refer to the prospectus of the Separate Account or to the
Qualified Plan documents or other informational materials supplied by Qualified
Plan sponsors for instructions on purchasing a VA Contract or VLI Policy and on
how to select the Portfolios as investment options for a VA Contract, VLI Policy
or Qualified Plan.
9. HOW CAN YOU SELL SHARES?
Shares can be redeemed on any business day by transmitting a redemption order to
a Participating Insurance Company or Qualified Plan.
10. WHEN WILL YOU RECEIVE DISTRIBUTIONS?
The Growth Portfolio distributes dividends at least annually and distributes its
net realized capital gains, if any, at least annually in the form of shares of
the Portfolios unless an election is made on behalf of a Separate Account of a
Participating Insurance Company or Qualified Plan to receive distributions in
cash.
11. WHAT INVESTOR SERVICES ARE AVAILABLE?
The Fund provides semi-annual and annual reports, including financial
statements, regarding the Growth Portfolio. Toll-free access to the Growth
Portfolio is also provided.
This Profile contains key information about the Portfolio. More details appear
in the Portfolio's accompanying Prospectus.
PART A
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
One East Liberty, Third Floor
Reno, Nevada 89501
Prospectus Dated _____________, 1998
Navellier Variable Insurance Series Fund, Inc. (the "Fund") is an open-end
management investment company authorized to issue multiple series of shares,
each representing a portfolio of investments (individually, a "Portfolio" and
collectively, the "Portfolios"). The Fund currently has authorized one series -
the Navellier Growth Portfolio (the "Growth Portfolio"). There can be no
assurance that any Portfolio of the Fund will achieve its investment objective.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. The Fund's shares are offered
only to (a) insurance companies ("Participating Insurance Companies") to fund
benefits under their variable annuity contracts ("VA Contracts") and variable
life insurance policies ("VLI Policies") and (b) tax-qualified pension and
retirement plans ("Qualified Plans"), including participant-directed Qualified
Plans which elect to make the Portfolios available as investment options for
Qualified Plan Participants.
Please read this Prospectus carefully and retain it for future reference. This
Prospectus should be read in conjunction with the prospectuses issued by the
Participating Insurance Companies for the VA Contracts and VLI Policies that
accompany this Prospectus or with the Qualified Plan documents or other
informational materials supplied by Qualified Plan sponsors. Additional
information about the Fund and the Growth Portfolio is contained in a Statement
of Additional Information which has been filed with the Securities and Exchange
Commission (the "SEC") and is available to investors without charge by calling
the Fund at 1-800-887-8671. The Statement of Additional Information, as amended
from time to time, bears the same date as this Prospectus and is incorporated by
reference in its entirety into this Prospectus.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the securities of the Fund in any jurisdiction in which such sale,
offer to sell, or solicitation may not be lawfully made.
INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND IS SUBJECT TO RISK THAT MAY CAUSE
THE VALUE OF THE INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS REDEEMED,
THE VALUE MAY BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED BY THE
INVESTOR.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE AVAILABLE AND ARE BEING OFFERED EXCLUSIVELY (i) AS A
POOLED FUNDING VEHICLE FOR LIFE INSURANCE COMPANIES WRITING ALL TYPES OF
VARIABLE LIFE INSURANCE POLICIES AND VARIABLE ANNUITY CONTRACTS AND (ii) TO
TAX-QUALIFIED PENSION AND RETIREMENT PLANS.
TABLE OF CONTENTS
Page
SHAREHOLDER TRANSACTION EXPENSES 1
AND ANNUAL FUND OPERATING EXPENSES
SUMMARY 2
INVESTMENT OBJECTIVE AND POLICIES 3
SPECIAL INVESTMENT METHODS AND RISKS 4
INVESTMENT RESTRICTIONS 5
RISK FACTORS 6
PERFORMANCE ADVERTISING 8
MANAGEMENT OF THE FUND 10
EXPENSES OF THE FUND 11
REPORTS AND INFORMATION 12
DESCRIPTION OF SHARES 12
TAX STATUS, DIVIDENDS AND DISTRIBUTIONS 14
PURCHASES AND REDEMPTIONS 14
ADDITIONAL INFORMATION 16
SHAREHOLDER TRANSACTION EXPENSES
AND ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
<S> <C>
Navellier
Growth
Portfolio
Shareholder Transaction Expenses/1/
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)............. 0%
Maximum Sales Load Imposed on
Reinvested Dividends........................... None
Deferred Sales Load................................ None
Redemption Fees.................................... None
Exchange Fee....................................... None
Annual Portfolio Operating Expenses/2/
(As a percentage of average net assets after
applicable expense reimbursements or fee waivers)
Management Fees.................................... 0.85%
12b-1 Fees......................................... None
Other Expenses/3/.................................. 0.65%
Total Portfolio Operating Expenses/2/ ............. 1.50%
</TABLE>
/1/ The above table of fees and other expenses is provided to assist you in
understanding the various potential costs and expenses that an investor in the
Portfolio may bear directly or indirectly.
/2/ Navellier & Associates, Inc. has agreed to waive its advisory fee
and/or reimburse expenses until Total Portfolio Operating Expenses (including
the advisory fee) are at or below 1.50%. Therefore, the amounts shown above
reflect the anticipated fee waiver and/or expense reimbursement. This
undertaking is subject to termination at any time without notice to shareholders
after the expiration of twelve months from the date shares of the Portfolio are
first offered to the public. The estimated Total Portfolio Operating Expenses,
before any advisory fee waiver and/or any expense reimbursement, are 5%. (See
"Expenses of the Fund").
/3/ The figure of 0.65% shown here includes the annual fee of 0.25%
received by the Adviser pursuant to the Administrative Services Agreement. (See
"Expenses of the Fund").
EXAMPLE:
The following example indicates the direct and indirect expenses an investor
(maintaining an average annual investment of $1,000) could expect to incur in a
single year, and three-year period respectively:
<TABLE>
<CAPTION>
Growth Portfolio
<S> <C>
One-Year...................... $ ________
Three-Year.................... $ ________
</TABLE>
The foregoing example assumes (a) that an investor maintains an average of
$1,000 invested in the Growth Portfolio; (b) no sales load; (c) a 5% annual
return; (d) percentage amounts listed above for Annual Fund Operating Expenses
remain constant (for all periods shown above); and (e) reinvestment of all
dividends and distributions.
The foregoing example is based upon estimated Total Operating Expenses for the
Growth Portfolio, as set forth in the "Annual Operating Expenses" table above
and reflects the fee waiver/expense reimbursement arrangement in effect. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE TABLE DOES NOT
REFLECT ADDITIONAL CHARGES AND EXPENSES WHICH ARE, OR MAY BE, IMPOSED UNDER THE
VA CONTRACTS, VLI POLICIES OR QUALIFIED PLANS. SUCH CHARGES AND EXPENSES ARE
DESCRIBED IN THE PROSPECTUS OF THE PARTICIPATING INSURANCE COMPANY SEPARATE
ACCOUNT OR IN THE QUALIFIED PLAN DOCUMENTS OR OTHER INFORMATIONAL MATERIALS
SUPPLIED BY QUALIFIED PLAN SPONSORS.
SUMMARY
The Fund
The Fund is an open-end management investment company which currently offers
shares of the Growth Portfolio. Additional Portfolios may be added to the Fund
in the future. This Prospectus will be supplemented or amended to reflect the
addition of any new Portfolios.
This summary, which provides basic information about the Growth Portfolio and
the Fund, is qualified in its entirety by reference to the more detailed
information provided elsewhere in this Prospectus and in the Statement of
Additional Information.
The Growth Portfolio is designed for long-term investors and is not intended as
a trading vehicle or to be a complete investment program for the investor. An
investment in the Growth Portfolio involves certain speculative considerations;
see "Risk Factors."
The Growth Portfolio employs aggressive investment strategies and can experience
substantial fluctuations, including declines, so that shares may be worth less
than when originally purchased.
Investment Adviser
The Investment Adviser administers the assets of the Growth Portfolio and
determines which securities will be selected as investments for the Growth
Portfolio. Louis Navellier, the President and CEO of the Investment Adviser,
refined the Modern Portfolio Theory investment strategy which is applied in
managing the assets of the Growth Portfolio. He sets the strategies and
guidelines for the Growth Portfolio and oversees the Portfolio Managers'
activities. Louis Navellier and Alan Alpers, who are the Portfolio Managers
involved in the day-to-day investment activities of the Growth Portfolio, head
up a team of investment professionals who assist in managing the Portfolio,
including research analysts Jon Tesseo, Shawn Price, Michael Borgen and Arnold
Langsen. Alan Alpers has been an analyst and portfolio manager for the
Investment Adviser since 1989 and has been responsible along with Mr. Navellier
for day-to-day management of over $100 million in individual accounts for the
Investment Adviser. The Investment Adviser receives an annual advisory fee,
equal to .85% of the average daily net asset value of assets under management,
for the Growth Portfolio. The advisory fee for the Growth Portfolio is payable
monthly, based upon a percentage of the Portfolio's average daily net assets.
This advisory fee paid to the Investment Adviser is higher than those generally
paid by most other investment companies. The Growth Portfolio is paying this
higher advisory fee based on its desire to retain the Investment Adviser's
specific application of Modern Portfolio Theory, its particular method of
analyzing securities and its investment advisory services.
Distribution of Shares
Navellier Securities Corp. (the "Distributor") acts as the principal underwriter
for the shares of the Growth Portfolio. The Distributor is a corporation
wholly-owned by Louis Navellier, who also owns 100% of the Adviser.
How to Invest
Individual investors may not purchase or redeem shares of the Growth Portfolio
directly; shares may be purchased or redeemed only through VA Contracts and VLI
Policies offered by separate accounts of Participating Insurance Companies or
through Qualified Plans, including participant-directed Qualified Plans which
elect to make the Portfolio an investment option for Qualified Plan
Participants. See "Purchases and Redemptions."
Risk Factors
Investment in the Growth Portfolio involves special risks and there can be no
guarantee of profitability. Some of those risks are briefly described here. Some
of the small cap securities which the Growth Portfolio may purchase may be
difficult to liquidate on short notice or, on occasion, only a portion of the
shares of a company in which the Investment Adviser intends to trade may be
available to be bought or sold by the Growth Portfolio. There can be no
assurance of profitability or of what the percentage of the Portfolio's total
annual operating expenses will be. Investments, if any, in securities of foreign
issuers may pose greater risks. The Investment Adviser's investment style could
result in above average portfolio turnover which could result in higher
brokerage expenses. As with any equity fund, the investments may decline,
resulting in a loss of value to the shareholder. (For more detail, see "Risk
Factors".)
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective of the Navellier Growth Portfolio
The investment objective of the Growth Portfolio is to achieve long-term growth
of capital primarily through investment in companies with appreciation
potential. This investment objective is fundamental and may not be changed
without shareholder approval. The Growth Portfolio invests in equity securities
traded in all United States markets including dollar denominated foreign
securities traded in United States markets. It is a diversified portfolio,
meaning it limits its investment in the securities of any single company
(issuer) to a maximum of 5% of the Portfolio assets and further limits its
investments to less than 25% of the Portfolio's assets in any one industry
group. The Growth Portfolio seeks long term capital appreciation through
investments in securities of companies which the Investment Adviser feels are
undervalued in the marketplace. Navellier & Associates, Inc. is the Investment
Adviser for the Growth Portfolio. This Portfolio should not be considered
suitable for investors seeking current income.
Other Investments
The Growth Portfolio may, for temporary defensive purposes or to maintain cash
or cash equivalents to meet anticipated redemptions, also invest in debt
securities and money market funds if, in the opinion of the Investment Adviser,
such investment will further the cash needs or temporary defensive needs of the
Portfolio. In addition, when the Investment Adviser feels that market or other
conditions warrant it, for temporary defensive purposes the Growth Portfolio may
retain cash or invest all or any portion of its assets in cash equivalents,
including money market mutual funds. Under normal conditions, the Growth
Portfolio's holdings in such non-equity securities should not exceed 35% of the
total assets of the Portfolio. If the Growth Portfolio's assets, or a portion
thereof, are retained in cash or money market funds or money market mutual
funds, such cash will, in all probability, be deposited in interest-bearing or
money market accounts or in Rushmore's money market mutual funds. Rushmore Trust
& Savings, FSB is also the Fund's Transfer Agent and Custodian. Cash deposits by
the Fund in interest bearing instruments issued by Rushmore Trust & Savings
("Transfer Agent") will only be deposited with the Transfer Agent if its
interest rates, terms, and security are equal to or better than could be
received by depositing such cash with another savings institution. Money market
investments have no FDIC protection and deposits in Rushmore Trust & Savings
accounts have only $100,000 protection.
It is anticipated that all of the Growth Portfolio's investments in corporate
debt securities (other than commercial paper) and preferred stocks will be
represented by debt securities and preferred stocks which have, at the time of
purchase, a rating within the four highest grades as determined by Moody's
Investors Service, Inc. (Aaa, Aa, A, Baa) or by Standard & Poor's Corporation
(AAA, AA, A, BBB; securities which are rated BBB/Baa have speculative
characteristics). Although investment-quality securities are subject to market
fluctuations, the risk of loss of income and principal is generally expected to
be less than with lower quality securities. In the event the rating of a debt
security or preferred stock in which the Growth Portfolio has invested drops
below investment grade, the Growth Portfolio will promptly dispose of such
investment. When interest rates go up, the market value of debt securities
generally goes down and long-term debt securities tend to be more volatile than
short term debt securities.
In determining the types of companies which will be suitable for investment by
the Growth Portfolio, the Investment Adviser will screen over 6,000 stocks and
will take into account various factors and base its stock selection on its own
model portfolio theory concepts. The Growth Portfolio invests primarily in what
the Investment Adviser believes are undervalued common stocks believed to have
long-term growth potential. Stocks are selected on the basis of an evaluation of
factors such as earnings growth, expanding profit margins, market dominance
and/or factors that create the potential for market dominance, sales growth, and
other factors that indicate a company's potential for growth. The Growth
Portfolio will invest up to 100% of its capital in equity securities selected
for their capital growth potential. The Investment Adviser will typically (but
not always) purchase common stocks of issuers which have records of
profitability and strong earnings momentum. When selecting such stocks for
investment by the Growth Portfolio, the issuers may be lesser known companies
moving from a lower to a higher market share position within their industry
groups rather than the largest and best known companies in such groups.
SPECIAL INVESTMENT METHODS AND RISKS
"Short Sales Against the Box"
The Growth Portfolio is permitted to make short sales if at the time of the
short sale the Portfolio owns or has the right to acquire a security equal in
kind and amount to the security being sold short, at no additional cost. This
investment technique is known as a "short sale against the box."
In a short sale, the seller does not immediately deliver the securities sold and
is said to have a short position in those securities until delivery occurs. To
make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If the Fund engages in a short sale, the collateral account will be
maintained by the Fund's custodian. While the short sale is open, the Fund will
maintain, in a segregated custodial account, an amount of securities equal in
kind and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities at no additional cost. These
securities would constitute the Fund's long position.
The Growth Portfolio may make a short sale against the box, when it believes
that the price of a security may decline, causing a decline in the value of a
security owned by the Portfolio (or a security convertible into or exchangeable
for such security), or when the Portfolio desires to sell the security it owns
at a current attractive price, but also wishes to defer recognition of gain or
loss for federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal Revenue
Code. In such a case, any future losses in the Growth Portfolio's long position
should be reduced by a gain in the short position. The extent to which such
gains or losses are reduced would depend upon the amount of the security sold
short relative to the amount the Growth Portfolio owns. There will be certain
additional transaction costs associated with short sales against the box, but
the Growth Portfolio will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.
INVESTMENT RESTRICTIONS
The Growth Portfolio can invest up to 5% of its assets in the securities of a
single issuer and can invest up to 25% of its assets in the securities of a
single industry. The Growth Portfolio may not make investments in real estate or
commodities or commodity contracts, including futures contracts, but may
purchase securities of issuers which deal in real estate or commodities. The
Growth Portfolio is also prohibited from investing in or selling puts, calls,
straddles (or any combination thereof). The Growth Portfolio is prohibited from
investing in derivatives. The Growth Portfolio may borrow money only from banks
for temporary or emergency (not leveraging) purposes provided that, after each
borrowing, there is an asset coverage in the Portfolio of at least 300%. The
Growth Portfolio will not purchase securities if the amount of borrowing by the
Portfolio exceeds 5% of total assets of the Portfolio. In order to secure any
such borrowing, the Growth Portfolio may pledge, mortgage, or hypothecate up to
10% of the market value of the assets of the Portfolio. The investment by the
Growth Portfolio in securities, including American Depository Receipts, of
issuers or any governmental entity or political subdivision thereof, located,
incorporated or organized outside of the United States is limited to 25% of the
net asset value of the Portfolio, provided that no such foreign securities may
be purchased unless they are traded on United States securities markets.
The Fund may not purchase for any Portfolio "restricted securities" (as defined
in Rule 144(a)(3) of the Securities Act of 1933) if, as a result of such
purchase, more than 10% of the net assets (taken at market value) of such
Portfolio would be invested in such securities nor will the Fund invest in
illiquid or unseasoned securities if as a result of such purchase more than 5%
of the net assets of such Portfolio would be invested in either illiquid or
unseasoned securities. The Board of Directors will determine whether these
securities are liquid and will monitor liquidity on an ongoing basis.
In addition to the investment restrictions described above, the investment
program of the Growth Portfolio is subject to further restrictions which are
described in the Statement of Additional Information. The restrictions for the
Growth Portfolio are fundamental and may not be changed without shareholder
approval.
RISK FACTORS
Lack of Operating History and Experience
The Growth Portfolio is newly organized and has no history of operations. The
Investment Adviser was organized on May 28, 1993 and has been managing the
assets of The Navellier Series Fund since January 3, 1994 and the publicly
invested assets of The Navellier Series Fund since April 1, 1994. The Investment
Adviser also manages the assets of The Navellier Performance Funds which went
effective December 28, 1995. Although the Investment Adviser sub-contracts a
substantial portion of its responsibilities for administrative services of the
Fund's operations to various agents, including the Transfer Agent and Custodian,
the Investment Adviser still has overall responsibility for the administration
of the Growth Portfolio and oversees the administrative services performed by
others as well as servicing shareholder's needs and, along with the Fund's Board
of Directors, is responsible for the selection of such agents and their
oversight. The Investment Adviser is also responsible for the selection of
securities for investment. None of the principals, officers, legal counsel, or
directors of the Investment Adviser (including such of those persons who are
also controlling persons of the Fund) had, before June 1993, ever registered,
operated, or supervised the operations of investment companies in the past, and
there is no assurance that their past business experiences or their experience
with The Navellier Series Fund or The Navellier Performance Funds will enable
them to successfully manage the assets of the Fund in the future. The owner of
the Investment Adviser has been in the business of rendering advisory services
to significant pools of capital such as retirement plans and large investors
since 1987.
The Investment Adviser presently manages over $2.02 billion in investor funds.
The owner of the Investment Adviser is also the owner of another investment
advisory firm, Navellier Fund Management, Inc., and controls other investment
advisory entities which manage assets and/or act as sub-advisors, all of which
firms employ the same basic modern portfolio theories and select many of the
same over-the-counter stocks and other securities which the Investment Adviser
intends to employ and invest in while managing the Portfolios of the Fund.
Because many of the over-the-counter and other securities which Investment
Adviser intends to, or may, invest in have a smaller number of shares available
to trade than more conventional companies, lack of shares available at any given
time may result in one or more of the Portfolios of the Fund not being able to
purchase or sell all shares which the Investment Adviser desires to trade at a
given time or period of time, thereby creating a potential liquidity problem
which could adversely affect the performance of the Fund portfolios. Since the
Investment Adviser will be trading on behalf of the various Portfolios of the
Fund in some or all of the same securities at the same time that the Investment
Adviser, Navellier Fund Management, Inc., other Navellier controlled investment
entities, The Navellier Series Fund and The Navellier Performance Funds are
trading, the potential liquidity problem could be exacerbated. In the event the
number of shares available for purchase or sale in a security or securities is
limited and therefore the trade order cannot be fully executed at the time it is
placed, i.e., where the full trade orders of the Investment Adviser, Navellier
Fund Management, Inc., The Navellier Series Fund, The Navellier Performance
Funds and other Navellier controlled investment entities and the Fund cannot be
completed at the time the order is made, the Investment Adviser, and the other
Navellier controlled investment entities will allocate their purchase or sale
orders in proportion to the dollar value of the order made by the other
Navellier entities, and the dollar value of the order made by the Fund. For
example, if the Investment Adviser, and Navellier Fund Management, Inc., each
place a $25,000 purchase order and Investment Adviser on behalf of the Fund
places a $50,000 purchase order for the same stock and only $50,000 worth of
stock is available for purchase, the order would be allocated $12,500 each of
the stock to the Investment Adviser, and Navellier Fund Management, Inc., and
$25,000 of the stock to the Fund. As the assets of each Portfolio of the Fund
increase, the potential for shortages of buyers or sellers increases, which
could adversely affect the performance of the various Portfolios. While the
Investment Adviser generally does not anticipate liquidity problems (i.e., the
possibility that the Portfolio cannot sell shares of a company and therefore the
value of those shares drops) unless the Fund has assets in excess of two billion
dollars (although liquidity problems could still occur when the Fund has assets
of substantially less than two billion dollars), each investor is being made
aware of this potential risk in liquidity and should not invest in the Fund if
it is not willing to accept this potentially adverse risk, and by investing,
acknowledges that it is aware of the risks.
An investment in shares of any Portfolio of the Fund involves certain
speculative considerations. There can be no assurance that any of a Portfolio's
objectives will be achieved or that the value of the investment will increase.
All Portfolios intend to comply with the diversification and other requirements
applicable to regulated investment companies under the Internal Revenue Code.
All securities in which any of the Fund's Portfolios may invest are inherently
subject to market risk, and the market value of the Fund's investments will
fluctuate. From time to time the Fund may choose to close a Portfolio or
Portfolios to new investors.
Investing in Securities of Foreign Issuers
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries. The Investment Adviser will
use the same basic selection criteria for investing in foreign securities as it
uses in selecting domestic securities as described in the Investment Objective
and Policies section of this Prospectus.
While to some extent the risks to the Fund of investing in foreign securities
may be limited since the Growth Portfolio may not invest more than 25% of its
net asset value in such securities and may only invest in foreign securities
which are traded in the United States securities markets, the risks nonetheless
exist.
Net Asset Value
The net asset value of the Growth Portfolio is determined by adding the values
of all securities and other assets of the Portfolio, subtracting liabilities,
and dividing by the number of outstanding shares of the Portfolio. (See
"Purchases and Redemptions - Valuation of Shares" and the Statement of
Additional Information.)
Portfolio Turnover
The annual rate of portfolio turnover for the Growth Portfolio is unknown since
it has no operating history and therefore no actual portfolio turnover rate
presently exists. The Investment Adviser estimates that the annual portfolio
turnover rate for the Growth Portfolio will not exceed 300%. However, this is
not a restriction on the Investment Adviser and if in the Investment Adviser's
judgment a higher annual portfolio turnover rate is required in order to attempt
to achieve a higher overall Portfolio performance, then the Investment Adviser
is permitted to do so. However, high portfolio turnover (100% or more) will
result in increased brokerage commissions, dealer mark-ups, and other
transaction costs on the sale of securities and on reinvestment in other
securities and could therefore adversely affect Portfolio performance.
Special Risk Considerations Relating to Securities of the Growth Portfolio
For a description of certain other factors, including certain risk factors,
which investors should consider relating to the securities in which the
Portfolio will invest, see "Investment Objective and Policies".
PERFORMANCE ADVERTISING
From time to time, a Portfolio may advertise its yield and total return. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made regarding actual future yields
or returns. Yield refers to the annualized income generated by an investment in
the Portfolio over a specified 30-day period. The yield is calculated by
assuming that the same amount of income generated by the investment during that
period is generated in each 30-day period over one year and is shown as a
percentage of the investment.
The total return of a Portfolio refers to the average compounded rate of return
on a hypothetical investment for designated time periods (including but not
limited to the period from which the Portfolio commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period and assuming the reinvestment of all dividend and capital gain
distributions.
A Portfolio may periodically compare its performance to that of other mutual
funds tracked by mutual fund rating services (such as Lipper Analytical
Services, Inc.) or by financial and business publications and periodicals, broad
groups of comparable mutual funds, unmanaged indices which may assume investment
of dividends but generally do not reflect deductions for administrative and
management costs and other investment alternatives. A Portfolio may quote
services such as Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance, and Ibbotson Associates of Chicago,
Illinois, which provides historical returns of the capital markets in the U.S. A
Portfolio may use long-term performance of these capital markets to demonstrate
general long-term risk versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. A Portfolio may also
quote financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.
A Portfolio may quote various measures of volatility and benchmark correlation
in advertising and may compare these measures to those of other funds. Measures
of volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
Private Account Performance
The Investment Adviser has also managed, on an individual basis, accounts for
individuals and institutions ("Private Accounts") since 1987 employing a modern
portfolio theory style of stock analysis which uses substantially the same
investment objectives, policies and strategies that will be employed by the
Investment Adviser for the Growth Portfolio. Thus, the performance information
derived from these Private Accounts may be relevant to an investor. The basic
investment style is a proprietary system of computer based screens to analyze
over 7,000 stocks in order to determine which stocks to buy and sell (the
"Navellier system"). Louis Navellier and his staff at the Investment Adviser
have used the Navellier system since 1987 to manage the Private Accounts under
management.
Further, the performance of the Growth Portfolio will vary from the Private
Account composite information because the Growth Portfolio will be actively
managed and its investments will vary from time to time and will not be
identical to the past portfolio investments of the Private Accounts. Moreover,
the Private Accounts are not subject to certain investment limitations,
diversification requirements and other restrictions imposed by the 1940 Act and
the Internal Revenue Code of 1986, as amended, which, if applicable, may have
adversely affected the performance results of the Private Account Composites.
The Private Account composite performance figures are time-weighted rates of
return which include all income and accrued income and realized and unrealized
gains or losses.
The following tables show historical composite performance data for all Private
Accounts under the management of the Investment Adviser during the dates
indicated, as well as comparisons with the S&P 500 Index, an unmanaged index
generally considered to be representative of the stock market. The performance
figures shown represent the performance results of the composite of Private
Accounts. The figures are shown in two different ways. Table A shows the
performance results adjusted to reflect the deduction of investment advisory
fees and other expenses actually charged to the Private Accounts. Table B shows
the performance results adjusted to reflect the deduction of the fees and
expenses anticipated to be paid by the Growth Portfolio (after fee waivers).
Please refer to "Shareholder Transaction Expenses and Annual Fund Operating
Expenses" for further information concerning fees and expenses and the fee
waiver arrangements. Absent the fee waivers, the performance figures shown below
would be reduced. Neither table reflects the deduction of any insurance fees or
charges which are imposed by the Participating Insurance Company in connection
with its sale of the VA Contracts and VLI Policies nor do the figures reflect
any charges or expenses which may be attributable to any Qualified Plan.
Investors should refer to the separate account prospectuses describing the VA
Contracts and VLI Policies or to the Qualified Plan documents or other
informational materials supplied by Qualified Plan sponsors for information
pertaining to these fees and charges. These fees and charges will have a
detrimental effect on the performance of the Portfolio.
Investors should not consider the performance data of these Private Accounts as
an indication of the future performance of the Growth Portfolio.
Private Account Composite Performance
Table A
(after deduction of Private Account advisory fees and expenses)
<TABLE>
<CAPTION>
Investment Adviser S&P 500 Index
<S> <C> <C>
1987.................... _____% _____%
1988.................... _____% _____%
1989.................... _____% _____%
1990.................... _____% _____%
1991.................... _____% _____%
1992.................... _____% _____%
1993.................... _____% _____%
1994.................... _____% _____%
1995.................... _____% _____%
1996.................... _____% _____%
1997.................... _____% _____%
</TABLE>
<TABLE>
<CAPTION>
Investment Adviser S&P 500 Index
<S> <C> <C>
One Year _____% _____%
Five Years _____% _____%
Ten Years _____% _____%
</TABLE>
Table B
(after deduction of fees and expenses anticipated to be paid by the
Growth Portfolio)
<TABLE>
<CAPTION>
Investment Adviser S&P 500 Index
<S> <C> <C>
1987.................... _____% _____%
1988.................... _____% _____%
1989.................... _____% _____%
1990.................... _____% _____%
1991.................... _____% _____%
1992.................... _____% _____%
1993.................... _____% _____%
1994.................... _____% _____%
1995.................... _____% _____%
1996.................... _____% _____%
1997.................... _____% _____%
</TABLE>
<TABLE>
<CAPTION>
Investment Adviser S&P 500 Index
<S> <C> <C>
One Year _____% _____%
Five Years _____% _____%
Ten Years _____% _____%
</TABLE>
MANAGEMENT OF THE FUND
The Board of Directors
The Fund's Board of Directors directs the business and affairs of each Portfolio
of the Fund as well as supervises the Investment Adviser, Distributor,
Accountant, Transfer Agent and Custodian, as described below.
The Investment Adviser
Navellier & Associates, Inc. acts as the Investment Adviser to the Growth
Portfolio. The Investment Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940. The Investment Adviser is responsible for
selecting the securities which will constitute the pool of securities which will
be selected for investment for the Growth Portfolio. Pursuant to a separate
Administrative Services Agreement, the Investment Adviser provides the Growth
Portfolio with certain administrative services, including accounting and
bookkeeping services and supervising the Custodian's and Transfer Agent's
activities and the Growth Portfolio's compliance with its reporting obligations.
The Investment Adviser may contract (and pay for out of its own resources
including the administrative fee it receives) for the performance of such
services to the Custodian, Transfer Agent, or others, and may retain all of its
0.25% administrative services fee or may share some or all of its fee with such
other person(s). The Investment Adviser also provides the Growth Portfolio with
a continuous investment program based on its investment research and management
with respect to all securities and investments. The Investment Adviser will
determine from time to time what securities and other investments will be
selected to be purchased, retained, or sold by the Fund.
The Investment Adviser is owned and controlled by its sole shareholder, Louis G.
Navellier (a 100% stockholder). In 1987, Louis Navellier was in litigation with
a business partner and on the advice of his then legal counsel, as part of a
legal strategy, filed a personal bankruptcy petition in connection with that
litigation. The bankruptcy petition was voluntarily dismissed by Mr. Navellier
less than two months later with all creditors being paid in full. Louis G.
Navellier is an affiliated person of the Fund. The Investment Adviser is
registered as an investment adviser with the Securities and Exchange Commission
and with all states which require investment adviser registration. Louis
Navellier is registered as an investment adviser representative or agent in all
states requiring such registration. Louis Navellier and the Investment Adviser
without admitting liability, did in the past agree to a two-week suspension in
California and agreed to pay civil penalties to the States of California,
Connecticut, and Maryland for allegedly not being properly registered as an
investment adviser. Navellier Management, Inc., an affiliate of the Investment
Adviser, is also and has been since January 1994, the investment adviser to The
Navellier Series Fund, an open-end diversified investment company and to The
Navellier Performance Funds, an open-end investment company, since December
1995. Louis Navellier is, and has been, in the business of rendering investment
advisory services to significant pools of capital since 1987.
For information regarding the Fund's expenses and the fees paid to the
Investment Adviser see "Expenses of the Fund".
Control Persons and Principal Holders of Securities
On January 15, 1998, in order to fulfill the requirements of Section 14(a)(1) of
the 1940 Act, one hundred percent (100%) of the issued and outstanding shares of
the Growth Portfolio was subscribed to for purchase by Louis Navellier under an
agreement dated January 15, 1998. Such subscription was made for an aggregate of
$100,000 and was allocated 100% to the Growth Portfolio (to purchase 10,000
shares).
The Distributor
Navellier Securities Corp. acts as the Fund's Distributor and is registered as a
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The Distributor renders its
services to the Fund pursuant to a distribution agreement under which it serves
as the principal underwriter of the shares of each existing Portfolio of the
Fund. The Distributor receives no compensation for serving in such capacity.
Louis G. Navellier, an affiliate of the Fund and the Investment Adviser, is an
officer, director and sole shareholder of the Distributor.
The Custodian and the Transfer Agent
Rushmore Trust & Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland, 20814,
telephone: (301) 657-1510 or (800) 622-1386, is Custodian for the Fund's
securities and cash and Transfer Agent for the Fund shares.
EXPENSES OF THE FUND
General
Each Portfolio is responsible for the payment of its own expenses. These
expenses are deducted from that Portfolio's investment income before dividends
are paid. These expenses include, but are not limited to: fees paid to the
Investment Adviser, the Custodian, the Transfer Agent, and the Accountant;
Directors' fees; taxes; interest; brokerage commissions; organization expenses;
securities registration ("blue sky") fees; legal fees; auditing fees; printing
and other expenses which are not directly assumed by the Investment Adviser
under its investment advisory or expense reimbursement agreements with the Fund.
General expenses which are not associated directly with a specific Portfolio
(including fidelity bond and other insurance) are allocated to each Portfolio
based upon their relative net assets. The Investment Adviser may, but is not
obligated to, from time to time advance funds, or directly pay, for expenses of
the Fund and may seek reimbursement of or waive reimbursement of those advanced
expenses.
Compensation of the Investment Adviser
The Investment Adviser receives an annual .85% fee for investment management of
the Growth Portfolio. The fee is payable monthly, based upon the Portfolio's
average daily net assets. This advisory fee is higher than those generally paid
by most other investment companies. The Investment Adviser also receives a 0.25%
annual fee for rendering administrative services to the Fund pursuant to an
Administrative Services Agreement and is entitled to reimbursement for operating
expenses it advances for the Fund.
Brokerage Commissions
The Investment Adviser may select selected broker-dealers to execute portfolio
transactions for the Portfolios of the Fund, provided that the commissions,
fees, or other remuneration received by such party in exchange for executing
such transactions are reasonable and fair compared to those paid to other
brokers in connection with comparable transactions. In addition, when selecting
broker-dealers for Fund portfolio transactions, the Investment Adviser may
consider the record of such broker-dealers with respect to the sale of shares of
the Fund or sale of VA Contracts and VLI Policies. (See the Statement of
Additional Information.)
REPORTS AND INFORMATION
The Fund will distribute to the shareholders of each Portfolio semi-annual
reports containing unaudited financial statements and information pertaining to
matters of each Portfolio of the Fund. An annual report containing financial
statements for each Portfolio, together with the report of the independent
auditors for each Portfolio of the Fund is distributed to shareholders each
year. Shareholder inquiries should be addressed to the Fund, at One East
Liberty, Third Floor, Reno, Nevada 89501; Tel: (800) 887- 8671, or to the
Transfer Agent, Rushmore Trust & Savings, FSB, 4922 Fairmont Avenue, Bethesda,
Maryland, 20814, Telephone: (301) 657-1510 or (800) 622-1386.
DESCRIPTION OF SHARES
The Fund is a Maryland corporation organized on February 28, 1997. The Fund is
authorized to issue 500,000,000 shares of the Growth Portfolio and to create
additional portfolios of the Fund. Each share of the Growth Portfolio represents
an equal proportionate interest in that Portfolio with each other share. Shares
are entitled upon liquidation to a pro rata share in the net assets of the
Growth Portfolio available for distribution to shareholders. Shareholders have
no preemptive rights. All consideration received by the Fund for shares of any
Portfolio and all assets in which such consideration is invested would belong to
that Portfolio and would be subject to the liabilities related thereto.
The Fund reserves the right to create classes of shares.
Voting Rights
Each share held entitles the shareholder of record to one vote. Shareholders of
each Portfolio will vote separately on matters relating solely to it, such as
approval of advisory agreements and changes in fundamental policies, and matters
affecting some but not all Portfolios of the Fund will be voted on only by
shareholders of the affected Portfolios. Shareholders of all Portfolios of the
Fund will vote together in matters affecting the Fund generally, such as the
election of Directors or selection of accountants. As a Maryland corporation,
the Fund is not required to hold annual meetings of shareholders but shareholder
approval will be sought for certain changes in the operation of the Fund and for
the election of Directors under certain circumstances. In addition, a Director
may be removed by the remaining Directors or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Fund. In the event that such a meeting is requested,
the Fund will provide appropriate assistance and information to the shareholders
requesting the meeting. Under current law, a Participating Insurance Company is
required to request voting instructions from VA Contract owners and VLI Policy
owners and must vote all shares held in the separate account in proportion to
the voting instructions received. Qualified Plans may or may not pass through
voting rights to Qualified Plan participants, depending on the terms of the
Qualified Plan's governing documents. For a more complete discussion of voting
rights, refer to the Participating Insurance Company separate account prospectus
or the Qualified Plan documents or other informational materials supplied by
Qualified Plan sponsors.
Conflicts of Interest. The Portfolios offers their shares to (i) VA Contracts
and VLI Policies offered through separate accounts of Participating Insurance
Companies which may or may not be affiliated with each other and (ii) Qualified
Plans including Participant-directed Plans which elect to make the Portfolios
available as investment options for Qualified Plan participants. Due to
differences of tax treatment and other considerations, the interests of VA
Contract and VLI Policy owners and Qualified Plan participants participating in
the Portfolios may conflict. The Board will monitor the Portfolios for any
material conflicts that may arise and will determine what action, if any, should
be taken. If a conflict occurs, the Board may require one or more Participating
Insurance Company separate accounts and/or Qualified Plans to withdraw its
investments in the Portfolios. As a result, the Portfolios may be forced to sell
securities at disadvantageous prices and orderly portfolio management could be
disrupted. In addition, the Board may refuse to sell shares of the Portfolios to
any VA Contract, VLI Policy or Qualified Plan or may suspend or terminate the
offering of shares of the Portfolios if such action is required by law or
regulatory authority or is in the best interests of the shareholders of the
Portfolios.
To mitigate the possibility that a Portfolio will be adversely affected by
personal trading of employees, the Fund and the Adviser have adopted a Code of
Ethics under Rule 17j-1 of the 1940 Act. This Code contains policies restricting
securities trading in personal accounts of the portfolio managers and others who
normally come into possession of information on portfolio transactions. This
Code complies, in all material respects, with the recommendations of the
Investment Company Institute.
TAX STATUS, DIVIDENDS AND DISTRIBUTIONS
Taxes
For a discussion of the tax status of a VA Contract, VLI Policy or Qualified
Plan, refer to the Participating Insurance Company separate account prospectus
or Qualified Plan documents or other informational materials supplied by
Qualified Plan sponsors.
Each Portfolio intends to qualify and elect to be treated as a regulated
investment company that is taxed under the rules of Subchapter M of the Internal
Revenue Code. As such, a Portfolio will not be subject to federal income tax on
its net ordinary income and net realized capital gains to the extent such income
and gains are distributed to the separate accounts of Participating Insurance
Companies and Qualified Plans which hold its shares. Because shares of the
Portfolios may be purchased only through VA Contracts, VLI Policies and
Qualified Plans, it is anticipated that any income, dividends or capital gain
distributions from the Portfolios are taxable, if at all, to the Participating
Insurance Companies and Qualified Plans and will be exempt from current taxation
of the VA Contract owner, VLI Policy owner, or Qualified Plan participant if
left to accumulate within the VA Contract, VLI Policy or Qualified Plan.
Internal Revenue Service Requirements
The Portfolios intend to comply with the diversification requirements currently
imposed by the Internal Revenue Service on separate accounts of insurance
companies as a condition of maintaining the tax-deferred status of VA Contracts
and VLI Policies. See the Statement of Additional Information for more specific
information.
Dividends and Distributions
Each of the Portfolios will declare and distribute dividends from net ordinary
income at least annually and will distribute its net realized capital gains, if
any, at least annually. Distributions of ordinary income and capital gains will
be made in shares of such Portfolios unless an election is made on behalf of a
separate account of a Participating Insurance Company to receive distributions
in cash. Participating Insurance Companies and Qualified Plan sponsors will be
informed at least annually about the amount and character of distributions from
the fund for federal income tax purposes.
PURCHASES AND REDEMPTIONS
Individual investors may not purchase or redeem shares of the Portfolios
directly; shares may be purchased or redeemed only through VA Contracts and VLI
Policies offered by separate accounts of Participating Insurance Companies or
through Qualified Plans, including participant-directed Qualified Plans which
elect to make the Portfolios investment options for Qualified Plan participants.
Please refer to the prospectus of the sponsoring Participating Insurance Company
separate account or to the Qualified Plan documents or other informational
materials supplied by Qualified Plan sponsors for instructions on purchasing a
VA Contract or VLI Policy and on how to select the Portfolios as investment
options for a VA Contract, VLI Policy or Qualified Plan.
Purchases. All investments in the Portfolios are credited to a Participating
Insurance Company's separate account immediately upon acceptance of the
investments by the Portfolios. Each Participating Insurance Company receives
orders from its contract owners to purchase or redeem shares of each Portfolio
on each day that the Portfolio calculates its net asset value (a "Business
Day"). That night, all orders received by the Participating Insurance Company
prior to the close of regular trading on the New York Stock Exchange Inc. (the
"NYSE") (currently 4:00 p.m., Eastern time) on that Business Day are aggregated,
and the Participating Insurance Company places a net purchase or redemption
order for shares of the Portfolios during the morning of the next Business Day.
These orders are executed at the net asset value (described below under "Net
Asset Value") next computed after receipt of such order by the Participating
Insurance Company.
Qualified Plan participants may invest in shares of the Portfolios through their
Qualified Plans by directing the Qualified Plan trustee to purchase shares for
their account. Participants should contact their Qualified Plan sponsors for
information concerning the appropriate procedure for investing in the
Portfolios. All investments in the Portfolios by Qualified Plans are credited to
the Qualified Plans immediately upon acceptance of the investments by the
Portfolios. All orders received from Qualified Plans are executed at the net
asset value next computed after receipt of such orders by the Portfolios.
The Portfolios reserve the right to reject any specific purchase order. Purchase
orders may be refused if, in the Investment Adviser's opinion, they are of a
size that would disrupt the management of the Portfolio. A Portfolio may
discontinue sales of its shares if management believes that a substantial
further increase in assets may adversely effect the Portfolio's ability to
achieve its investment objective. In such event, however, it is anticipated that
existing VA Contract owners, VLI Policy owners and Qualified Plan participants
would be permitted to continue to authorize investments in the Portfolios and to
reinvest any dividends or capital gains distributions.
Redemptions. Shares of a Portfolio may be redeemed on any Business Day.
Redemption orders which are received by a Participating Insurance Company or
Qualified Plan prior to the close of regular trading on the NYSE on any Business
Day and transmitted to the Fund or its specified agent during the morning of the
next Business Day will be processed at the next net asset value computed after
receipt of such order by the Participating Insurance Company or Qualified Plan.
Redemption proceeds will normally be wired to the Participating Insurance
Company or Qualified Plan the Business Day following receipt of the redemption
order by the Participating Insurance Company or Qualified Plan, but in no event
later than seven days after receipt of such order.
Valuation of Shares
The net asset value of the shares of each Portfolio of the Fund are determined
once daily as of 4 p.m. New York Time, on days when the New York Stock Exchange
is open for trading. In the event that the New York Stock Exchange or the
national securities exchanges on which Portfolio stocks are traded adopt
different trading hours on either a permanent or temporary basis, the Directors
of the Fund will reconsider the time at which net asset value is to be computed.
The net asset value is determined by adding the values of all securities and
other assets of the Portfolio, subtracting liabilities, and dividing by the
number of outstanding shares of the Portfolio. The price at which a purchase is
effected is based on the next calculation of net asset value after the order is
received.
In determining the value of the assets of each Portfolio, the securities for
which market quotations are readily available are valued at market value. Debt
securities (other than short-term obligations) are normally valued on the basis
of valuations provided by a pricing service when such prices are believed to
reflect the fair value of such securities. All other securities and assets are
valued at their fair value as determined in good faith by the Directors,
although the actual calculations may be made by persons acting pursuant to the
direction of the Directors.
ADDITIONAL INFORMATION
The Statement of Additional Information, available upon request, without charge
from the Fund, provides a further discussion of certain sections of the
Prospectus and other information which may be of interest to certain investors.
This Prospectus and the Statement of Additional Information do not contain all
the information included in the Registration Statement filed with the Securities
and Exchange Commission with respect to the securities being sold, certain
portions of which have been omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The Registration Statement, including the
exhibits filed therewith, may be examined at the office of the Securities and
Exchange Commission in Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and, in each instance,
reference is made to the Statement of Additional Information and the copy of
such contract or other document filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, each such statement being
qualified in all respects by such reference.
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
Investment Adviser
Navellier & Associates, Inc.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
Distributor
Navellier Securities Corp.
One East Liberty, Third Floor
Reno, NV 89501
(800) 887-8671
Independent Auditors
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, PA 19103
Transfer Agent and Custodian
Rushmore Trust & Savings, FSB
4922 Fairmont Avenue
Bethesda, MD 20814
(800) 622-1386
Counsel
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
PART B
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED _____________, 1998
This Statement of Additional Information, which is not a prospectus, should be
read in conjunction with the Prospectus of the Navellier Variable Insurance
Series Fund, Inc. (the "Fund"), dated ______________, 1998, a copy of which
Prospectus may be obtained, without charge, by contacting the Fund, at its
mailing address: One East Liberty, Third Floor, Reno, Nevada 89501; Tel:
1-800-887-8671.
TABLE OF CONTENTS
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<S> <C>
GENERAL INFORMATION AND HISTORY
INVESTMENT OBJECTIVE AND POLICIES
DIRECTORS AND OFFICERS OF THE FUND
OFFICERS
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
THE INVESTMENT ADVISER, CUSTODIAN, AND TRANSFER AGENT
THE DISTRIBUTOR
INDEPENDENT ACCOUNTANTS
BROKERAGE ALLOCATION AND OTHER PRACTICES
CAPITAL STOCK AND OTHER SECURITIES
PURCHASE, REDEMPTION, AND PRICING OF SHARES
TAXES
CALCULATION OF PERFORMANCE DATA
FINANCIAL STATEMENTS
APPENDIX
</TABLE>
GENERAL INFORMATION AND HISTORY
The Fund is a corporation (organized under the laws of the State of Maryland on
February 28, 1997) and has commenced regular investment operations as of the
date of this Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
Investment Policies. The investment objective and policies of the Growth
Portfolio are described in the "Investment Objective and Policies" section of
the Prospectus. The following general policies supplement the information
contained in that section of the Prospectus.
Certificates of Deposit. Certificates of deposit are generally short-term,
interest-bearing, negotiable certificates issued by banks or savings and loan
associations against funds deposited in the issuing institution.
Time Deposits. Time deposits are deposits in a bank or other financial
institution for a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
Banker's Acceptances. A banker's acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an international
commercial transaction (to finance the import, export, transfer, or storage of
goods). The borrower, as well as the bank, is liable for payment, and the bank
unconditionally guarantees to pay the draft at its face amount on the maturity
date. Most acceptances have maturities of six months or less and are traded in
secondary markets prior to maturity.
Commercial Paper. Commercial paper refers to short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a maturity at the
time of issuance not exceeding nine months.
Corporate Debt Securities. Corporate debt securities with a remaining
maturity of less than one year tend to become liquid and can sometimes be traded
as money market securities.
United States Government Obligations. Securities issued or guaranteed as to
principal and interest by the United States government include a variety of
Treasury securities, which differ only in their interest rates, maturities, and
times of issuance. Treasury bills have a maturity of one year or less. Treasury
notes have maturities of one to seven years, and Treasury bonds generally have a
maturity of greater than five years.
Agencies of the United States government which issue or guarantee
obligations include, among others, export-import banks of the United States,
Farmers' Home Administration, Federal Housing Administration, Government
National Mortgage Association, Maritime Administration, Small Business
Administration, the Defense Security Assistance Agency of the Department of
Defense, and the Tennessee Valley Authority. Obligations of instrumentalities of
the United States government include securities issued or guaranteed by, among
others, the Federal National Mortgage Association, Federal Intermediate Credit
Banks, Banks for Cooperatives, and the United States Postal Service. Some of the
securities are supported by the full faith and credit of the United States
government; others are supported by the right of the issuer to borrow from the
Treasury, while still others are supported only by the credit of the
instrumentality.
Investment Restrictions. The Fund's fundamental policies as they affect a
Portfolio cannot be changed without the approval of a vote of a majority of the
outstanding securities of such Portfolio. A proposed change in fundamental
policy or investment objective will be deemed to have been effectively acted
upon with respect to any Portfolio if a majority of the outstanding voting
securities of that Portfolio votes for the matter. Such a majority is defined as
the lesser of (a) 67% or more of the voting shares of the Fund present at a
meeting of shareholders of the Portfolio, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy or (b)
more than 50% of the outstanding shares of the Portfolio. For purposes of the
following restrictions (except the percentage restrictions on borrowing and
illiquid securities -- which percentage must be complied with) and those
contained in the Prospectus: (i) all percentage limitations apply immediately
after a purchase or initial investment; and (ii) any subsequent change in any
applicable percentage resulting from market fluctuations or other changes in the
amount of total assets does not require elimination of any security from the
Portfolio.
The following investment restrictions are fundamental policies of the Fund
with respect to the Growth Portfolio and may not be changed except as described
above. The Growth Portfolio may not:
1. Purchase any securities or other property on margin; provided, however,
that the Portfolio may obtain short-term credit as may be necessary for the
clearance of purchases and sales of securities.
2. Make cash loans, except that the Portfolio may purchase bonds, notes,
debentures, or similar obligations which are customarily purchased by
institutional investors whether publicly distributed or not.
3. Make securities loans, except that the Portfolio may make loans of its
portfolio securities, provided that the market value of the securities subject
to any such loans does not exceed 33-1/3% of the value of the total assets
(taken at market value) of the Portfolio.
4. Make investments in real estate or commodities or commodity contracts,
including futures contracts, although the Portfolio may purchase securities of
issuers which deal in real estate or commodities although this is not a primary
objective of the Portfolio.
5. Invest in oil, gas, or other mineral exploration or development
programs, although the Portfolio may purchase securities of issuers which engage
in whole or in part in such activities.
6. Purchase securities of companies for the purpose of exercising
management or control.
7. Participate in a joint or joint and several trading account in
securities.
8. Issue senior securities or borrow money, except that the Portfolio may
(i) borrow money only from banks for temporary or emergency (not leveraging)
purposes, including the meeting of redemption requests, that might otherwise
require the untimely disposition of securities, provided that any such borrowing
does not exceed 10% of the value of the total assets (taken at market value) of
the Portfolio, and (ii) borrow money only from banks for investment purposes,
provided that (a) after each such borrowing, when added to any borrowing
described in clause (i) of this paragraph, there is an asset coverage of at
least 300% as defined in the Investment Company Act of 1940 (the "1940 Act"),
and (b) is subject to an agreement by the lender that any recourse is limited to
the assets of the Portfolio with respect to which the borrowing has been made.
As an operating policy, the Portfolio may not invest in portfolio securities
while the amount of borrowing of the Portfolio exceeds 5% of the total assets of
the Portfolio.
9. Pledge, mortgage, or hypothecate the assets of the Portfolio to an
extent greater than 10% of the total assets of the Portfolio to secure
borrowings made pursuant to the provisions of Item 8 above.
10. Purchase "restricted securities" (as defined in Rule 144(a)(3) of the
Securities Act of 1933), if, as a result of such purchase, more than 10% of the
net assets (taken at market value) of the Portfolio would then be invested in
such securities nor will the Portfolio invest in illiquid or unseasoned
securities if as a result of such purchase more than 5% of the net assets of the
Portfolio would be invested in either illiquid or unseasoned securities.
11. Invest more than 5% of the assets of the Portfolio in securities of any
single issuer.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values of portfolio securities or amount of net assets shall not be
considered a violation of the restrictions, except as to the 5%, 10% and 300%
percentage restrictions on borrowing specified in Restriction Number 8 above.
Portfolio Turnover. The Growth Portfolio's annual rate of portfolio
turnover is calculated by dividing the lesser of purchases or sales of portfolio
securities during the fiscal year by the monthly average of the value of the
Portfolio's securities (excluding from the computation all securities, including
options, with maturities at the time of acquisition of one year or less). A high
rate of portfolio turnover generally involves correspondingly greater expenses
to the Portfolio, including brokerage commission expenses, dealer mark-ups, and
other transaction costs on the sale of securities, which must be borne directly
by the Portfolio. Turnover rates may vary greatly from year to year as well as
within a particular year and may also be affected by cash requirements for
redemptions of the Portfolio's shares and by requirements which enable the Fund
to receive certain favorable tax treatment. Because the Growth Portfolio is a
new fund portfolio which has not been in operation for a year, no actual
turnover rate can be given at this time. The Fund will attempt to limit the
annual portfolio turnover rate of the Growth Portfolio to 300% or less, however,
this rate may be exceeded if in the Investment Adviser's discretion securities
are or should be sold or purchased in order to attempt to increase the
Portfolio's performance.
DIRECTORS AND OFFICERS OF THE FUND
The following information is provided with respect to each director and officer
of the Fund:
<TABLE>
<CAPTION>
<S> <C> <C>
Position(s) Held With Principal Occupation(s)
Name and Address Registrant and its Affiliates During Past Five Years
- ---------------- ----------------------------- ----------------------
Louis G. Navellier President CEO and President of
One East Liberty Navellier & Associates
Third Floor Inc., an investment
Reno, NV 89501 management company since
Age: 40 1988; CEO and President
of Navellier Management,
Inc., one of the Portfolio
Managers for the Investment
Adviser to this Fund, The
Navellier Series Fund and
The Navellier Performance
Funds; President and CEO
of Navellier Securities
Corp., the principal
underwriter to The Navellier
Performance Funds and The
Navellier Series Fund; CEO
and President of Navellier
Fund Management, Inc., an
investment advisory company,
since November 30, 1995
Dennis A. Holtorf/1/ Treasurer
One East Liberty
Third Floor
Reno, NV 89501
Age: 50
Dean H. Hamilton Director Managing Director, BHJ, LLC,
BHJ, LLC Consultant, Navellier a consulting firm
30 Stanford Drive & Associates, Inc.
Farmington, CT 06032
Age: 57
Robert S. Hardy Director President, Zephyr Associates,
Zephyr Associates a financial software company,
312 Dorla Court from April 1994 to present;
Suite 204 prior thereto, Vice President,
Zephyr Cove, NV 89448 Balch, Hardy, et all., a
Age: 55 money management company
from 1973 - April 1994
Robert G. Sharp Director Director, JMC Corp., a marketing
843 Knapp Drive company for annuities and mutual
Santa Barbara, CA 93108 funds, May 1995 to present
Age: 62
</TABLE>
/1/ This person is an interested person affiliated with the Investment
Adviser.
OFFICERS
The officers of the Fund are affiliated with the Investment Adviser and receive
no salary or fee from the Fund. The Fund's disinterested Directors are each
compensated by the Fund with $1,500 for each Board meeting attended and $250 for
attendance of any Committee meeting held on a day on which no Board meeting is
held. The Directors' fees may be adjusted according to increased
responsibilities if the Fund's assets exceed one billion dollars. In addition,
each disinterested Director receives reimbursement for actual expenses of
attendance at Board of Directors meetings.
The Fund does not expect, in its current fiscal year, to pay aggregate
remuneration in excess of $60,000 for services in all capacities to any (a)
Director, (b) officer, (c) affiliated person of the Fund (other than the
Investment Adviser), (d) affiliated person of an affiliate or principal
underwriter of the Fund, or (e) all Directors and officers of the Fund as a
group.
The Board of Directors is permitted by the Fund's By-Laws to appoint an advisory
committee which shall be composed of persons who do not serve the Fund in any
other capacity and which shall have no power to dictate corporate operations or
to determine the investments of the Fund. The Fund currently has no advisory
committee. The Audit Committee of the Board of Directors is composed of Messrs.
Sharp and Hardy. The Pricing Committee is composed of Messrs. Hardy and
Holtorf.
<TABLE>
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Remuneration Table
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Aggregate Remuneration/*/
Capacity In Which Aggregate Remuneration/*/ From Registrant and
Remuneration Received From Registrant Fund Complex
Dean H. Hamilton/**/ Director N/A N/A
Robert S. Hardy Director $6,000 $6,000
Robert G. Sharp Director $6,000 $6,000
</TABLE>
/*/ Based on projections for fiscal year 1998.
/**/ Mr. Hamilton may be deemed to be an "interested person" of the Fund,
as that term is defined in the 1940 Act, and consequently will be
receiving no compensation from the Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On January 15, 1998, in order to fulfill the requirements of Section 14(a)(1) of
the 1940 Act, one hundred percent (100%) of the issued and outstanding shares of
the Growth Portfolio was purchased by Louis G. Navellier under a subscription
agreement dated January 15, 1998. Such subscription for acquisition was made for
an aggregate of $100,000 allocated 100% to the Growth Portfolio (to purchase
10,000 shares).
THE INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
(a) The Investment Adviser
The offices of the Investment Adviser (Navellier & Associates, Inc.) are
located at One East Liberty, Third Floor, Reno, Nevada 89501. The Investment
Adviser began operation in May 1993 and advises this Fund, The Navellier Series
Fund and The Navellier Performance Funds.
(i) The following individual owns the enumerated shares of outstanding
stock of the Investment Adviser and, as a result, maintains control over
the Investment Adviser:
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Shares of Outstanding Stock Percentage of Outstanding
Name of the Investment Adviser Shares
Louis G. Navellier 1,000 100%
</TABLE>
(ii) The following individual is affiliated with the Investment
Adviser:
<TABLE>
<CAPTION>
<S> <C>
Name Position
Louis G. Navellier Trustee, President, and Treasurer of The
Navellier Series Fund and The Navellier
Performance Funds; Director, CEO, President,
Secretary, and Treasurer of Navellier
Management, Inc.,; Director, President, CEO,
Secretary, and Treasurer of Navellier
Securities Corp.; one of the Portfolio
Managers of the Navellier Series Fund and The
Navellier Performance Funds.
</TABLE>
(iii) The management fee payable to the Investment Adviser under the
terms of the Investment Advisory Agreement (the "Advisory Agreement")
between the Investment Adviser and the Fund is payable monthly and is based
upon .85% of the Growth Portfolio's average daily net assets. The
Investment Adviser has the right, but not the obligation, to waive any
portion or all of its management fee, from time to time.
Expenses not expressly assumed by the Investment Adviser under the Advisory
Agreement are paid by the Fund. The Advisory Agreement lists examples of
expenses paid by the Fund for the account of the Growth Portfolio, the major
categories of which relate to taxes, fees to Directors, legal, accounting, and
audit expenses, custodian and transfer agent expenses, certain printing and
registration costs, and non-recurring expenses, including litigation.
The Advisory Agreement provides that the Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or its investors except for losses (i) resulting from the willful misfeasance,
bad faith, or gross negligence on its part, (ii) resulting from reckless
disregard by it of its obligations and duties under the Advisory Agreement, or
(iii) a loss for which the Investment Adviser would not be permitted to be
indemnified under the Federal Securities laws.
Pursuant to an Administrative Services Agreement, the Investment Adviser
receives an annual fee of .25% of the value of the assets under management and
provides or is responsible for the provision of certain administrative services
to the Fund, including, among others, the preparation and maintenance of certain
books and records required to be maintained by the Fund under the Investment
Company Act of 1940. The Administrative Services Agreement permits the
Investment Adviser to contract out for all of its duties thereunder; however, in
the event of such contracting, the Investment Adviser remains responsible for
the performance of its obligations under the Administrative Services Agreement.
The Investment Adviser has entered into an agreement with Rushmore Trust &
Savings, FSB, to perform, in addition to custodian and transfer agent services,
some or all administrative services and may contract in the future with other
persons or entities to perform some or all of its administrative services. All
of these contracted services are and will be paid for by the Investment Adviser
out of its fees or assets.
In exchange for its services under the Administrative Services Agreement, the
Fund reimburses the Investment Adviser for certain expenses incurred by the
Investment Adviser in connection therewith but does not reimburse Investment
Adviser (over the amount of the 0.25% annual Administrative Services Fee) to
reimburse it for fees Investment Adviser pays to others for administrative
services. The agreement also allows Investment Adviser to pay to its delegate
part or all of such fees and reimbursable expense payments incurred by it or its
delegate.
The Advisory Agreement permits the Investment Adviser to act as investment
adviser for any other person, firm, or corporation, and designates the
Investment Adviser as the owner of the name "Navellier" or of any use or
derivation of the word Navellier. If the Investment Adviser shall no longer act
as investment adviser to the Fund, the right of the Fund to use the name
"Navellier" as part of its title may, solely at the Investment Adviser's option,
be withdrawn.
The Fund's organizational expenses have been paid by the Adviser.
(b) The Custodian and Transfer Agent
Rushmore Trust & Savings, FSB, 4922 Fairmont Avenue, Bethesda, Maryland
20814, serves as the custodian of the Fund's portfolio securities and as the
Fund's transfer agent and, in those capacities, maintains certain accounting and
other records of the Fund and processes requests for the purchase or the
redemption of shares, maintains records of ownership for shareholders, and
performs certain other shareholder and administrative services on behalf of the
Fund.
(c) Legal Counsel
Blazzard, Grodd & Hasenauer, P.C., is legal counsel to the Fund.
THE DISTRIBUTOR
The Fund's Distributor is Navellier Securities Corp., a Delaware corporation
organized and incorporated on May 10, 1993. The Fund's shares will be
continuously distributed by the Distributor, located at One East Liberty, Third
Floor, Reno, Nevada 89501, pursuant to a Distribution Agreement, dated
_____________, 1998.
INDEPENDENT ACCOUNTANTS
Tait, Weller & Baker, Philadelphia, Pennsylvania, serves as the independent
accountants of the Fund and, in such capacity, audits and reports on the Fund's
annual financial statements, assists in the preparation of the Fund's federal
tax returns and performs other professional accounting, auditing and advisory
services when engaged to do so by the Fund.
BROKERAGE ALLOCATION AND OTHER PRACTICES
In effecting portfolio transactions for the Fund, the Investment Adviser adheres
to the Fund's policy of seeking best execution and price, determined as
described below, except to the extent it is permitted to pay higher brokerage
commissions for "brokerage and research services," as defined herein. The
Investment Adviser may cause the Fund to pay a broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission which another broker or dealer would have charged for effecting the
transaction if the Investment Adviser determines in good faith that such amount
of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer or that any offset of direct
expenses of a Portfolio yields the best net price. As provided in Section 28(e)
of the Securities Exchange Act of 1934, "brokerage and research services"
include giving advice as to the value of securities, the advisability of
investing in, purchasing, or selling securities, and the availability of
securities; furnishing analysis and reports concerning issuers, industries,
economic facts and trends, portfolio strategy and the performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Brokerage and research services
provided by brokers to the Fund or to the Investment Adviser are considered to
be in addition to and not in lieu of services required to be performed by the
Investment Adviser under its contract with the Fund and may benefit both the
Fund and other clients of the Investment Adviser or customers of or affiliates
of the Investment Adviser. Conversely, brokerage and research services provided
by brokers to other clients of the Investment Adviser or its affiliates may
benefit the Fund.
If the securities in which a particular Portfolio of the Fund invests are traded
primarily in the over-the-counter market, where possible, the Fund will deal
directly with the dealers who make a market in the securities involved unless
better prices and execution are available elsewhere. Such dealers usually act as
principals for their own account. There is generally no stated commission in the
case of securities traded in the over-the-counter market, but the price paid by
a Portfolio usually includes an undisclosed dealer commission or mark-up. On
occasion, securities may be purchased directly from the issuer. There may be
customary mark-ups on principal transactions. Bonds and money market instruments
are generally traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes.
The determination of what may constitute best execution and price in the
execution of a securities transaction by a broker involves a number of
considerations including, without limitation, the overall direct net economic
result to the Fund (involving both price paid or received and any net
commissions and other costs paid), the efficiency with which the transaction is
effected, the ability to effect the transaction at all where a large block is
involved, the availability of the broker to stand ready to execute possibly
difficult transactions in the future, and the financial strength and stability
of the broker. Such considerations are judgmental and are weighed by the
Investment Adviser in determining the overall reasonableness of brokerage
commissions paid by the Fund. Some portfolio transactions are subject to the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
and subject to obtaining best prices and executions, effected through dealers
who sell shares of the Fund and/or possibly the VA Contracts and/or VLI
Policies.
The Board of Directors of the Fund will periodically review the performance of
the Investment Adviser of its respective responsibilities in connection with the
placement of portfolio transactions on behalf of the Fund and review the
commissions paid by the Fund over representative periods of time to determine if
they are reasonable in relation to the benefits to the Fund.
The Board of Directors will periodically review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar fees
paid by the Fund on portfolio transactions is legally permissible and advisable.
At present, no recapture arrangements are in effect. The Board of Directors will
review whether recapture opportunities are available and are legally
permissible, and, if so, will determine, in the exercise of their business
judgment, whether it would be advisable for the Fund to seek such recapture.
CAPITAL STOCK AND OTHER SECURITIES
The rights and preferences attached to the shares of each Portfolio are
described in the Prospectus. (See "Description of Shares".) The 1940 Act
requires that where more than one class or series of shares exists, each class
or series must be preferred over all other classes or series in respect of
assets specifically allocated to such class or series. Rule 18f-2 under the 1940
Act provides that any matter required to be submitted by the provisions of the
1940 Act or applicable state law, or otherwise, to the holders of the
outstanding voting securities of an investment company such as the Fund shall
not be deemed to have been effectively acted upon unless approved by the holders
of a majority of the outstanding shares of each series affected by such matter.
Rule 18f-2 further provides that a series shall be deemed to be affected by a
matter unless the interests of each series in the matter are substantially
identical or that the matter does not affect any interest of such series.
However, the Rule exempts the selection of independent public accountants, the
approval of principal distribution contracts, and the election of Directors from
the separate voting requirements of the Rule.
PURCHASE, REDEMPTION, AND PRICING OF SHARES
Redemption of Shares. The Prospectus, under "Purchases and Redemptions"
describes the requirements and methods available for effecting redemption. The
Fund may suspend the right of redemption or delay payment more than seven days
(a) during any period when the New York Stock Exchange or any other applicable
exchange, is closed (other than a customary weekend and holiday closing), (b)
when trading on the New York Stock Exchange, or any other applicable exchange,
is restricted, or an emergency exists as determined by the Securities and
Exchange Commission ("SEC") or the Fund so that disposal of the Fund's
investments or a fair determination of the net asset values of the Portfolios is
not reasonably practicable, or (c) for such other periods as the SEC by order
may permit for protection of the Portfolio's shareholders.
The Fund normally redeems shares for cash. However, the Board of Directors can
determine that conditions exist making cash payments undesirable. If they should
so determine (and if a proper election pursuant to Rule 18f-1 of the 1940 Act
has been made by the Fund), redemption payments could be made in securities
valued at the value used in determining net asset value. There generally will be
brokerage and other costs incurred by the redeeming shareholder in selling such
securities.
Determination of Net Asset Value. As described in the Prospectus under
"Purchases and Redemptions - Valuation of Shares," the net asset value of shares
of each Portfolio of the Fund is determined once daily as of 4 p.m. New York
time on each day during which the New York Stock Exchange, or other applicable
exchange, is open for trading. The New York Stock Exchange is scheduled to be
closed for trading on the following days: New Year's Day, Washington's Birthday,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. The Board of Directors of the Exchange reserves the right to
change this schedule. In the event that the New York Stock Exchange or the
national securities exchanges on which small cap equities are traded adopt
different trading hours on either a permanent or temporary basis, the Board of
Directors of the Fund will reconsider the time at which net asset value is to be
computed.
Valuation of Assets. In determining the value of the assets of any
Portfolio of the Fund, the securities for which market quotations are readily
available are valued at market value, which is currently determined using the
last reported sale price, or, if no sales are reported - as is the case with
many securities traded over-the-counter - the last reported bid price. Debt
securities (other than short-term obligations, i.e., obligations which have 60
days or less left to maturity, which are valued on the basis of amortized cost)
are normally valued on the basis of valuations provided by a pricing service
when such prices are believed to reflect the fair value of such securities.
Prices provided by a pricing service may be determined without exclusive
reliance on quoted prices and take into account appropriate factors such as
institution-size trading in similar groups of securities, yield, quality of
issue, trading characteristics, and other market data. All other securities and
assets are valued at their fair value as determined in good faith by the Board
of Directors, although the actual calculations may be made by persons acting
pursuant to the direction of the Board of Directors.
TAXES
In the case of a "series fund" (that is, a regulated investment company having
more than one segregated portfolio of investments the beneficial interests in
which are owned by the holders of a separate series of stock), each investment
portfolio is treated as a separate corporation for federal income tax purposes.
The Fund will be deemed a series fund for this purpose and, thus, each Portfolio
will be deemed a separate corporation for such purpose.
Each Portfolio of the Fund intends to qualify as a regulated investment company
for federal income tax purposes. Such qualification requires, among other
things, that each Portfolio (a) make a timely election to be a regulated
investment company, (b) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities (including options and futures) or
foreign currencies, and (c) diversify its holdings so that at the end of each
fiscal quarter (i) 50% of the market value of its assets is represented by cash,
government securities, securities of other regulated investment companies, and
securities of one or more other issuers (to the extent the value of the
securities of any one such issuer owned by the Portfolio does not exceed 5% of
the value of its total assets and 10% of the outstanding voting securities of
such issuer) and (ii) not more than 25% of the value of its assets is invested
in the securities (other than government securities and securities of other
regulated investment companies) of any one industry. These requirements may
limit the ability of the Portfolios to engage in transactions involving options
and futures contracts.
If each Portfolio qualifies as a regulated investment company, it will not be
subject to federal income tax on its "investment company taxable income"
(calculated by excluding the amount of its net capital gain, if any, and by
excluding the dividends-received and net operating loss deductions) or "net
capital gain" (the excess of its long-term capital gain over its net short-term
capital loss) which is distributed to shareholders. In determining taxable
income, however, a regulated investment company holding stock on the record date
for a dividend is required to include the dividend in income on the later of the
ex-dividend date or the date of acquisition.
Section 817 Diversification Requirements
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of segregated asset accounts that fund contracts such as the
VA Contracts and VLI Policies (that is, the assets of the Portfolios), which are
in addition to the diversification requirements imposed on the Portfolios by the
1940 Act and Subchapter M. Failure to satisfy those standards would result in
imposition of Federal income tax on a VA Contract or VLI Policy owner with
respect to the increase in the value of the VA Contract or VLI Policy. Section
817(h)(2) provides that a segregated asset account that funds contracts such as
the VA Contracts and VLI Policies is treated as meeting the diversification
standards if, as of the close of each calendar quarter, the assets in the
account meet the diversification requirements for a regulated investment company
and no more than 55% of those assets consist of cash, cash items, U.S.
Government securities and securities of other regulated investment companies.
The Treasury Regulations amplify the diversification standards set forth in
Section 817(h) and provide an alternative to the provision described above.
Under the regulations, an investment portfolio will be deemed adequately
diversified if (i) no more than 55% of the value of the total assets of the
portfolio is represented by any one investment; (ii) no more than 70% of such
value is represented by any two investments; (iii) no more than 80% of such
value is represented by any three investments; and (iv) no more than 90% of such
value is represented by any four investments. For purposes of these Regulations
all securities of the same issuer are treated as a single investment, but each
United States government agency or instrumentality shall be treated as a
separate issuer.
Each Portfolio will be managed with the intention of complying with these
diversification requirements. It is possible that, in order to comply with these
requirements, less desirable investment decisions may be made which would affect
the investment performance of a Portfolio.
CALCULATION OF PERFORMANCE DATA
Performance information for each Portfolio may appear in advertisements, sales
literature, or reports to shareholders or prospective shareholders. Performance
information in advertisements and sales literature may be expressed as total
return on the applicable Portfolio.
The average annual total return on such Portfolios represents an annualization
of each Portfolio's total return ("T" in the formula below) over a particular
period and is computed by finding the current percentage rate which will result
in the ending redeemable value ("ERV" in the formula below) of a $1,000
payment/*/ ("P" in the formula below) made at the beginning of a one-, five-, or
ten-year period, or for the period from the date of commencement of the
Portfolio's operation, if shorter ("n" in the formula below). The following
formula will be used to compute the average annual total return for the
Portfolio:
N
P (1 + T) = ERV
In addition to the foregoing, each Portfolio may advertise its total return over
different periods of time by means of aggregate, average, year-by-year, or other
types of total return figures.
Performance information for the Portfolios shall reflect only the performance of
a hypothetical investment in the Portfolios during the particular time period on
which the calculations are based. Performance information should be considered
in light of the investment objectives and policies, characteristics and quality
of the particular Portfolio, and the market conditions during the given time
period, and should not be considered as a representation of what may be achieved
in the future.
Each Portfolio may, from time to time, include in advertisements containing
total return the ranking of those performance figures relative to such figures
for groups of mutual funds categorized by Lipper Analytical Services, or other
services, as having the same investment objectives. The total return may also be
used to compare the performance of the Portfolio against certain widely
acknowledged outside standards or indices for stock and bond market performance.
The Standard & Poor's Composite Stock Price Index of 500 stocks ("S&P 500") is a
market value-weighted and unmanaged index showing the changes in the aggregate
market value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included.
As summarized in the Prospectus under the heading "Performance Advertising", the
total return and/or yield of a Portfolio may be quoted in advertisements and
sales literature.
FINANCIAL STATEMENTS
A Statement of Assets and Liabilities of the Growth Portfolio as of
January 15, 1998, and the report of Tait, Weller & Baker, Independent
Accountants, with respect thereto, is set forth below.
TAIT, WELLER & BAKER
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and Directors
Navellier Growth Portfolio
Reno, Nevada
We have audited the accompanying statement of assets and liabilities of the
Navellier Growth Portfolio, a series of shares of Navellier Variable Insurance
Series Fund, Inc. (the "Fund") as of January 15, 1998. This financial statement
is the responsibility of the Fund's management. Our responsibility is to express
an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit of the statement of
assets and liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Navellier Growth Portfolio as of January 15, 1998 in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 16, 1998
NAVELLIER GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
January 15, 1998
- --------------------------------------------------------------------------------
ASSETS
Cash $100,000
--------
Total assets 100,000
LIABILITIES -
--------
NET ASSETS
(500,000,000 shares authorized; 10,000 shares outstanding) $100,000
--------
--------
Net asset value and redemption price per share
$100,000 / 10,000 shares $10.00
------
------
See notes to statement of assets and liabilities
NAVELLIER GROWTH PORTFOLIO
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
January 15, 1998
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Navellier Growth Portfolio (the "Portfolio") is a series of The Navellier
Variable Insurance Series Fund, Inc. (the "Fund"), a diversified, open-end
investment company. The Fund was incorporated on February 28, 1997 as a
Maryland Corporation. The Fund and the Portfolio have had no operations
through January 15, 1998 other than those relating to organizational matters
and the sale and issuance of 10,000 shares at $10.00 per share to the initial
shareholder.
APPENDIX
A-1 and P-1 Commercial Paper Ratings
The Growth Portfolio will invest only in commercial paper which, at the date of
investment, is rated A-1 by Standard & Poor's Corporation ("S&P") or P- 1 by
Moody's Investors Services, Inc. ("Moody's"), or, if not rated, is issued or
guaranteed by companies which at the date of investment have an outstanding debt
issue rated AA or higher by Standard & Poor's or Aa or higher by Moody's.
Commercial paper rated A-1 by S&P has the following characteristics: (1)
liquidity ratios are adequate to meet cash requirements; (2) long-term senior
debt is rated "A" or better; (3) the issuer has access to at least two
additional channels of borrowing; (4) basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; (5) typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and (6) the reliability and quality of management are
unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody's. Among
the factors considered by Moody's in assigning ratings are the following: (1)
evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationship which exists with
the issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and preparations
to meet such obligations.
PART C
OTHER INFORMATION
Item 24 Financial Statements and Exhibits
(a) Financial Statements:
The Financial Statements filed as part of this Registration
Statement are as follows:
Statement of Assets and Liabilities of the Navellier Growth
Portfolio as of January 15, 1998*
Report of Independent Accountants - January 16, 1998*
*Included in Part B of this Registration Statement
(b) Exhibits:
Exhibit
Number Description
______ ________________
1. Articles of Incorporation of Registrant*
2. By-Laws of Registrant
3. None
4. None
5. Form of Investment Advisory Agreement between Registrant
and Navellier & Associates, Inc.
6. Form of Distribution Agreement between the Registrant and
Navellier Securities Corp.
7. None
8. Administrative Services, Custodian, Transfer Agent Agreement
with Rushmore Trust & Savings, FSB (to be filed by amendment)
9.1 Navellier Administrative Services Agreement by and between
the Registrant and Navellier & Associates, Inc.
9.3 Form of Expense Limitation Agreement between the Registrant
and Navellier Management, Inc.
9.4(a) Form of Fund Participation Agreement
9.4.(b) Form of Fund Participation Agreement between the Registrant,
the Adviser, American General Life Insurance Company and
American General Securities Incorporated
10. Opinion and Consent of Counsel
11. Consent of Independent Accountants
12. None
13. Subscription Agreement between Navellier Variable Insurance
Series Fund, Inc. and Louis G. Navellier, dated January 15,
1998
14. None
15. None
16. None
17. None
18. None
24. None
27. None
*Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A (File No. 333-22633), as filed electronically on
February 28, 1997.
Item 25 Persons Controlled by or under Common Control with Registrant
There are no persons who are controlled by or under common control with the
Registrant.
Item 26 Number of Holders of Securities
Louis G. Navellier, as the initial shareholder of the Growth Portfolio of
the Fund, holds all of the outstanding shares of the Fund.
Item 27 Indemnification
The Articles of Incorporation of the Registrant include the following:
ARTICLE VII
(4) Each Director and each officer of the Corporation shall be indemnified
by the Corporation to the full extent permitted by the Maryland General
Corporation Law and the By-Laws of the Corporation, as such law and By-Laws may
now or in the future be in effect, subject only to such limitations as may be
required by the Investment Company Act of 1940, as amended.
The By-Laws of the Registrant include the following:
ARTICLE VI
Indemnification
"The Corporation shall indemnify (a) its Directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by (i) Maryland law now or hereafter in force, including
the advance of expenses under the procedures and to the full extent permitted by
law, and (ii) the Investment Company Act of 1940, as amended, and (b) other
employees and agents to such extent as shall be authorized by the Board of
Directors and be permitted by law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary to
carry out these indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such resolutions or contracts implementing
such provisions nor such further indemnification arrangement as may be permitted
by law."
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suite or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
To the extent that the Articles of Incorporation, By-Laws or any other
instrument pursuant to which the Registrant is organized or administered
indemnify any director or officer of the Registrant, or that any contract or
agreement indemnifies any person who undertakes to act as investment adviser or
principal underwriter to the Registrant, any such provision protecting or
purporting to protect such persons against any liability to the Registrant or
its security holders to which he would otherwise by subject by reason of willful
misfeasance, bad faith, or gross negligence, in the performance of his duties,
or by reason of his contract or agreement, will be interpreted and enforced in a
manner consistent with the provisions of Sections 17(h) and (i) of the
Investment Company Act of 1940, as amended, and Release No. IC-11330 issued
thereunder.
Item 28 Business and Other Connections of Investment Adviser
Set forth below is a description of any other business, profession, vocation, or
employment of a substantial nature in which each investment adviser of the Fund
and each director, officer, or partner of any such investment adviser, is or has
been at any time during the past two fiscal years, engaged for his own account
or in the capacity of director, officer, employee, partner, or trustee:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Positions Held with Principal Occupations
Business Address Registrant and Its Affiliates During Past Two Years
- ---------------- ----------------------------- ---------------------
Louis G. Navellier Mr. Navellier is the CEO, Mr. Navellier is and has been
One East Liberty President, Treasurer, and the CEO and President of
Third Floor Secretary of Navellier Navellier & Associates Inc.,
Reno, NV 89501 & Associates, Inc., a Delaware an investment management
Corporation which is the company since 1988; is and has
Investment Adviser to the been CEO and President of
Fund. Mr. Navellier is also Navellier Management, Inc.;
CEO, President, Secretary, one of the Portfolio Managers
and Treasurer of Navellier for the Investment Adviser to
Management Inc., Navellier this Fund, The Navellier
Publications, Inc., MPT Series Fund and The Navellier
Review Inc., and Navellier Performance Funds; President
International Management, Inc. and CEO of Navellier
Securities Corp., the
principal Underwriter to The
Navellier Performance Funds
and The Navellier Series
Fund; CEO and President of
Navellier Fund Management,
Inc. and investment advisory
company, since November 30,
1995; and has been publisher
and editor of MPT Review from
August 1987 to the present,
and was publisher and editor
of the predecessor investment
advisory newsletter OTC
Insight, which he began in
1980 and wrote through July
1987.
</TABLE>
Item 29 Principal Underwriters
(a) The Distributor does not currently act as principal underwriter, depositor,
or investment adviser for any investment company other than the Fund, The
Navellier Performance Fund and the Navellier Series Fund.
(b) The following information is provided, as of the date hereof, with respect
to each director, officer, or partner of each principal underwriter named in
response to Item 21:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
- ------------------ ---------------------- ----------------------
Louis Navellier CEO, President, Director, Trustee, President,
920 Incline Way Treasurer, and Secretary CEO, Treasurer
Incline Village, NV 89450
</TABLE>
(c) Not Applicable.
Item 30 Location of Accounts and Records
All accounts, records, and other documents required to be maintained under
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained at the office of the Navellier Variable Insurance Series Fund, Inc.
located at One East Liberty, Third Floor, Reno, Nevada 89501, and the offices of
the Fund's Custodian and Transfer Agent at 4922 Fairmont Avenue, Bethesda, MD
20814.
Item 31 Management Services
Other than as set forth in Part A and Part B of this Registration Statement, the
Fund is not a party to any management-related service contract.
Item 32 Undertakings
Registrant hereby undertakes that whenever shareholders meeting the requirements
of Section 16(c) of the Investment Company Act of 1940 inform the Board of
Directors of their desire to communicate with Shareholders of the Fund, the
Directors will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant undertakes to call a meeting of Shareholders for the purpose of
voting upon the question of removal of a Director(s) when requested in writing
to do so by the holders of at least 10% of Registrant's outstanding shares and
in connection with such meetings to comply with the provisions of Section 16(c)
of the Investment Company Act of 1940 relating to Shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus is delivered
with a copy of the Registrant's latest annual report to Shareholders, upon
request and without charge.
Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the later
of the commencement of operations of the Registrant or the effective date of the
Registrant's 1933 Act Registration Statement.
SIGNATURES
Pursuant to the Securities Act of 1933 and the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned thereto duly authorized, in the City of Reno, and
State of Nevada, on the 26th day of January, 1998.
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
______________________________________________
Registrant
By: /s/LOUIS G. NAVELLIER
__________________________________________
Louis G. Navellier
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature and Title
/s/LOUIS G. NAVELLIER President 1/26/98
_________________________________ ____________
Louis G. Navellier Date
/s/DENNIS A. HOLTORF Treasurer 1/26/98
_________________________________ ____________
Dennis A. Holtorf Date
/s/DEAN H. HAMILTON* Director 1/26/98
_________________________________ ____________
Dean H. Hamilton Date
/s/ROBERT S. HARDY* Director 1/26/98
_________________________________ ____________
Robert S. Hardy Date
/s/ROBERT G. SHARP* Director 1/26/98
_________________________________ ____________
Robert G. Sharp Date
/s/LOUIS G. NAVELLIER
*By____________________________________
Louis G. Navellier, Attorney-in-Fact
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Louis G. Navellier, President of
Navellier Variable Insurance Series Fund, Inc., (the "Fund"), a Maryland
corporation, do hereby appoint Dennis A. Holtorf as my attorney and agent, for
me, and in my name as President of the Fund on behalf of the Fund or otherwise,
with full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 21st day of January, 1998.
/s/Louis. G. Navellier
________________________
Louis G. Navellier
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Dean H. Hamilton, a Director of
Navellier Variable Insurance Series Fund, Inc., (the "Fund"), a Maryland
corporation, do hereby appoint Dennis A. Holtorf and Louis G. Navellier, each
individually, as my attorney and agent, for me, and in my name as a Director of
the Fund on behalf of the Fund or otherwise, with full power to execute, deliver
and file with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of the aforesaid Acts.
WITNESS my hand this 19th day of January, 1998.
WITNESS:
/s/JANET BOOTH /s/DEAN H. HAMILTON
__________________ ___________________
Dean H. Hamilton
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Robert Stephen Hardy, a Director of
Navellier Variable Insurance Series Fund, Inc., (the "Fund"), a Maryland
corporation, do hereby appoint Dennis A. Holtorf and Louis G. Navellier, each
individually, as my attorney and agent, for me, and in my name as a Director of
the Fund, on behalf of the Fund or otherwise, with full power to execute,
deliver and file with the Securities and Exchange Commission all documents
required for registration of a security under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, and to do and
perform each and every act that said attorney may deem necessary or advisable to
comply with the intent of the aforesaid Acts.
WITNESS my hand this 26th day of January, 1998.
WITNESS:
/s/KELLY HIGGINS /s/ROBERT STEPHEN HARDY
__________________ _____________________
Robert Stephen Hardy
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Robert G. Sharp, a Director of Navellier
Variable Insurance Series Fund, Inc., (the "Fund"), a Maryland corporation, do
hereby appoint Dennis A. Holtorf and Louis G. Navellier, each individually, as
my attorney and agent, for me, and in my name as a Director of the Fund, on
behalf of the Fund or otherwise, with full power to execute, deliver and file
with the Securities and Exchange Commission all documents required for
registration of a security under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, and to do and perform each and every
act that said attorney may deem necessary or advisable to comply with the intent
of the aforesaid Acts.
WITNESS my hand this 30th day of December, 1997.
WITNESS:
/s/J. P. Sharp /s/Robert G. Sharp
__________________ ______________________
Robert G. Sharp
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, Dennis A. Holtorf, Treasurer of
Navellier Variable Insurance Series Fund, Inc., (the "Fund"), a Maryland
corporation, do hereby appoint Louis G. Navellier as my attorney and agent, for
me, and in my name as Treasurer of the Fund, on behalf of the Fund or otherwise,
with full power to execute, deliver and file with the Securities and Exchange
Commission all documents required for registration of a security under the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS my hand this 21st day of January, 1998.
/s/Dennis A. Holtorf
_______________________
Dennis A. Holtorf
EXHIBIT LIST
Exhibit Number Description
EX-99.B2 By-Laws
EX-99.B5 Form of Investment Advisory Agreement between
Registrant and Navellier & Associates, Inc.
EX-99.B6 Form of Distribution Agreement between the
Registrant and Navellier Securities Corp.
EX-99.B8 Administrative Services, Custodian, Transfer Agent
Agreement with Rushmore Trust & Savings, FSB
EX-99.B9.1 Navellier Administrative Services Agreement by and
between the Registrant and Navellier & Associates, Inc.
EX-99.B9.3 Form of Expense Limitation Agreement between
Registrant and Navellier Management, Inc.
EX-99.B9.4(a) Form of Fund Participation Agreement
EX-99.B9.4(b) Form of Fund Participation Agreement between the
Registrant, the Adviser, American General Life Insurance
Company and American General Securities Incorporated
EX-99.B10 Opinion and Consent of Counsel
EX-99.B11 Consent of Independent Accountants
EX-99.B13 Subscription Agreement between Navellier Variable
Insurance Series Fund, Inc. and Louis G. Navellier,
dated January 15, 1998
BYLAWS
FOR
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation in the
State of Maryland shall be in the City of Baltimore.
SECTION 2. OTHER OFFICES. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING. Subject to this Article II, an annual meeting of
stockholders for the election of Directors and the transaction of such other
business as may properly come before the meeting shall be held at such time and
place as the Board of Directors shall select. The Corporation shall not be
required to hold an annual meeting of its stockholders in any year in which the
election of Directors is not required to be acted upon under the Investment
Company Act of 1940.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be called
at any time by the President, the Secretary or by a majority of the Board of
Directors and shall be held at such time and place as may be stated in the
notice of the meeting.
Special meetings of the stockholders shall be called by the Secretary upon
receipt of written request of the holders of shares entitled to cast not less
than 10% of the votes entitled to be cast at such meeting, provided that (1)
such request shall state the purposes of such meeting and the matters proposed
to be acted on, and (2) the stockholders requesting such meeting shall have paid
to the Corporation the reasonably estimated cost of preparing and mailing the
notice thereof, which the Secretary shall determine and specify to such
stockholders. No special meeting shall be called upon the request of
stockholders to consider any matter which is substantially the same as a matter
voted upon at any special meeting of the stockholders held during the preceding
12 months, unless requested by the holders of a majority of all shares entitled
to be voted at such meeting.
SECTION 3. PLACE OF MEETINGS. Meetings of stockholders shall be held at
such place within or without the State of Maryland or abroad as the Board of
Directors may from time to time determine.
SECTION 4. NOTICE OF MEETINGS; WAIVER OF NOTICE. Notice of the place, date
and time of the holding of each stockholders' meeting and, if the meeting is a
special meeting, the purpose or purposes of the meeting, shall be given
personally or by mail, not less than ten nor more than ninety days before the
date of such meeting, to each stockholder entitled to vote at such meeting and
to each other stockholder entitled to notice of the meeting. Notice by mail
shall be deemed to be duly given when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting.
SECTION 5. QUORUM; ADJOURNMENT OF MEETINGS. The presence at any
stockholders' meeting, in person or by proxy, of stockholders of one third of
the shares of the stock of the Corporation thereat shall be necessary and
sufficient to constitute a quorum for the transaction of business, except for
any matter which, under applicable statutes or regulatory requirements, requires
approval by a separate vote of one or more classes of stock, in which case the
presence in person or by proxy of stockholders of one third of the shares of
stock of each class required to vote as a class on the matter shall constitute a
quorum. The holders of a majority of shares entitled to vote at the meeting and
present in person or by proxy, whether or not sufficient to constitute a quorum,
or, any officer present entitled to preside or act as Secretary of such meeting,
may adjourn the meeting without determining the date of the new meeting and/or
without further notice to a date not more than 120 days after the original
record date. Any business that might have been transacted at the meeting
originally called may be transacted at any such adjourned meeting at which a
quorum is present.
SECTION 6. ORGANIZATION. At each meeting of the stockholders, the Chairman
of the Board (if one has been designated by the Board), or in his absence or
inability to act, the President, or in the absence or inability to act of the
Chairman of the Board and the President, a Senior Vice President or a Vice
President, shall act as chairman of the meeting; provided, however, that if no
such officer is present or able to act, a chairman of the meeting shall be
elected at the meeting. The Secretary, or in his absence or inability to act,
any person appointed by the chairman of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.
SECTION 7. ORDER OF BUSINESS. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
SECTION 8. VOTING. Except as otherwise provided by statute or the Articles
of Incorporation, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for every full share of such stock, with a fractional vote for any
fractional shares, standing in his name on the record of stockholders of the
Corporation as of the record date determined pursuant to Section 9 of this
Article or if such record date shall not have been so fixed, then at the later
of (i) the close of business on the day on which notice of the meeting is mailed
or (ii) the thirtieth day before the meeting.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholders or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law. Except as
otherwise provided by statute, the Articles of Incorporation or these By-Laws,
any corporate action to be taken by vote of the stockholders shall be authorized
by a majority of the total votes validly cast at a meeting of stockholders at
which a quorum is present.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these By-Laws, or determined by the chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
SECTION 9. FIXING OF RECORD DATE. The Board of Directors may fix a time not
less than 10 nor more than 90 days prior to the date of any meeting of
stockholders or prior to the last day on which the consent or dissent of
stockholders may be effectively expressed for any purpose without a meeting, as
the time as of which stockholders entitled to notice of and to vote at such a
meeting or whose consent or dissent is required or may be expressed for any
purpose, as the case may be, shall be determined; and all persons who were
holders of record of voting stock at such time and no other shall be entitled to
notice of and to vote at such meeting or to express their consent or dissent, as
the case may be. If no record date has been fixed, the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be the later of the close of business on the day on which
notice of the meeting is mailed or the thirtieth day before the meeting, or, if
notice is waived by all stockholders, at the close of business on the tenth day
next preceding the day on which the meeting is held. The Board of Directors may
fix a record date for determining stockholders entitled to receive payment of a
dividend or an allotment of any rights, but such date shall be not more than 90
days before the date on which such payment or allotment is made. If no record
date has been fixed, the record date for determining stockholders entitled to
receive dividends or an allotment of rights shall be the close of business on
the day on which the resolution of the Board of Directors declaring the dividend
or an allotment of rights is adopted, but the payment or allotment shall not be
made more than 60 days after the date on which the resolution is adopted.
SECTION 10. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Except as otherwise
provided by statute or the Articles of Incorporation, any action required to be
taken at any meeting of stockholders, or any action which may be taken at any
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
stockholders' meetings: (i) a unanimous written consent which sets forth the
action and is signed by each stockholder entitled to vote on the matter and (ii)
a written waiver of any right to dissent signed by each stockholder entitled to
notice of the meeting but not entitled to vote thereat.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors and all powers of
the Corporation may be exercised by or under authority of the Board of
Directors.
SECTION 2. NUMBER OF DIRECTORS. The number of directors shall be fixed from
time to time by resolution of the Board of Directors adopted by a majority of
the Directors then in office; provided, however, that the number of Directors
shall in no event be less than three (3) nor more than fifteen (15); except that
the Corporation shall have at least one (1) Director if there is no stock
outstanding and may have a number of Directors or fewer than three (3)
stockholders. Any vacancy created by an increase in Directors may be filled in
accordance with Section 6 of this Article III. No reduction in the number of
Directors shall have the effect of removing any Director from office prior to
the expiration of his term unless such Director is specifically removed pursuant
to Section 5 of this Article III at the time of such decrease. Directors need
not be stockholders.
SECTION 3. ELECTION AND TERM OF DIRECTORS. Directors shall be elected
annually, by written ballot at the annual meeting of stockholders or a special
meeting held for that purpose; provided, however, that if no annual meeting of
the stockholders of the Corporation is required to be held in a particular year
pursuant to Section 1 of Article II of these By-Laws, Directors shall be elected
at the next annual meeting held. The term of office of each Director shall be
from the time of his election and qualification until the election of Directors
next succeeding his election and until his successor shall have been elected and
shall have qualified.
SECTION 4. RESIGNATION. A Director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 5. REMOVAL OF DIRECTORS. Any Director of the Corporation may be
removed in accordance with the Articles of Incorporation.
SECTION 6. VACANCIES. If any vacancies shall occur in the Board of
Directors (i) by reason of death, resignation, removal or otherwise, the
remaining Directors shall continue to act, and such vacancies (if not previously
filled by the stockholders) may be filled by a majority of the remaining
Directors, although less than a quorum, or (ii) by reason of an increase in the
authorized number of Directors, such vacancies (if not previously filled by the
stockholders) may be filled only by a majority vote of the entire Board of
Directors.
SECTION 7. PLACE OF MEETING. The Directors may hold their meetings, have
one or more offices, and keep the books of the Corporation, outside the State of
Maryland, and within or without the United States of America, at any office or
offices of the Corporation or at any other place as they may from time to time
by resolution determine, or in the case of meetings, as they may from time to
time by resolution determine or as shall be specified or fixed in the respective
notices or waivers of notice thereof.
SECTION 8. REGULAR MEETINGS. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix their time and
place as the Board of Directors may determine. Notice of such regular meetings
need not be in writing, provided that notice of any change in the time or place
of such fixed regular meetings shall be communicated promptly to each Director
not present at the meeting at which such change was made in the manner provided
in Section 9 of this Article III for notice of special meetings. Members of the
Board of Directors or any committee designated thereby may participate in a
meeting of such Board or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time, and participation by such means
shall constitute presence in person at a meeting.
SECTION 9. SPECIAL MEETING. Special meetings of the Board of Directors may
be held at any time or place and for any purpose when called by the President,
the Secretary or two or more of the Directors. Notice of special meetings,
stating the time and place, shall be communicated to each Director personally by
telephone or transmitted to him by telegraph, telefax, telex, cable or wireless
at least one day before the meeting.
SECTION 10. WAIVER OF NOTICE. No notice of any meeting of the Board of
Directors or a committee of the Board need be given to any Director who is
present at the meeting or who waives notice of such meeting in writing (which
waiver shall be filed with the records of such meeting), either before or after
the time of the meeting.
SECTION 11. QUORUM AND VOTING. At all meetings of the Board of Directors,
the presence of one third of the entire Board of Directors shall constitute a
quorum unless there are only two or three Directors, in which case two Directors
shall constitute a quorum. If there is only one Director, the sole Director
shall constitute a quorum. At any adjourned meeting at which a quorum is
present, any business may be transacted which might have been transacted at the
meeting as originally called.
SECTION 12. ORGANIZATION. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President, or, in his absence
or inability to act, another Director chosen by a majority of the Directors
present, shall act as chairman of the meeting and preside thereat. The Secretary
(or, in his absence or inability to act, any person appointed by the Chairman)
shall act as secretary of the meeting and keep the minutes thereof.
SECTION 13. WRITTEN CONSENT OF DIRECTORS IN LIEU OF A MEETING. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board or
committee.
SECTION 14. COMPENSATION. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board.
ARTICLE IV
COMMITTEES
SECTION 1. ORGANIZATION. By resolution adopted by the Board of Directors,
the board may designate one or more committees, including an Executive
Committee, composed of two or more Directors. The Chairman of such committees
shall be elected by the Board of Directors. The Board of Directors shall have
the power at any time to change the members of such committees and to fill
vacancies in the committees. The Board may delegate to these committees any of
its powers, except the power to authorize the issuance of stock, declare a
dividend or distribution on stock, recommend to stockholders any action
requiring stockholder approval, amend these By-Laws, or approve any merger or
share exchange which does not require stockholder approval. If the Board of
Directors has given general authorization for the issuance of stock, a committee
of the Board, in accordance with a general formula or method specified by the
Board by resolution or by adoption of a stock option or other plan, may fix the
terms of stock subject to classification or reclassification and the terms on
which any stock may be issued, including all terms and conditions required or
permitted to be established or authorized by the Board of Directors.
SECTION 2. PROCEEDINGS AND QUORUM. In the absence of an appropriate
resolution of the Board of Directors, each committee may adopt such rules and
regulations governing its proceedings, quorum and manner of acting as it shall
deem proper and desirable. In the event any member of any committee is absent
from any meeting, the members thereof present at the meeting, whether or not
they constitute a quorum, may appoint a member of the Board of Directors to act
in the place of such absent member.
ARTICLE V
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. GENERAL. The officers of the Corporation shall be a President, a
Secretary and a Treasurer, and may include one or more Executive Vice
Presidents, Vice Presidents, Assistant Secretaries or Assistant Treasurers, and
such other officers as may be appointed in accordance with the provisions of
Section 8 of this Article.
SECTION 2. ELECTION, TENURE AND QUALIFICATIONS. The officers of the
Corporation, except those appointed as provided in Section 8 of this Article V,
shall be elected by the Board of Directors at its first meeting and thereafter
annually at an annual meeting. If any officers are not chosen at any annual
meeting, such officers may be chosen at any subsequent regular or special
meeting of the Board. Except as otherwise provided in this Article V, each
officer chosen by the Board of Directors shall hold office until the next annual
meeting of the Board of Directors and until his successor shall have been
elected and qualified. Any person may hold one or more offices of the
Corporation except the offices of President and Vice President.
SECTION 3. REMOVAL AND RESIGNATION. Whenever in the judgment of the Board
of Directors the best interest of the Corporation will be served thereby, any
officer may be removed from office by the vote of a majority of the members of
the Board of Directors at any regular meeting or at a special meeting called for
such purpose. Any officer may resign his office at any time by delivering a
written resignation to the Board of Directors, the President, the Secretary, or
any Assistant Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
SECTION 4. PRESIDENT. The President shall be the chief executive officer of
the Corporation. Subject to the supervision of the Board of Directors, he shall
have general charge of the business, affairs and property of the Corporation and
general supervision over its officers, employees and agents. Except as the Board
of Directors may otherwise order, he may sign in the name and on behalf of the
Corporation all deeds, bonds, contracts, or agreements. He shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him by the Board of Directors.
SECTION 5. EXECUTIVE VICE PRESIDENT AND VICE PRESIDENT. The Board of
Directors may from time to time elect one or more Executive Vice Presidents who
shall have such powers and perform such duties as from time to time may be
assigned to them by the Board of Directors or the President. At the request or
in the absence or disability of the President, the Executive Vice President (or,
if there are two or more Executive Vice Presidents, then the more senior of such
officers present and able to act) may perform all the duties of the President
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may perform such duties as
the Board of Directors may assign.
SECTION 6. TREASURER AND ASSISTANT TREASURER. The Treasurer shall be the
principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of the performance
by the Custodian of its duties with respect thereto. He shall render to the
Board of Directors, whenever directed by the Board, an account of the financial
condition of the Corporation and of all his transactions as Treasurer. He shall
perform all acts incidental to the Office of Treasurer, subject to the control
of the Board of Directors.
Any Assistant Treasurer may perform such duties of the Treasurer as the
Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, the Assistant Treasurer (or if there are two or more Assistant
Treasurers, then the more senior of such officers present and able to act) may
perform all of the duties of the Treasurer.
SECTION 7. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall attend
to the giving and serving of all notices of the Corporation and shall record all
proceedings of the meetings of the stockholders and Directors in books to be
kept for that purpose. He shall keep in safe custody the seal of the
Corporation, and shall have charge of the records of the Corporation, including
such books and papers as the Board of Directors may direct and such books,
reports, certificates and other documents required by law to be kept, all of
which shall at all reasonable times be open to inspection by any Director. He
shall perform such other duties as appertain to his office or as may be required
by the Board of Directors.
Any Assistant Secretary may perform such duties of the Secretary as the
Secretary of the Board of Directors may assign, and, in the absence of the
Secretary, he may perform all the duties of the Secretary.
SECTION 8. SUBORDINATE OFFICERS. The Board of Directors from time to time
may appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
rights, terms of office, authorities and duties.
SECTION 9. REMUNERATION. The salaries or other compensation, if any, of the
officers of the Corporation shall be fixed from time to time by resolution of
the Board of Directors, except that the Board of Directors may by resolution
delegate to any person or group of persons the power to fix the salaries or
other compensation of any subordinate officers or agents appointed in accordance
with the provisions of Section 8 of this Article V.
SECTION 10. SURETY BONDS. The Board of Directors may require any officer or
agent of the Corporation to execute a bond (including, without limitation, any
bond required by the Investment Company Act of 1940, as amended, and the rules
and regulations of the Securities and Exchange Commission) to the Corporation in
such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his duties to the
Corporation, including responsibility for negligence and for the accounting of
any of the Corporation's property, funds or securities that may come into his
hands.
ARTICLE VI
INDEMNIFICATION
The Corporation shall indemnify (a) its Directors and officers, whether
serving the Corporation or at its request any other entity, to the full extent
required or permitted by (i) Maryland law now or hereafter in force, including
the advance of expenses under the procedures and to the full extent permitted by
law, and (ii) the Investment Company Act of 1940, as amended, and (b) other
employees and agents to such extent as shall be authorized by the Board of
Directors and be permitted by law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which those seeking indemnification may
be entitled. The Board of Directors may take such action as is necessary to
carry out these indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such resolutions or contracts implementing
such provisions or such further indemnification arrangements as may be permitted
by law.
ARTICLE VII
CAPITAL STOCK
SECTION 1. STOCK CERTIFICATES. The interest of each stockholder of the
Corporation may be evidenced by certificates for shares of stock in such forms
as the Board of Directors may from time to time prescribe. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the President, an Executive Vice President or a Vice President
and countersigned by the Secretary or an Assistant Secretary or the Treasurer or
an Assistant Treasurer. Certificates may be sealed with the actual corporate
seal or a facsimile of it or in any other form. Any or all of the signatures or
the seal on the certificate may be manual or a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate shall be issued, it may be issued by the
Corporation with the same effect as if such officer, transfer agent or registrar
were still in office at the date of issue unless written instructions of the
Corporation to the contrary are delivered to such officer, transfer agent or
registrar.
SECTION 2. STOCK LEDGERS. The stock ledgers of the Corporation, containing
the names and addresses of the stockholders and the number of shares held by
them respectively, shall be kept at the principal office of the Corporation or,
if the Corporation employs a transfer agent, at the office of the transfer agent
of the Corporation.
SECTION 3. TRANSFER OF SHARES. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for such shares properly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, with such proof of the
authenticity of the signature as the Corporation or its agents may reasonably
require and the payment of all taxes thereon. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive rights of a
person in whose name any share or shares stand on the record of stockholders as
the owner of such share or shares for all purposes, including, without
limitation, the rights to receive dividends or other distributions, and to vote
as such owner, and the Corporation shall not be bound to recognize any equitable
or legal claim to or interest in any such share or shares on the part of any
other person. The Board may make such additional rules and regulations, not
inconsistent with these By-Laws, as it may deem expedient concerning the issue,
transfer and registration of certificates for shares of stock of the
Corporation.
SECTION 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may from
time to time appoint or remove transfer agents and/or registrars of transfers of
shares of stock of the Corporation and it may appoint the same person as both
transfer agent and registrar. Upon any such appointment being made all
certificates representing shares of capital stock thereafter issued shall be
countersigned by one of such transfer agents or by one of such registrars of
transfers or by both and shall not be valid unless so countersigned. If the same
person shall be both transfer agent and registrar, only one countersignature by
such person shall be required.
SECTION 5. LOST, DESTROYED OR MUTILATED CERTIFICATES. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any such certificate or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board, in its absolute discretion,
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
ARTICLE VIII
SEAL
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "Maryland". The form of the seal may be altered by the Board of
Directors. Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced. Any Officer or Director
of the Corporation shall have the authority to affix the corporate seal of the
Corporation to any document requiring the same.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Company shall be determined by resolution of the
Board of Directors.
ARTICLE X
DEPOSITORIES AND CUSTODIAN
SECTION 1. DEPOSITORIES. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
SECTION 2. CUSTODIANS. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safe keeping of the
securities and investments of the Corporation shall contain provisions complying
with the Investment Company Act of 1940, as amended, and the general rules and
regulations thereunder.
ARTICLE XI
EXECUTION OF INSTRUMENTS
SECTION 1. CHECKS, NOTES, DRAFTS, ETC. Checks, notes, drafts, acceptances,
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate or as these By-Laws
provide.
SECTION 2. SALE OF TRANSFER OF SECURITIES. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or so transferred or otherwise disposed of subject to any limits
imposed by these By-Laws and pursuant to authorization by the Board and, when so
authorized to be held on behalf of the Corporation or sold, transferred or
otherwise disposed of, may be transferred from the name of the Corporation by
the signature of the President, any Executive Vice President, any Vice President
or the Treasurer or pursuant to any procedure approved by the Board of
Directors, subject to applicable law.
ARTICLE XII
INDEPENDENT PUBLIC ACCOUNTANTS
The Corporation shall employ an independent public accountant or a firm of
independent public accountants as its accountants to examine the accounts of the
Corporation and to sign and certify financial statements filed by the
Corporation.
ARTICLE XIII
AMENDMENTS
These By-Laws or any of them may be amended, altered or repealed at any
regular meeting of the stockholders or at any special meeting of the
stockholders at which a quorum is present or represented, provided that notice
of the proposed amendment, alteration or repeal be contained in the notice of
such special meeting. These By-Laws may also be amended, altered or repealed by
the affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board of Directors, except any particular By-Law which is
specified as not subject to alteration or repeal by the Board of Directors,
subject to the requirements of the Investment Company Act of 1940, as amended.
INVESTMENT ADVISORY AGREEMENT
FOR
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
AGREEMENT made as of the ____ day of ______________, 1997, by and between
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. a corporation organized under the
laws of the State of Maryland (the "Fund"), and NAVELLIER & ASSOCIATES, INC., a
Nevada corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is being registered as such under the Investment Company
Act of 1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund has a portfolio designated as the "Navellier Growth
Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Fund desires to retain the Adviser as investment adviser to
furnish advisory and portfolio management services to the Fund;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. DUTIES AS ADVISER. The Fund hereby appoints the Adviser to act as the
investment adviser to the Fund and, subject to the supervision of the Board of
Directors of the Fund, to provide investment advisory services to the Fund as
hereinafter set forth: (i) to obtain and evaluate such information and advice
relating to the economy, securities markets, and securities as it deems
necessary or useful to discharge its duties hereunder; (ii) to continuously
manage the assets of the Fund in a manner consistent with applicable law and the
investment objectives and policies set forth in the most current prospectus and
statement of additional information of the Fund under the Securities Act of 1933
(the "Prospectus"); (iii)to determine the timing of purchases, sales, and
dispositions of securities; (iv) to take such further action in its sole
discretion (but always in compliance with applicable law and the Prospectus)
without obligation to give prior notice to the Board of Directors of the Fund,
or the Custodian, including the placing of purchase and sale orders on behalf of
the Fund as it shall deem necessary and appropriate; (v) to furnish to or place
at the disposal of the Fund such of the information, evaluations, analyses, and
opinions formulated or obtained by it in the discharge of its duties as the Fund
may, from time to time, reasonably request; and (vi) to take such actions
necessary or appropriate to carry out the decisions of the Fund's Board of
Directors. The Fund has directed to the Custodian, and Custodian has agreed, to
act in accordance with the instructions of the Adviser. The Adviser shall at no
time have custody of or physical control over the investment account assets or
securities, and the Adviser shall not be liable for any act or omission of the
Custodian. The Adviser shall maintain records required under the Advisers Act
and shall make them available to the Portfolio or its designees for review or
inspection upon demand and at the Adviser's expense.
2. ALLOCATION OF CHARGES AND EXPENSES. The Adviser shall bear the cost of
rendering the investment advisory services to be performed by it under this
Agreement and shall, at its expense, maintain such staff and employ or retain
personnel and consult with other persons as it shall determine necessary.
Without limiting the generality of the foregoing, the staff and personnel of the
Adviser shall be deemed to include persons employed or otherwise retained by the
Adviser to furnish statistical and other factual data, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice, and assistance as the Adviser
may deem appropriate. The Adviser shall, without expense to the Fund, furnish
the services of such members of the Adviser's organization as may be duly
elected to be officers of the Fund, subject to their individual consent to serve
and to any limitations imposed by law.
The Fund will pay or cause to be paid all other expenses of the Fund
(except for the expenses to be paid by the Fund's Distributor), including,
without limitation, the following: (i) services rendered by the Custodian and
the Transfer Agent, (ii) fees, voluntary assessments, and other expenses
incurred in connection with membership in investment company organizations,
(iii) cost of stock certificates, reports, proxy materials and notices to
shareholders, and other like miscellaneous expenses, (iv)brokerage commissions
and other brokerage expenses, (v) taxes (including any income or franchise
taxes), and any fees payable to federal, state, and other governmental agencies,
(vi) fees and salaries payable to the Directors, officers, and advisory board
members of the Fund, if any, (vii) auditing the Fund's books and accounts,
(viii) the cost of bookkeeping and accounting services, (ix) any and all Fund
legal expenses, (x) costs of mailing and tabulating proxies and costs of
shareholders' and Directors' meetings, (xi) the cost of investment company
literature and other publications provided by the Fund to its Directors and
officers, (xii) costs of any liability, uncollectible items of deposit and other
insurance or fidelity bonds, (xiii) any extraordinary expenses (including fees
and disbursements of counsel) incurred by the Fund, (xiv) costs of printing and
mailing monthly statements and confirmations, (xv) expense of organizing the
Fund, (xvi) filing fees and expenses relating to the registration and
qualification of the Fund's shares under federal and/or state securities laws
and maintaining such registrations and qualifications and (xvii) other expenses
properly payable by the Fund.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser hereunder, the Fund shall pay to the Adviser, on a monthly basis, an
annual fee of 0.85% (the "Management Fee") of the Portfolio's average daily net
assets. Payment of the Adviser's compensation for the preceding month shall be
made as promptly as possible after the last day of each such month. The
compensation for the period from the effective date hereof to the next
succeeding last day of the month shall be prorated according to the proportion
which such period bears to the full month ending on such date, and provided
further that, upon any termination of this Agreement before the end of the
month, such compensation for the period from the end of the last month ending
prior to such termination shall be prorated according to the proportion which
such period bears to a full month, and shall be payable upon the date of
termination. The Adviser has the right, but not the obligation, to waive any
portion or all of its Management Fee, from time to time.
The "average daily net assets" of the Portfolio for a particular period
shall be determined by adding together all calculations of net assets, as
regularly computed for the Portfolio on each business day during such period and
dividing the resulting total by the number of business days during such period.
4. LIMITATIONS OF LIABILITY OF ADVISER. The Adviser shall not be liable for
any error of judgment or mistake of law or fact, or, for any loss suffered by
the Fund or its investors in connection with the matters to which this Agreement
relates, except (i) a loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Adviser in the performance of its duties, or
from reckless disregard by the Adviser of its obligations and duties under this
Agreement, or (ii) a loss for which the Adviser would not be permitted to be
indemnified under the federal securities laws. The Fund also agrees to indemnify
Adviser to the extent provided for and agreed to by the parties in that
agreement entitled Indemnification Agreement executed by both parties on this
date and incorporated herein as Exhibit A and made a part hereof.
5. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective as of the date hereof and shall continue in effect unless sooner
terminated, as herein provided, for two years after the date hereof, and
thereafter only if approved at least annually: (a) by the Board of Directors of
the Fund or (b) by the vote of a majority (as defined in the Act) of the
outstanding voting securities of the Fund, and, in addition, (c) by the vote of
a majority of the Directors of the Fund who are not parties hereto nor
interested persons of any party, as required by the Act.
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund, or by a vote of a majority (as
defined in the Act) of the outstanding voting securities of the Fund, in either
case upon written notice to the Adviser, and it may be terminated by the Adviser
upon sixty (60) days' written notice to the Fund. This Agreement shall
automatically terminate in the event of its assignment, within the meaning of
the Act, unless such automatic termination shall be prevented by an exemptive
order of the Securities and Exchange Commission.
6. SEPARATE CONTRACT. This Agreement is separate and distinct from, and
neither affects nor is affected by (i) the Fund's Distribution Agreement, and
(ii) the Fund's Administrative Services Agreement. Nothing contained in this
Agreement shall prevent the Adviser or any affiliated person of the Adviser from
acting as investment adviser or manager for any other person, firm, corporation,
or other entity and shall not in any way bind or restrict the Adviser or any
such affiliated person from buying, selling, or trading any securities,
commodities, futures contracts, or options on such contracts for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Adviser to engage in any other business or to devote his time
and attention in part to the management or other aspects of any other business
whether of a similar or dissimilar nature.
7. AMENDMENT. This Agreement may be amended from time to time by agreement
of the parties; provided that such amendment shall be approved both by the vote
of a majority of Directors of the Fund, including a majority of Directors who
are not parties to this Agreement or interested persons of any such party to
this Agreement (other than as Directors of the Fund) cast in person at a meeting
called for that purpose, and by the holders of a majority (as defined in the
Act) of the outstanding voting securities of the Portfolio.
This Agreement may be amended by agreement of the parties without the vote
or consent of the shareholders of the Fund to supply any omission, to cure,
correct, or supplement any ambiguous, defective, or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal and/or state laws or regulations, but neither
the Fund nor the Investment Adviser shall be liable for failing to do so.
8. BINDING EFFECT. This Agreement shall be binding upon, and inure to the
benefit of the Fund and the Adviser and their respective successors.
9. NAME OF THE PORTFOLIO. The Fund acknowledges that the name "Navellier"
is and shall remain the sole property of the Adviser, notwithstanding the use
thereof by the Fund. The Portfolio may use the name "Navellier Growth Portfolio"
or any name derived from the name "Navellier" only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Adviser and for only so long as Navellier & Associates, Inc.,
remains as Adviser to the Fund. At such time as such an agreement shall no
longer be in effect, or Adviser's services have terminated, the Fund will (to
the extent that it is lawfully able) cease to use such a name or any other name
connected with the Adviser or any organization which shall have succeeded to the
business of the Adviser.
10. DEFINITIONS. Capitalized terms used herein without definition shall
have the meanings ascribed thereto in the Prospectus. For the purpose of this
Agreement, the terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person" shall have the
respective meanings specified in the Investment Company Act of 1940.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and each party may
become a party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with the laws of the State of ____________. Any dispute or
controversy arising out of this Agreement shall be either submitted to
arbitration (if both parties agree)in Reno, Nevada (near the Fund's principal
place of business)in accordance with the rules and regulations of the National
Association of Securities Dealers, Inc., or decided by a trier of fact in a
federal or state court in Reno, Nevada, and in no other jurisdiction or court
venued outside of Reno, Nevada.
13. ACKNOWLEDGMENT OF RECEIPT OF FORM ADV PART II. The Portfolio hereby
acknowledges receipt of the Adviser's Form ADV Part II or its brochure as
required by Rule 204-3 promulgated under the Investment Advisers Act of 1940.
14. INTEGRATION OF ALL PRIOR DISCUSSIONS, NEGOTIATIONS AND AGREEMENTS. This
Agreement integrates all prior discussions, negotiations and agreements between
the parties relating to Adviser's and Fund's agreement relating to the
performance of investment advisory services for the Fund, and no evidence or
parol evidence may be introduced to vary or change the terms of this written
Agreement which is the full and final expression of the parties' agreement. Any
change in the terms of this Agreement must be in writing signed by both parties.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in Reno, Nevada.
NAVELLIER VARIABLE INSURANCE SERIES
FUND, INC.
By:________________________________
Attest:
- ----------------------------
NAVELLIER & ASSOCIATES, INC.
By:_________________________________
Attest:
- -----------------------------
FORM OF DISTRIBUTION AGREEMENT
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
THIS AGREEMENT is made as of this ___ day of ____, 1997 between Navellier
Variable Insurance Series Fund, Inc. (the "Company"), a Maryland corporation,
and Navellier Securities Corp. (the "Distributor"), a ________________
corporation.
WHEREAS, the Company is registered as an investment company with the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended (the "1940 Act"), and is authorized to issue shares of common
stock ("Shares") in separately designated series ("Funds"), each with its own
objectives, investment program, policies and restrictions; and
WHEREAS, the Company has registered the Shares of the Funds under the
Securities Act of 1933, as amended (the "1933 Act"), pursuant to a registration
statement on Form N-1A (the "Registration Statement"), including a prospectus
("Prospectus") and a statement of additional information ("Statement of
Additional Information"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and
WHEREAS, the Company wishes to continue to engage the services of the
Distributor as principal underwriter and distributor of the Shares of the Funds
that now exist and that hereafter may be established, which are listed on
Schedule A to this Agreement as may be amended from time to time, and the
Distributor is willing to continue to serve in that capacity.
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. APPOINTMENT OF DISTRIBUTOR.
(a) The Company hereby appoints the Distributor as principal underwriter
and distributor of the Funds of the Company to sell the Shares of the Funds in
jurisdictions wherein the Shares may be legally offered for sale. The
Distributor shall be the exclusive agent for the distribution of Shares of the
Funds; provided, however, that the Company in its absolute discretion may issue
Shares of the Funds otherwise than through the Distributor in connection with
(i) the payment or reinvestment of dividends or distributions, (ii) any merger
or consolidation of the Company or a Fund with any other investment company or
trust or any personal holding company, or the acquisition of the assets of any
such entity by the Company or any Fund, and (iii) any offer of exchange
authorized by the Board of Directors of the Company. Notwithstanding any other
provision hereof, the Company may terminate, suspend, or withdraw the offering
of the Shares of a Fund whenever, in its sole discretion, it deems such action
to be desirable.
(b) The Distributor agrees that it will use all reasonable efforts,
consistent with its other business, in connection with the distribution of
Shares of the Company; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to register as a
broker or dealer under the state Blue Sky laws of any jurisdiction when it
determines it would be uneconomical for it to do so or to maintain its
registration in any jurisdiction in which it is now registered nor obligate the
Distributor to sell any particular number of Shares. The Distributor is
currently registered as a broker-dealer or exempt from registration in all
jurisdictions listed in Schedule B hereto. The Distributor shall promptly notify
the Company in the event it fails to maintain its registration in any
jurisdiction in which it is currently registered. The Distributor shall sell
Shares of the Funds as agent for the Company at prices determined as hereinafter
provided and on the terms set forth herein, all according to applicable federal
and state Blue Sky laws and regulations and the Articles of Incorporation and
By-Laws of the Company. The Distributor may sell Shares of the Funds to or
through qualified brokers, dealers or others and shall require each such person
to conform to the provisions hereof, the Registration Statement, the then
current Prospectus and Statement of Additional Information, and applicable law.
Neither the Distributor nor any such person shall withhold the placing of
purchase orders for Shares so as to make a profit thereby.
(c) The Distributor shall order Shares of the Funds from the Company only
to the extent that it shall have received purchase orders therefor. The
Distributor will not make, or authorize any brokers, dealers, or others to make,
(i) any short sales of Shares or (ii) any sales of Shares to any Director or
officer of the Company, the Distributor, or any corporation or association
furnishing investment advisory, managerial, or supervisory services to the
Company, or to any such corporation or association, unless such sales are made
in accordance with the Company's then current Prospectus and Statement of
Additional Information.
(d) The Distributor is not authorized by the Company to give any
information or to make any representation other than those contained in the then
current Prospectus, Statement of Additional Information, and Fund shareholder
reports ("Shareholder Reports"), or in supplementary sales materials
specifically approved by the Company. The Distributor may prepare and distribute
sales literature and other material as it may deem appropriate, provided that
such literature and materials have been approved by the Company prior to their
use.
2. OFFERING PRICE OF SHARES.
All Shares of each Fund sold under this Agreement shall be sold at the
public offering price per Share in effect at the time of the sale as described
in the Company's then current Prospectus and Statement of Additional
Information; provided, however, that any public offering price for the Shares
shall be the net asset value per Share, as determined in the manner described in
the Company's then current Prospectus and/or Statement of Additional
Information. At no time shall the Company receive less than the full net asset
value of the Shares, determined in the manner set forth in the then current
Prospectus and/or Statement of Additional Information.
3. REGISTRATION OF SHARES.
The Company agrees that it will take all actions necessary to register
Shares under the Federal and state Blue Sky securities laws so that there will
be available for sale the number of Shares the Distributor may reasonably be
expected to sell and to pay all fees associated with said registration.
4. PAYMENT OF EXPENSES.
(a) Except as otherwise provided herein, the Distributor shall pay, or
arrange for others to pay, all of the following expenses: (i) payments to sales
representatives of the Distributor and at the discretion of the Distributor to
qualified brokers, dealers and others in respect of the sale of Shares of the
Funds; (ii) compensation and expenses of employees of the Distributor who engage
in or support distribution of Shares of the Funds or render shareholder support
services not otherwise provided by the Company's transfer and shareholder
servicing agent; and (iii) the cost of obtaining such information, analysis, and
reports with respect to marketing and promotional activities as the Company may
from time to time reasonably request.
(b) The Company shall pay, or arrange for others to pay, the following
expenses: (i) preparation, printing, and distribution to shareholders of
Prospectuses and Statements of Additional Information; (ii) preparation,
printing, and distribution of Shareholder Reports and other communications
required by law to shareholders; (iii) registration of the Shares of the Funds
under the federal securities laws; (iv) qualification of the Shares of the Funds
for sale in such states as the Distributor and the Company may approve; (v)
maintaining facilities for the issue and transfer of Shares; (vi) supplying
information, prices, and other data to be furnished by the Company under this
Agreement; and (vii) taxes applicable to the sale or delivery of the Shares of
the Funds or certificates therefor.
(c) In connection with the Distributor's distribution of sales materials,
Prospectuses, Statements of Additional Information, and Shareholder Reports to
potential investors in the Company, the Company shall make available to the
Distributor such number of copies of such materials as the Distributor may
reasonably request. The Company shall also furnish to the Distributor copies of
all information, financial statements and other documents the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Company. The Company will enter into arrangements providing that persons other
than the Company will bear any and all expenses of preparing, printing and
providing to the Distributor, sales materials, Prospectuses, Statements of
Additional Information and Shareholder Reports for distribution to potential
investors in the Company.
5. COMPENSATION.
It is understood that the Distributor will not receive any commissions or
other compensation for acting as the Company's principal underwriter and
distributor.
6. REPURCHASE OF SHARES.
The Distributor as agent and for the account of the Company may repurchase
Shares of the Funds offered for resale to it and redeem such Shares at their net
asset value determined as set forth in the then current Prospectus and Statement
of Additional Information.
7. INDEMNIFICATION OF DISTRIBUTOR.
The Company agrees to indemnify and hold harmless the Distributor and each
of its directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim, or
expense, and any reasonable counsel fees and disbursements incurred in
connection therewith) arising by reason of any person acquiring any Shares,
based upon the ground that the Registration Statement, Prospectuses, Statements
of Additional Information, Shareholder Reports or other information filed or
made public by the Company (as from time to time amended) included an untrue
statement of a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements made not misleading.
However, the Company does not agree to indemnify the Distributor or hold it
harmless to the extent that the statements or omission was made in reliance
upon, and in conformity with, information furnished to the Company by or on
behalf of the Distributor.
In no case (i) is the indemnity of the Company to be deemed to protect the
Distributor against any liability to the Company or its shareholders to which
the Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its failure to exercise due care in rendering its services and duties
under this Agreement, or (ii) is the Company to be liable to the Distributor
under the indemnity agreement contained in this section with respect to any
claim made against the Distributor or any person indemnified unless the
Distributor or other person shall have notified the Company in writing of the
claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or such other person (or after the Distributor or
the person shall have received notice of service on any designated agent).
However, failure to notify the Company of any claim shall not relieve the
Company from any liability which it may have to the Distributor or any person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this section.
The Company shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Company elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Company and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Company
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Company does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
The Company agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Directors
in connection with the issuance or sale of any of its Shares.
8. INDEMNIFICATION OF COMPANY.
The Distributor covenants and agrees that it will indemnify and hold
harmless the Company and each of its directors and officers and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act,
against any loss, liability, damages, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damages, claim
or expense, and reasonable counsel fees and disbursements incurred in connection
therewith) based upon the 1933 Act or any other statute or common law and
arising by reason of any person acquiring any Shares, and alleging (i) a
wrongful act or deed of the Distributor or any of its employees or sales
representatives, or (ii) that the Registration Statement, Prospectuses,
Statements of Additional Information, shareholder reports or other information
filed or made public by the Company (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as any such statements or omissions were made in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Company
or any other person indemnified to be deemed to protect the Company or any other
person against any liability to which the Company or such other person would
otherwise be subject by reason of willful misfeasance or bad faith in the
performance of its duties or by reason of its failure to exercise due care in
rendering its services and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this section
with respect to any claim made against the Company or any person indemnified
unless the Company or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the summons
or other first written notification giving information of the nature of the
claim shall have been served upon the Company or upon any person (or after the
Company or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Company or
any person against whom the action is brought otherwise than on account on its
indemnity agreement contained in this section.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants, whose approval shall not be unreasonably
withheld. In the event that the Distributor elects to assume the defense of any
suit and retain counsel, the defendants in the suit shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does not
elect to assume the defense of any suit, it will reimburse the indemnified
defendants in the suit for the reasonable fees and expenses of any counsel
retained by them.
The Distributor agrees to notify the Company promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Company's Shares.
9. TERM AND TERMINATION.
(a) This Agreement shall become effective as of the date hereof. Unless
sooner terminated as herein provided, this Agreement shall remain in full force
and effect for two (2) years from the effective date and thereafter for
successive periods of one year, but only so long as each such continuance is
specifically approved at least annually (i) either by vote of a majority of the
Board of Directors of the Company or by vote of a majority of the outstanding
voting securities of the company, and (ii) by vote of a majority of the
Directors of the Company who are not interested persons of the Company or in
this Agreement), cast in person at a meeting called for the purpose of voting on
such approval.
(b) This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Directors of the Company, by vote of a majority of
the outstanding voting securities of the Company, or by the Distributor, on not
less than ninety (90) days' written notice to the other party or upon such
shorter notice as may be mutually agreed upon.
(c) This Agreement shall automatically terminate in the event of its
assignment.
(d) The indemnification provisions contained in Sections 7 and 8 of this
Agreement shall remain in full force and effect regardless of any termination of
this Agreement.
10. AMENDMENT.
No provisions of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought. If the Company should at any time deem it necessary or advisable in the
best interests of the Company that any amendment of this Agreement be made in
order to comply with the recommendations or requirements of the SEC or other
governmental authority or to obtain any advantage under state or federal tax
laws and notifies Distributor of the form of such amendment, and the reasons
therefor, and if Distributor should decline to assent to such amendment, the
Company may terminate this Agreement forthwith. If Distributor should at any
time request that a change be made in the Company's Articles of Incorporation or
Bylaws or in its methods of doing business, in order to comply with any
requirements of Federal law or regulations of the SEC, or of a national
securities association of which Distributor is or may be a member relating to
the sale of Shares, and the Fund should not make such necessary change within a
reasonable time, Distributor may terminate this Agreement forthwith.
11. INDEPENDENT CONTRACTOR.
Distributor shall be an independent contractor and neither Distributor nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Company in the performance of Distributor's duties hereunder.
Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. Distributor assumes
full responsibility for its agents and employees under applicable statutes and
agrees to pay all employee taxes thereunder.
12. DEFINITION OF CERTAIN TERMS.
For purposes of this Agreement the terms "assignment," "interested person,"
"majority of the outstanding voting securities," and "principal underwriter"
shall have their respective meanings defined in the 1940 Act and the rules and
regulations thereunder, subject, however, to such exemptions as may be granted
to either the Distributor or the Company by the SEC, or such interpretative
positions as may be taken by the SEC or its staff under the 1940 Act.
13. NOTICE.
Any notice under this Agreement shall be deemed to be sufficient if it is
given in writing, addressed and delivered, or mailed postpaid (a) if to the
Distributor, to Navellier Securities Corp. [ADDRESS]; and (b) if to the Company,
to Navellier Variable Insurance Series Fund, Inc., One East Liberty, Third
Floor, Reno, NV 89501, Attention: _________________.
14. CAPTIONS.
The captions in this Agreement are included for convenience of reference
only and in no other way define or delineate any of the provisions hereof or
otherwise affect construction or effect.
15. INTERPRETATION.
Nothing herein contained shall be deemed to require the Company or the
Distributor to take any action contrary to its Articles of Incorporation or
Bylaws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of Directors
of its responsibility for and control of the conduct of the affairs of the
Company.
16. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
_____________ and the applicable provisions of the 1940 Act. To the extent that
the applicable laws of the __________________ or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
17. MULTIPLE ORIGINALS.
This Agreement may be executed in two or more counterparts, each of which
when so executed shall be deemed to be an original, but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the Company and Distributor have each duly executed
this Agreement, as of the day and year above written.
ATTEST: NAVELLIER VARIABLE INSURANCE
SERIES FUND, INC.
____________________________ By:____________________________
Title:______________________ Title:_________________________
ATTEST: NAVELLIER SECURITIES CORP.
____________________________ By:_____________________________
Title:______________________ Title:__________________________
SCHEDULE A
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
Navellier Variable Insurance Series Fund, Inc. consists of the following
Portfolio:
Navellier Growth Portfolio
Date: _________, 1997
SCHEDULE B
[The Distributor is currently registered as a broker-dealer or exempt
from registration in all fifty states and Puerto Rico.]
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the ____ day of ____________, 1998, by and between
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC., a corporation organized under
the laws of the State of Maryland (the "Fund"), and NAVELLIER & ASSOCIATES,
INC., a Nevada corporation (the "Adviser").
WHEREAS, the Fund intends to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Investment Company Act"); and
WHEREAS, the Fund is currently comprised of one portfolio designated as
the "Navellier Growth Portfolio" ("Portfolio"); and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, and will be engaged in the business of acting
as investment adviser and providing certain other services to the Fund; and
WHEREAS, the Fund desires to retain the Adviser to render certain
additional services to the Fund regarding certain bookkeeping, accounting, and
administrative services (the "Services") in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, the Adviser desires to be retained to perform such services on
said terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and the Adviser agree as follows:
1. Duties of Adviser: (a) The Fund hereby retains the Adviser to provide to
the Fund: (A) such accounting and bookkeeping services and functions as are
reasonably necessary for the operation of the Fund. Such services shall include,
but shall not be limited to, preparation and maintenance of the following books,
records, and other documents: (1) journals containing daily itemized records of
all purchases and sales, and receipts and deliveries of securities, and all
receipts and disbursements of cash, and all other debits and credits, in the
form required by Rule 31a-1(b)(1) under the Investment Company Act; (2) general
and auxiliary ledgers reflecting all assets, liability, reserve, capital, income
and expense accounts, in the form required by Rules 31a-1(b)(2)(i)-(iii) under
the Investment Company Act; (3) a securities record or ledger reflecting
separately for each portfolio security as of trade date all "long" and "short"
positions carried by the Fund for the account of each Portfolio, if any, and
showing the location of all securities long and the off-setting position to all
securities short, in the form required by Rule 31a-1(b)(3) under the Investment
Company Act ; (4) a record of all portfolio purchases or sales, in the form
required by Rule 31a-1(b)(6) under the Investment Company Act; (5) a record of
all puts, calls, spreads, straddles, and all other options, if any, in which any
Portfolio has any direct or indirect interest or which any Portfolio has granted
or guaranteed, in the form required by Rule 31a-1(b)(7) under the Investment
Company Act; (6) a record of the proof of money balances in all ledger accounts
maintained pursuant to this Agreement, in the form required by Rule 31a-1(b)(8)
under the Investment Company Act; and (7) price mark-up sheets and such records
as are necessary to reflect the determination of each Portfolio's net asset
value. The foregoing books and records shall be maintained by the Adviser in
accordance with and for the time periods specified by applicable rules and
regulations, including Rule 31a-2 under the Investment Company Act. All such
books and records shall be the property of the Fund and upon request therefore,
the Adviser shall surrender to the Fund such of the books and records so
requested; and (B) certain administrative services including, but not limited
to, administrative services to shareholders of the Fund and to respond to
inquiries related to shareholder accounts.
(b) The services to be provided hereunder shall also include supervisory
services relating to the preparation and filing with the appropriate offices of
any reports or other documents, on behalf of the Fund, as shall be required by
applicable law and requested by the Fund, from time to time, including but not
limited to tax returns, financial statements, and such Forms N-1A and other
filings required by the securities laws of the United States or any state as may
be requested from time to time by the Fund.
2. Provision of Personnel. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall, from time to time, determine to be necessary or useful to
the performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, such staff and personnel shall be deemed to include
officers of the Adviser and persons employed or otherwise retained by the
Adviser to provide or assist in providing of the Services to the Fund.
3. Provision of Certain Facilities and Equipment. The Adviser shall provide
such office space, facilities, and equipment (including, but not limited to,
computer equipment, communication lines and supplies) and such clerical help and
other services as shall be necessary to provide the services to the Fund. In
addition, the Adviser may arrange, on behalf of the Fund and its Portfolios, to
obtain: (1) data processing and/or all of the above services, subject to
approval by a majority of the Fund's Board of Directors, as necessary to assist
it in providing the Services to the Fund, and (2) pricing information regarding
the Fund's investment securities from such company or companies as are approved
by a majority of the Fund's Board of Directors, and the Fund shall be
financially responsible to such company or companies as aforesaid, for the
reasonable cost of such services.
4. Provision of Information to the Adviser. The Fund will, from time to
time, furnish or otherwise make available to the Adviser such information
relating to the business and affairs of the Fund as the Adviser may reasonably
require in order to discharge its duties and obligations hereunder.
5. Reimbursement of Expenses of Adviser. The Fund shall reimburse the
Adviser for such direct expenses, including, but not limited to, (i) those
listed in paragraph 1(b) and 3 above, incurred on behalf of the Fund that are
associated with the providing of the Services, and (ii) those paid to any
delegates of the Adviser pursuant to Section 13 hereof. In no event, however,
shall such reimbursement exceed levels that are fair and reasonable in light of
the usual and customary charges made by others for services of the same nature
and quality. Reimbursement under this Agreement shall be calculated and paid
monthly.
The Adviser shall not be required to pay any filing fees and expenses
incurred in connection with the filing of reports or documents pursuant to
section 1(b) herein, or required to be filed by applicable federal or state law,
which fees or expenses shall be borne directly by the Fund.
6. Access to Records. The Adviser will permit representatives of the Fund,
including the Fund's independent auditors, to have reasonable access to the
personnel and records of the Adviser in order to enable such representatives to
monitor the quality of services being provided and the determination of
reimbursements due the Adviser pursuant to this Agreement. In addition, the
Adviser shall promptly deliver to the Board of Directors of the Fund such
information as may reasonably be requested from time to time to permit the Board
of Directors to make an informed determination regarding continuation of this
Agreement and the payments contemplated to be made hereunder.
7. Limitation of Liability of Adviser. The Adviser shall not be liable for
any error of judgment or mistake of law or fact, or for any loss suffered by the
Fund or its investors in connection with the matters to which this Agreement
relates, except (i) a loss resulting from willful misfeasance, bad faith, or
gross negligence on the part of the Adviser in the performance of its duties or
from reckless disregard by the Adviser of its obligations and duties under this
Agreement, or (ii) a loss for which the Adviser would not be permitted to be
indemnified under the Federal Securities laws.
8. Duration of Agreement. This Agreement shall become effective as of the
date of execution hereof and shall remain in effect for two (2) years from the
date hereof and from year to year thereafter, provided such continuance is
approved at least annually by the vote of a majority of the Directors of the
Fund who are not parties to this Agreement or "interested persons" (as defined
in the Investment Company Act) of any such party, which vote must be cast in
person at a meeting called for the purpose of voting on such approval; and
further provided, however, that (a) the Fund may, at any time and without the
payment of any penalty, terminate this Agreement upon written notice to the
Adviser; (b) this Agreement shall immediately terminate in the event of its
"assignment" (within the meaning of the Investment Company Act) to the extent
that it would similarly be required to terminate under similar circumstances if
it were an advisory contract subject to the provisions of Section 15 of the
Investment Company Act and the rules thereunder; and (c) the Adviser may
terminate this Agreement without payment of penalty on sixty days' written
notice to the Fund. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
9. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Maryland and the applicable provisions of the Investment
Company Act. To the extent the applicable law of the State of Maryland or any of
the provisions herein conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
10. Separate Contract. This Agreement is separate and distinct from, and
neither affects nor is affected by (i) the Distribution Agreement in effect
between the Fund and Navellier Securities Corp., a Delaware Corporation, or (ii)
the Investment Advisory Agreement in effect between the Adviser and the Fund.
11. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Fund and the Adviser and their respective successors.
12. Amendment. No amendment or modification of this Agreement shall be
effective unless in writing signed by other parties and witnessed and until
approved by a majority of the outstanding shares of the Fund.
13. Delegation of Duties. The Adviser may delegate each duty to be
performed by it hereunder; provided, however, that notwithstanding any such
delegation, the Adviser shall remain responsible for the performance of the
duties to be performed by it hereunder as though such delegation had not
occurred.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
15. Compensation. The Fund shall, in addition to reimbursing Adviser for
expenses as described in Section 5, pay Adviser an annual fee payable monthly
equal to .25% of the Fund's average daily net asset value for performing such
administrative services.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
NAVELLIER VARIABLE INSURANCE SERIES
FUND, INC.
By:__________________________________
ATTEST:
- -----------------------
NAVELLIER & ASSOCIATES, INC.
By:___________________________________
ATTEST:
- -----------------------
[TO BE TYPED ON NAVELLIER & ASSOCIATES, INC. LETTERHEAD]
(Date)
Navellier Variable Insurance Series Fund, Inc.
One East Liberty
Third Floor
Reno, NV 89501
Re: Expense Reimbursement
Dear Sirs:
The undersigned, Navellier & Associates, Inc. ("Adviser"), serves as the
investment adviser to Navellier Variable Insurance Series Fund, Inc. ("Fund").
The Fund intends to offer its shares to separate accounts of life insurance
companies ("Participating Insurance Companies") in connection with variable
annuity and variable life insurance policies issued by the Participating
Insurance Companies and to qualified pension and other retirement plans
("Qualified Plans").
The Adviser desires that the Fund be an attractive investment medium to
Participating Insurance Companies and their variable annuity and variable life
insurance policy owners and to Qualified Plans and their participants. In
consideration thereof and as an inducement to the Fund to offer its shares to
the separate accounts of Participating Insurance Companies and to Qualified
Plans, the Adviser hereby undertakes and agrees with the Fund that it will, if
necessary, waive its advisory fee until the total operating expenses of the
Navellier Growth Portfolio (including the advisory fee) are at or below 2.00%.
This undertaking is subject to termination at any time without notice to
shareholders after the expiration of twelve months from the date shares of the
Navellier Growth Portfolio are first offered to the public. Reimbursement by the
Portfolio of advisory fees waived by the Adviser may be made at a later date
when the Portfolio has reached a sufficient asset size to permit reimbursement
to be made without causing the total operating expenses of the Portfolio to
exceed 2.00%.
NAVELLIER & ASSOCIATES, INC.
By: ________________________________
Agreed and Accepted:
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
By: ________________________________________
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the ___ day of ________, , by and between
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. (the "FUND"), a Maryland
Corporation, NAVELLIER & ASSOCIATES, INC. (the "ADVISER"), a Nevada corporation,
and ______________ (the "LIFE COMPANY"), a life insurance company organized
under the laws of the State of __________.
WHEREAS, the FUND is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, the FUND is organized as a series fund comprised of several
Portfolios ("Portfolios"), with those currently available being listed on
Appendix A hereto; and
WHEREAS, the FUND was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, the FUND may also offer its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, the FUND will apply for an order from the SEC, granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the '40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Portfolios of the FUND to be sold to and held by
Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans ("Exemptive Order"); and
WHEREAS, the LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having the FUND as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, the ADVISER is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and acts as the FUND's investment
adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the LIFE COMPANY intends to purchase shares of the FUND to fund the
aforementioned Variable Contracts and the FUND is authorized to sell such shares
to the LIFE COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the LIFE
COMPANY, the FUND, and the ADVISER agree as follows:
Article I. SALE OF THE FUND SHARES
1.1 The FUND agrees to make available to the Separate Accounts of the LIFE
COMPANY shares of the selected Portfolios as listed on Appendix B for investment
of purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in the FUND's Registration Statement.
1.2 The FUND agrees to sell to the LIFE COMPANY those shares of the
selected Portfolios of the FUND which the LIFE COMPANY orders, executing such
orders on a daily basis at the net asset value next computed after receipt by
the FUND or its designee of the order for the shares of the FUND. For purposes
of this Section 1.2, the LIFE COMPANY shall be the designee of the FUND for
receipt of such orders from the designated Separate Account and receipt by such
designee shall constitute receipt by the FUND; provided that the LIFE COMPANY
receives the order by 4:00 p.m. New York time and the FUND receives notice from
the LIFE COMPANY by telephone or facsimile (or by such other means as the FUND
and the LIFE COMPANY may agree in writing) of such order by 9:00 a.m. New York
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the FUND
calculates its net asset value pursuant to the rules of the SEC.
1.3 The FUND agrees to redeem on the LIFE COMPANY's request, any full or
fractional shares of the FUND held by the LIFE COMPANY, executing such requests
on a daily basis at the net asset value next computed after receipt by the FUND
or its designee of the request for redemption, in accordance with the provisions
of this agreement and the FUND's Registration Statement. For purposes of this
Section 1.3, the LIFE COMPANY shall be the designee of the FUND for receipt of
requests for redemption from the designated Separate Account and receipt by such
designee shall constitute receipt by the FUND; provided that the LIFE COMPANY
receives the request for redemption by 4:00 p.m. New York time and the FUND
receives notice from the LIFE COMPANY by telephone or facsimile (or by such
other means as the FUND and the LIFE COMPANY may agree in writing) of such
request for redemption by 9:00 a.m. New York time on the next following Business
Day.
1.4 The FUND shall furnish, on or before the ex-dividend date, notice to
the LIFE COMPANY of any income dividends or capital gain distributions payable
on the shares of any Portfolio of the FUND. The LIFE COMPANY hereby elects to
receive all such income dividends and capital gain distributions as are payable
on a Portfolio's shares in additional shares of the Portfolio. The FUND shall
notify the LIFE COMPANY or its designee of the number of shares so issued as
payment of such dividends and distributions.
1.5 The FUND shall make the net asset value per share for the selected
Portfolio(s) available to the LIFE COMPANY on a daily basis as soon as
reasonably practicable after the net asset value per share is calculated but
shall use its best efforts to make such net asset value available by 6:30 p.m.
New York time. If the FUND provides the LIFE COMPANY with materially incorrect
share net asset value information through no fault of the LIFE COMPANY, the LIFE
COMPANY on behalf of the Separate Accounts, shall be entitled to an adjustment
to the number of shares purchased or redeemed to reflect the correct share net
asset value. Any material error in the calculation of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to the LIFE COMPANY.
1.6 At the end of each Business Day, the LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, the LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of the FUND shares which shall be purchased or redeemed at that day's closing
net asset value per share. The net purchase or redemption orders so determined
shall be transmitted to the FUND by the LIFE COMPANY by 9:00 a.m. New York Time
on the Business Day next following the LIFE COMPANY's receipt of such requests
and premiums in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If the LIFE COMPANY's order requests the purchase of the FUND shares,
the LIFE COMPANY shall pay for such purchase by wiring federal funds to the FUND
or its designated custodial account on the day the order is transmitted by the
LIFE COMPANY. If the LIFE COMPANY's order requests a net redemption resulting in
a payment of redemption proceeds to the LIFE COMPANY, the FUND shall use its
best efforts to wire the redemption proceeds to the LIFE COMPANY by the next
Business Day, unless doing so would require the FUND to dispose of Portfolio
securities or otherwise incur additional costs. In any event, proceeds shall be
wired to the LIFE COMPANY within three Business Days or such longer period
permitted by the '40 Act or the rules, orders or regulations thereunder and the
FUND shall notify the person designated in writing by the LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York Time the same
Business Day that the LIFE COMPANY transmits the redemption order to the FUND.
If the LIFE COMPANY's order requests the application of redemption proceeds from
the redemption of shares to the purchase of shares of another Fund advised by
the ADVISER, the FUND shall so apply such proceeds the same Business Day that
the LIFE COMPANY transmits such order to the FUND.
1.8 The FUND agrees that all shares of the Portfolios of the FUND will be
sold only to Participating Insurance Companies which have agreed to participate
in the FUND to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the
Portfolios of the FUND will not be sold directly to the general public.
1.9 The FUND may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
the FUND if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the
FUND (the "Board"), acting in good faith and in light of its duties under
federal and any applicable state laws, deemed necessary, desirable or
appropriate and in the best interests of the shareholders of such Portfolios.
1.10 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to the LIFE COMPANY or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 The LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of
___________________ and that it has legally and validly established each
Separate Account as a segregated asset account under such laws, and that
___________________, the principal underwriter for the Variable Contracts, is
registered as a broker-dealer under the Securities Exchange Act of 1934 (the
"'34 Act").
2.2 The LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 The LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all material
respects with applicable state insurance law suitability requirements.
2.4 The LIFE COMPANY represents and warrants that the Variable Contracts
are currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify the FUND immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 The LIFE COMPANY represents and warrants that it has reserved the right
to suspend or limit the rights of Variable Contract owners to transfer Contract
values between Portfolios. The LIFE COMPANY will not waive such right without
prior notice to the FUND. The LIFE COMPANY agrees that it will consult with the
FUND at the FUND's request from time to time on problems arising from frequent
or rapid transfer among Portfolios and that the LIFE COMPANY will impose
reasonable restrictions on transferees to or from the Portfolios as reasonably
requested by the FUND.
2.6 The FUND represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and the FUND shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. The FUND, subject to Section 1.9 above, shall amend its
registration statement under the '33 Act and the '40 Act from time to time as
required in order to effect the continuous offering of its shares. The FUND
shall register and qualify its shares for sale in accordance with the laws of
the various states only if and to the extent deemed advisable by the FUND.
2.7 The FUND represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance.
2.8 The FUND represents and warrants that each Portfolio invested in by the
Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify the LIFE COMPANY immediately upon
having a reasonable basis for believing it has ceased to so qualify or might not
so qualify in the future.
2.9 The ADVISER represents and warrants that it is and will remain duly
registered and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 The FUND shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the FUND.
The FUND shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 At least annually, the FUND or its designee shall provide the LIFE
COMPANY, free of charge, with as many copies of the current prospectus,
statements of additional information, annual and semi-annual reports and proxy
statements for the shares of the Portfolios as the LIFE COMPANY may reasonably
request for distribution to existing Variable Contract owners whose Variable
Contracts are funded by such shares. The FUND or its designee shall provide the
LIFE COMPANY, at the LIFE COMPANY's expense, with as many copies of the current
prospectus for the shares as the LIFE COMPANY may reasonably request for
distribution to prospective purchasers of Variable Contracts. If requested by
the LIFE COMPANY in lieu thereof, the FUND or its designee shall provide such
documentation (including a "camera ready" copy of the new prospectus as set in
type or, at the request of the LIFE COMPANY, as a diskette in the form sent to
the financial printer) and other assistance as is reasonably necessary in order
for the parties hereto once a year (or more frequently if the prospectus for the
shares is supplemented or amended) to have the prospectus for the Variable
Contracts and the prospectus for the FUND shares printed together in one
document. The expenses of such printing will be apportioned between the LIFE
COMPANY and the FUND in proportion to the number of pages of the Variable
Contract and the FUND prospectus, taking account of other relevant factors
affecting the expense of printing, such as covers, columns, graphs and charts;
the FUND to bear the cost of printing the FUND prospectus portion of such
document for distribution only to owners of existing Variable Contracts funded
by the FUND shares and the LIFE COMPANY to bear the expense of printing the
portion of such documents relating to the Separate Account; provided, however,
LIFE COMPANY shall bear all printing expenses of such combined documents where
used for distribution to prospective purchasers or to owners of existing
Variable Contracts not funded by the shares. In the event that the LIFE COMPANY
requests that the FUND or its designee provide the FUND's prospectus in a
"camera ready" or diskette format, the FUND shall be responsible for providing
the prospectus in the format in which it is accustomed to formatting
prospectuses and shall bear the expense of providing the prospectus in such
format (e.g. typesetting expenses), and the LIFE COMPANY shall bear the expense
of adjusting or changing the format to conform with any of its prospectuses.
3.3 The FUND will provide the LIFE COMPANY with at least one complete copy
of all prospectuses, statements of additional information, annual and
semi-annual reports, proxy statements, exemptive applications and all amendments
or supplements to any of the above that relate to the Portfolios promptly after
the filing of each such document with the SEC or other regulatory authority. The
LIFE COMPANY will provide the FUND with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account promptly after
the filing of each such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 The LIFE COMPANY will furnish, or will cause to be furnished, to the
FUND and the ADVISER, each piece of sales literature or other promotional
material in which the FUND or the ADVISER is named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if the
FUND or the ADVISER objects to its use in writing within ten (10) Business Days
after receipt of such material.
4.2 The FUND and the ADVISER will furnish, or will cause to be furnished,
to the LIFE COMPANY, each piece of sales literature or other promotional
material in which the LIFE 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 LIFE COMPANY objects to its use in writing within ten (10) Business
Days after receipt of such material.
4.3 The FUND and its affiliates and agents shall not give any information
or make any representations on behalf of the LIFE COMPANY or concerning the LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by the LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by the LIFE COMPANY or its designee, except
with the written permission of the LIFE COMPANY.
4.4 The LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of the FUND or concerning the
FUND other than the information or representations contained in a registration
statement or prospectus for the FUND, as such registration statement and
prospectus may be amended or supplemented from time to time, or in sales
literature or other promotional material approved by the FUND or its designee,
except with the written permission of the FUND.
4.5 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. ("NASD")
rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that the FUND will be filing an application
with the SEC to request an order granting relief from various provisions of the
'40 Act and the rules thereunder to the extent necessary to permit the FUND
shares to be sold to and held by Variable Contract separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and Qualified
Plans. It is anticipated that the Exemptive Order, when and if issued, shall
require the FUND and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Section 5. If the
Exemptive Order imposes conditions materially different from those provided for
in this Section 5, the conditions and undertakings imposed by the Exemptive
Order shall govern this Agreement and the parties hereto agree to amend this
Agreement consistent with the Exemptive Order. The Fund will not enter into a
participation agreement with any other Participating Insurance Company unless it
imposes the same conditions and undertakings as are imposed on the LIFE COMPANY
hereby.
5.2 The Board will monitor the FUND for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of all
separate accounts investing in the FUND. An irreconcilable material conflict may
arise for a variety of reasons, which may include: (a) an action by any state
insurance regulatory authority; (b) a change in applicable federal or state
insurance, tax, or securities laws or regulations, or a public ruling, private
letter ruling or any similar action by insurance, tax or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of the FUND are being
managed; (e) a difference in voting instructions given by Variable Contract
owners; (f) a decision by a Participating Insurance Company to disregard the
voting instructions of Variable Contract owners and (g) if applicable, a
decision by a Qualified Plan to disregard the voting instructions of plan
participants.
5.3 The LIFE COMPANY will report any potential or existing conflicts to the
Board. The LIFE COMPANY will be responsible for assisting the Board in carrying
out its duties in this regard by providing the Board with all information
reasonably necessary for the Board to consider any issues raised. The
responsibility includes, but is not limited to, an obligation by the LIFE
COMPANY to inform the Board whenever it has determined to disregard Variable
Contract owner voting instructions. These responsibilities of the LIFE COMPANY
will be carried out with a view only to the interests of the Variable Contract
owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting the LIFE
COMPANY, the LIFE COMPANY, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested Trustees),
will take any steps necessary to remedy or eliminate the irreconcilable material
conflict, including; (a) withdrawing the assets allocable to some or all of the
Separate Accounts from the FUND or any Portfolio thereof and reinvesting those
assets in a different investment medium, which may include another Portfolio of
the FUND, or another investment company; (b) submitting the question as to
whether such segregation should be implemented to a vote of all affected
Variable Contract owners and as appropriate, segregating the assets of any
appropriate group (i.e variable annuity or variable life insurance Contract
owners of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected Variable Contract owners the
option of making such a change; and (c) establishing a new registered management
investment company (or series thereof) or managed separate account. If a
material irreconcilable conflict arises because of the LIFE COMPANY's decision
to disregard Variable Contract owner voting instructions, and that decision
represents a minority position or would preclude a majority vote, the LIFE
COMPANY may be required, at the election of the FUND, to withdraw the Separate
Account's investment in the FUND, and no charge or penalty will be imposed as a
result of such withdrawal. The responsibility to take such remedial action shall
be carried out with a view only to the interests of the Variable Contract
owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict but in no event will
the FUND or the ADVISER (or any other investment adviser of the FUND) be
required to establish a new funding medium for any Variable Contract. Further,
the LIFE COMPANY shall not be required by this Section 5.4 to establish a new
funding medium for any Variable Contracts if any offer to do so has been
declined by a vote of a majority of Variable Contract owners materially and
adversely affected by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the LIFE COMPANY.
5.6 No less than annually, the LIFE COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
Article VI. VOTING
6.1 The LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the LIFE COMPANY, where applicable, will vote shares of the
Portfolio held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Variable Contract owners. The LIFE COMPANY
will be responsible for assuring that each of its Separate Accounts that
participates in the FUND calculates voting privileges in a manner consistent
with other Participating Insurance Companies. The LIFE COMPANY will vote shares
for which it has not received timely voting instructions, as well as shares it
owns, in the same proportion as its votes those shares for which it has received
voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act
or the rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Exemptive
Order, then the FUND, and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rule 6e-2
and Rule 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such
Rules are applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by the LIFE COMPANY. The LIFE COMPANY agrees to
indemnify and hold harmless the FUND, the ADVISER and each of their directors,
principals, officers, employees and agents and each person, if any, who controls
the FUND or the ADVISER within the meaning of Section 15 of the '33 Act
(collectively, the "Indemnified Parties") against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the LIFE COMPANY, which consent shall not be unreasonably withheld)
or litigation (including legal and other expenses), to which the Indemnified
Parties may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the FUND's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration
Statement or prospectus for the Variable Contracts or contained in the
Variable Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such
alleged statement or omission was made in reliance upon and in
conformity with information furnished to the LIFE COMPANY by or on
behalf of the FUND for use in the registration statement or prospectus
for the Variable Contracts or in the Variable Contracts or sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or the FUND shares;
or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature of the FUND not supplied by
the LIFE COMPANY, or persons under its control) or wrongful conduct of
the LIFE COMPANY or persons under its control, with respect to the
sale or distribution of the Variable Contracts or the FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature of the FUND or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to the FUND by or on behalf of
the LIFE COMPANY; or
(d) arise as a result of any failure by the LIFE COMPANY to provide
substantially the services and furnish the materials under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the LIFE COMPANY in this Agreement or arise
out of or result from any other material breach of this Agreement by
the LIFE COMPANY.
7.2 The LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
7.3 The LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the LIFE COMPANY of
any such claim shall not relieve the LIFE COMPANY from any liability which it
may have to the Indemnified Party against whom such action is brought otherwise
than on account of this indemnification provision. In case any such action is
brought against an Indemnified Party, the LIFE COMPANY shall be entitled to
participate at its own expense in the defense of such action. The LIFE COMPANY
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the LIFE COMPANY to such
party of the LIFE COMPANY's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the LIFE COMPANY will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
7.4 Indemnification by the FUND. The FUND agrees to indemnify and hold
harmless the LIFE COMPANY and each of its directors, officers, employees, and
agents and each person, if any, who controls the LIFE COMPANY within the meaning
of Section 15 of the '33 Act (collectively, the "Indemnified Parties") against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the FUND which consent shall not be
unreasonably withheld) or litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of the FUND's shares or the Variable
Contracts and:
(a) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement
or prospectus or sales literature of the FUND (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify
shall not apply as to any Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished to the ADVISER or
the FUND by or on behalf of the LIFE COMPANY for use in the
registration statement or prospectus for the FUND or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or the FUND shares;
or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration
statement, prospectus or sales literature for the Variable Contracts
not supplied by the ADVISER or the FUND or persons under its control)
or wrongful conduct of the FUND or persons under its control, with
respect to the sale or distribution of the Variable Contracts or the
FUND shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature covering the Variable Contracts, or any amendment
thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished to the
LIFE COMPANY for inclusion therein by or on behalf of the FUND; or
(d) arise as a result of (i) a failure by the FUND to provide
substantially the services and furnish the materials under the terms
of this Agreement; or (ii) a failure by a Portfolio(s) invested in by
the Separate Account to comply with the diversification requirements
of Section 817(h) of the Code; or (iii) a failure by a Portfolio(s)
invested in by the Separate Account to qualify as a "regulated
investment company" under Subchapter M of the Code; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the FUND in this Agreement or arise out of or
result from any other material breach of this Agreement by the FUND.
7.5 The FUND shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
7.6 The FUND shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified the FUND in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify the FUND of any such claim shall not relieve the
FUND from any liability which it may have to the Indemnified Party against whom
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified Parties,
the FUND shall be entitled to participate at its own expense in the defense
thereof. The FUND also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
FUND to such party of the FUND's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional counsel
retained by it, and the FUND will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the LIFE COMPANY or the FUND at any time from the
date hereof upon 180 days' notice, unless a shorter time is agreed to
by the parties;
(b) At the option of the LIFE COMPANY, if the FUND shares are not
reasonably available to meet the requirements of the Variable
Contracts as determined by the LIFE COMPANY. Prompt notice of election
to terminate shall be furnished by the LIFE COMPANY, said termination
to be effective ten days after receipt of notice unless the FUND makes
available a sufficient number of shares to reasonably meet the
requirements of the Variable Contracts within said ten-day period;
(c) At the option of the LIFE COMPANY, upon the institution of formal
proceedings against the FUND by the SEC, the NASD, or any other
regulatory body, the expected or anticipated ruling, judgment or
outcome of which would, in the LIFE COMPANY's reasonable judgment,
materially impair the FUND's ability to meet and perform the FUND's
obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by the LIFE COMPANY with said termination
to be effective upon receipt of notice;
(d) At the option of the FUND, upon the institution of formal proceedings
against the LIFE COMPANY by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which
would, in the FUND's reasonable judgment, materially impair the LIFE
COMPANY's ability to meet and perform its obligations and duties
hereunder. Prompt notice of election to terminate shall be furnished
by the FUND with said termination to be effective upon receipt of
notice;
(e) In the event the FUND'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 Variable
Contracts issued or to be issued by the LIFE COMPANY. Termination
shall be effective upon such occurrence without notice;
(f) At the option of the FUND if the Variable Contracts cease to qualify
as annuity contracts or life insurance contracts, as applicable, under
the Code, or if the FUND reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall be effective upon
receipt of notice by the LIFE COMPANY;
(g) At the option of the LIFE COMPANY, upon the FUND's breach of any
material provision of this Agreement, which breach has not been cured
to the satisfaction of the LIFE COMPANY within ten days after written
notice of such breach is delivered to the FUND;
(h) At the option of the FUND, upon the LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not been cured
to the satisfaction of the FUND within ten days after written notice
of such breach is delivered to the LIFE COMPANY;
(i) At the option of the FUND, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately upon such
occurrence without notice;
(j) In the event this Agreement is assigned without the prior written
consent of the LIFE COMPANY, the FUND, and the ADVISER, termination
shall be effective immediately upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to Section
8.2 hereof, the FUND at its option may elect to continue to make available
additional the FUND shares, as provided below, for so long as the FUND desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if the FUND so elects to make additional FUND shares available, the
owners of the Existing Contracts or the LIFE COMPANY, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in the FUND,
redeem investments in the FUND and/or invest in the FUND upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, the FUND and the ADVISER, as
promptly as is practicable under the circumstances, shall notify the LIFE
COMPANY whether the FUND elects to continue to make the FUND shares available
after such termination. If the FUND shares continue to be made available after
such termination, the provisions of this Agreement shall remain in effect and
thereafter either the FUND or the LIFE COMPANY may terminate the Agreement, as
so continued pursuant to this Section 8.3, upon sixty (60) days prior written
notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, the LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to the LIFE COMPANY's assets held in the
Separate Accounts), and the LIFE COMPANY shall not prevent Variable Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Variable Contracts until thirty (30) days after the LIFE COMPANY shall
have notified the FUND of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the FUND:
Navellier Variable Insurance Series Fund, Inc.
One East Liberty, Third Floor
Reno, Nevada 89501
Attn: Dennis A. Holtorf
If to the ADVISER:
Navellier & Associates, Inc.
One East Liberty, Third Floor
Reno, Nevada 89501
Attn: Dennis A. Holtorf
If to the LIFE COMPANY:
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Massachusetts.
It shall also be subject to the provisions of the federal securities laws and
the rules and regulations thereunder and to any orders of the SEC granting
exemptive relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the directors or officers of the
FUND or any Portfolio shall be personally liable hereunder. No Portfolio shall
be liable for the liabilities of any other Portfolio. All persons dealing with
the FUND or a Portfolio must look solely to the property of the FUND or that
Portfolio, respectively, for enforcement of any claims against the FUND or that
Portfolio. It is also understood that each of the Portfolios shall be deemed to
be entering into a separate Agreement with the LIFE COMPANY so that it is as if
each of the Portfolios had signed a separate Agreement with the LIFE COMPANY and
that a single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 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.
10.7 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.
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
10.9 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by the
FUND, the ADVISER and the LIFE COMPANY.
10.10 No failure or delay by a party in exercising any right or remedy
under this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
10.11 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 are entitled to under state and federal
laws.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
NAVELLIER VARIABLE INSURANCE SERIES FUND,
INC.
By:_______________________________________
Name:
Title:
NAVELLIER & ASSOCIATES, INC.
By:_______________________________________
Name:
Title:
LIFE COMPANY
By:_______________________________________
Name:
Title:
APPENDIX A
Navellier Growth Portfolio
APPENDIX B
Name of Separate Account and
Variable Contract Number Portfolio
1. Navellier Growth Portfolio
THIS AGREEMENT, made and entered into as of the __ day of _________, 1997
by and among AMERICAN GENERAL LIFE INSURANCE COMPANY (hereinafter the
"Company"), a Texas insurance company, on its own behalf and on behalf of each
separate account of the Company set forth on Schedule B hereto as may be amended
from time to time (each such account hereinafter referred to as the "Account"),
AMERICAN GENERAL SECURITIES INCORPORATED ("AGSI"), a Texas corporation,
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC. (hereinafter the "Fund"), a
Maryland corporation, and NAVELLIER & ASSOCIATES, INC . (the "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as (i) the investment vehicle for separate
accounts established by insurance companies for individual and group life
insurance policies and annuity contracts with variable accumulation and/or
pay-out provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products") and (ii) the investment vehicle for certain
qualified pension and retirement plans (hereinafter "Qualified Plans"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into a
participation agreement with the Fund and the Adviser (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares, each
representing the interest in a particular managed portfolio of securities and
other assets, any one or more of which may be made available for Variable
Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule A (each such series hereinafter referred to as a "Portfolio"), as may
be amended from time to time by mutual agreement of the parties hereto, under
this Agreement to the Accounts of the Company; and
WHEREAS, the Fund intends to apply for an order from the Securities and
Exchange Commission, granting Participating Insurance Companies and Variable
Insurance Product separate accounts exemptions from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended
(hereinafter the "1940 Act"), and Rules 6e-2(b)(15) and 6e- 3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by Variable Annuity Product separate accounts of both affiliated and
unaffiliated life insurance companies and Qualified Plans (hereinafter the
"Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Adviser manages certain Portfolios of the Fund; and
WHEREAS, Navellier Securities Corp. (the "Underwriter") is registered as a
broker/dealer under the Securities Exchange Act of 1934, as amended (hereinafter
the "1934 Act"), is a member in good standing of the National Association of
Securities Dealers, Inc. (hereinafter "NASD") and serves as principal
underwriter of the shares of the Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule B
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Product; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products and
the Underwriter is authorized to sell such shares to each such Account at net
asset value;
WHEREAS, AGSI serves as both the distributor and the principal underwriter
of the Variable Insurance Products that are set forth on Schedule B;
NOW, THEREFORE, in consideration of their mutual promises, the Company, AGSI,
the Fund and the Underwriter agree as follows:
ARTICLE I. FUND SHARES
1.1. The Fund agrees to make available for purchase by the Company shares
of the Portfolios set forth on Schedule A and shall execute orders placed for
each Account on a daily basis at the net asset value next computed after receipt
by the Fund or its designee of such order. For purposes of this Section 1.1, the
Company shall be the designee of the Fund for receipt of such orders from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives notice of such order by 9:00 a.m. Eastern time
on the next following Business Day. "Business Day" shall mean any day on which
the New York Stock Exchange is open for trading and on which the Fund calculates
the net asset value pursuant to the rules of the SEC, as set forth in the Fund's
Prospectus and Statement of Additional Information. Notwithstanding the
foregoing, the Board of Directors of the Fund (hereinafter the "Board") may
refuse to permit the Fund to sell shares of any Portfolio to any person, or
suspend or terminate the offering of shares of any Portfolio, if such action is
required by law or by regulatory authorities having jurisdiction or is, in the
sole discretion of the Board 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 Portfolio.
1.2. The Fund agrees that shares of the Fund will be sold only to
Participating Insurance Companies and their Variable Insurance Products and to
certain Qualified Plans all in accordance with the requirements of Section
817(h)(4) of the Internal Revenue Code of 1986, as amended ( the "Code") and
Treasury Regulation 1.817-5. No shares of any Portfolio will be sold to the
general public.
1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
substantially the same as Sections 2.4, 2.9, 3.4 and Article VII of this
Agreement is in effect to govern such sales.
1.4. The Fund agrees to redeem for cash, on the Company's request, any full
or fractional shares of the Fund held by the Company, executing such requests on
a daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Fund for receipt of requests for
redemption from each Account and receipt by such designee shall constitute
receipt by the Fund; provided that the Fund receives notice of such request for
redemption on the next following Business Day in accordance with the timing
rules described in Section 1.1.
1.5. The Company agrees that purchases and redemptions of Portfolio shares
offered by the then current prospectus of the Fund shall be made in accordance
with the provisions of such prospectus. The Accounts of the Company, under which
amounts may be invested in the Fund, are listed on Schedule B attached hereto
and incorporated herein by reference, as such Schedule B may be amended from
time to time by mutual written agreement of all of the parties hereto. The
Company will give the Fund and the Adviser sixty (60) days written notice of its
intention to make available in the future, as a funding vehicle under the
Contracts, any other investment company.
1.6. The Company will place separate orders to purchase or redeem shares of
each Portfolio. Each order shall describe the net amount of shares and dollar
amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall pay the redemption
proceeds in federal funds transmitted by wire on the next Business Day after an
order to redeem a Portfolio's shares is made in accordance with the provision of
Section 1.4 hereof. Notwithstanding the foregoing, if the payment of redemption
proceeds on the next Business Day would require the Portfolio to dispose of
securities or otherwise incur substantial additional costs, and if the Portfolio
has determined to settle redemption transactions for all shareholders on a
delayed basis, proceeds shall be wired to the Company within seven (7) days and
the Portfolio shall notify in writing the person designated by the Company as
the recipient for such notice of such delay by 3:00 p.m. Eastern time on the
same Business Day that the Company transmits the redemption order to the
Portfolio.
1.7. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account. Shares
ordered from the Fund will be recorded in an appropriate title for each Account
or the appropriate subaccount of each Account.
1.8. The Fund shall make the dividends or capital gain distributing payable
on the Fund's shares available to the Company as soon as reasonably practical
after the dividends or capital gains are calculated (normally by 6:30 p.m.
Eastern time) and shall use its best efforts to furnish same day notice by 7:00
p.m. Eastern time (by wire or telephone, followed by written confirmation) to
the Company of any dividends or capital gain distributions payable on the Fund's
shares. The Company hereby elects to receive all such dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such dividends and capital gain distributions in cash. The Fund
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.9. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated (normally by 6:30 p.m. Eastern time)
and shall use its best efforts to make such net asset value per share available
by 7:00 p.m. Eastern time. In the event that the Fund is unable to meet the 7:00
p.m. time stated immediately above, then the Fund shall provide the Company with
additional time to notify the Fund of purchase or redemption orders pursuant to
Sections 1.1 and 1.4, respectively, above. Such additional time shall be equal
to the additional time that the Fund takes to make the net asset values
available to the Company; provided, however, that notification must be made by
10:15 a.m. Eastern time on the Business Day such order is to be executed
regardless of when the net asset value is made available.
1.10. If the Fund provides materially incorrect share net asset value
information through no fault of the Company, the Company shall be entitled to an
adjustment with respect to the Fund shares purchased or redeemed to reflect the
correct net asset value per share. The determination of the materiality of any
net asset value pricing error shall be based on the SEC's recommended guidelines
regarding such errors. The correction of any such errors shall be made at the
Company level and shall be made pursuant to the SEC's recommended guidelines.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to the Company.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the interests of the Accounts
(the "Contracts") are or will be registered and will maintain the registration
under the 1933 Act and the regulations thereunder to the extent required by the
1933 Act; that the Contracts will be issued in compliance in all material
respects with all applicable federal and state laws and regulations. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law and that it has legally and validly
established each Account prior to any issuance or sale thereof as a segregated
asset account under the New York Insurance Law and the regulations thereunder
and has registered or, prior to any issuance or sale of the Contracts, will
register and will maintain the registration of each Account as a unit investment
trust in accordance with and to the extent required by the provisions of the
1940 Act and the regulations thereunder to serve as a segregated investment
account for the Contracts. The Company shall amend its registration statement
for its contracts under the 1933 Act and the 1940 Act from time to time as
required in order to effect the continuous offering of its Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act and the regulations
thereunder to the extent required by the 1933 Act, duly authorized for issuance
in accordance with the laws of the State of Maryland and sold in compliance with
all applicable federal and state securities laws and regulations and that the
Fund is and shall remain registered under the 1940 Act and the regulations
thereunder to the extent required by the 1940 Act. The Fund shall amend the
registration statement for its shares under the 1933 Act and the 1940 Act from
time to time as required in order to effect the continuous offering of its
shares. The Fund shall register and qualify the shares for sale in accordance
with the laws of the various states only if and to the extent deemed advisable
by the Fund.
2.3 The Fund and the Adviser represent that the Fund is currently qualified
as a Regulated Investment Company under Subchapter M of the Code, and that the
Fund and the Adviser (with respect to those Portfolios for which such Adviser
acts as investment adviser) will make every effort to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that the Fund or the appropriate Adviser will notify the Company immediately
upon having a reasonable basis for believing that a Portfolio has ceased to so
qualify or that a Portfolio might not so qualify in the future.
2.4. The Company represents that each Account is and will continue to be a
"segregated account" under applicable provisions of the Code and that each
Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatments and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.5.. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have a board of directors, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various states.
2.7. The Fund and the Adviser represent that the Fund is lawfully organized
and validly existing under the laws of the State of Maryland and that the Fund
does and will comply in all material respects with the 1940 Act.
2.8. The Adviser and AGSI each represents and warrants that it is and shall
remain duly registered in all material respects under all applicable federal and
state securities laws and that it will perform its obligations for the Fund and
the Company in compliance in all material respects with the laws and regulations
of its state of domicile and any applicable state and federal securities laws
and regulations.
2.9. The Company represents and warrants that all of its trustees,
officers, employees, investment Adviser, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount equal to the greater of $5 million or any
amount required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company. The Company agrees to make all reasonable efforts to see that this bond
or another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no longer
applies.
ARTICLE III. PROSPECTUSES, REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1(a) The Fund or its designee shall provide the Company with as many
printed copies of the Fund's current prospectus (the "Fund Prospectus") as the
Company may reasonably request. If requested by the Company, in lieu of
providing printed copies of the Fund Prospectus, the Fund shall provide
camera-ready film or computer diskettes containing the Fund Prospectus and such
other assistance as is reasonably necessary in order for the Company once each
year (or more frequently if the Fund Prospectus is amended during the year) to
have the prospectus for the Contracts (the "Contract Prospectus") and the Fund
Prospectus printed together in one document or separately. The Company may elect
to print the Fund Prospectus in combination with other fund companies'
prospectuses. For purposes hereof, any combined prospectus including the Fund
Prospectus along with the Contract Prospectus or prospectus of other fund
companies shall be referred to as a "Combined Prospectus." For purposes hereof,
the term "Fund Portion of the Combined Prospectus" shall refer to the percentage
of the number of Fund Prospectus pages in the Combined Prospectus in relation to
the total number of pages of the Combined Prospectus.
3.1(b) The Fund shall provide the Company with as many printed copies of
the Fund's current statement of additional information (the "Fund SAT") as the
Company may reasonably request. If requested by the Company in lieu of providing
printed copies of the Fund SAI, the Fund shall provide camera-ready film or
computer diskettes containing the Fund SAI, and such other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the Fund SAI is amended during the year) to have the statement of additional
information for the Contracts (the "Contract SAI") and the Fund SAI printed
together or separately. The Company may also elect to print the Fund SAI in
combination with other fund companies' statements of additional information. For
purposes hereof, any combined statement of additional information including the
Fund SAI along with the Contract SAI or statement of additional information of
other fund companies shall be referred to as a "Combined SAI." For purposes
hereof, the term "Fund Portion of the Combined SAI" shall refer to the
percentage of the number of Fund SAI pages in the Combined SAI in relation to
the total number of pages of the Combined SAI.
3.1(c) The Fund shall provide the Company with as many printed copies of
the Fund's annual report and semi-annual report (collectively, the "Fund
Reports") as the Company may reasonably request. If requested by the Company in
lieu of providing printed copies of the Fund Reports, the Fund shall provide
camera-ready film or computer diskettes containing the Fund's Reports, and such
other assistance as is reasonably necessary in order for the Company once each
year to have the annual report and semi-annual report for the Contracts
(collectively, the "Contract Reports") and the Fund Reports printed together or
separately. The Company may also elect to print the Fund Reports in combination
with other fund companies' annual reports and semi-annual reports. For purposes
hereof, any combined annual reports and semi-annual reports including the Fund
Reports along with the Contract Reports or annual reports and semi-annual
reports of other fund companies shall be referred to as "Combined Reports." For
purposes hereof, the term "Fund Portion of the Combined Reports" shall refer to
the percentage of the number of Fund Reports pages in the Combined Reports in
relation to the total number or pages of the Combined Reports.
3.2 Expenses
3.2(a) Expenses Borne by Company. Except as otherwise provided in this
Section 3.2., all expenses of preparing, setting in type and printing and
distributing (i) Contract Prospectuses, Fund Prospectuses, and Combined
Prospectuses; (ii) Fund SAID, Contract SAIs, and Combined SAIs; (iii) Fund
Reports, Contract Reports, and Combined Reports, and (iv) Contract proxy
material that the Company may require in sufficient quantity to be sent to
Contract owners, annuitants, or participants under Contracts (collectively, the
"Participants"), shall be the expense of the Company.
3.2(b) Expenses Borne by Fund
Fund Prospectuses
With respect to existing Participants, the Fund shall pay the cost of
setting in type, printing and distributing Fund Prospectuses made available by
the Company to such existing Participants in order to update disclosure as
required by the 1933 Act and/or the 1940 Act. With respect to existing
Participants, in the event the Company elects to prepare a Combined Prospectus,
the Fund shall pay the cost of setting in type, printing and distributing the
Fund Portion of the Combined Prospectus made available by the Company to its
existing Participants in order to update disclosure as required by the 1933 Act
and/or the 1940 Act. In such event, the Fund shall bear the cost of typesetting
to provide the Fund Prospectus to the Company in the format in which the Fund is
accustomed to formatting prospectus. Notwithstanding the foregoing, in no event
shall the Fund pay for any such costs that exceed by more than five (5) percent
what the Fund would have paid to print such documents. The Fund shall not pay
any costs of typesetting, printing and distributing the Fund Prospectus (or
Combined Prospectus, if applicable) to prospective Participants.
Fund SAIs, Fund Reports and Proxy Material
With respect to existing Participants, the Fund shall pay the cost of
setting in type and printing Fund SAIs, Fund Reports and Fund proxy material
made available by the Company to its existing Participants. With respect to
existing Participants, in the event the Company elects to prepare a Combined SAI
or Combined Reports, the Fund shall pay the cost of setting in type and printing
the Fund Portion of the Combined SAI or Combined Reports, respectively, made
available by the Company to its existing Participants. In such event, the Fund
shall bear the cost of typesetting to provide the Fund SAI or Fund Reports to
the Company in the format in which the Fund is accustomed to formatting
statements of additional information and annual and semi-annual reports.
Notwithstanding the foregoing, in no event shall the Fund pay for any such costs
that exceed by more than five (5) percent what the Fund would have paid to print
such documents. The Fund shall pay one half the cost of distributing Fund SAIs,
Fund Reports and Fund proxy statements and proxy-related material to such
existing Participants. The Fund shall pay the cost of distributing the Fund
Portion of the Combined SAIs and the Fund Portion of the Combined Reports to
existing Participants. The Fund shall not pay any costs of distributing Fund
SAIs, Combined SAIs, Fund Reports, Combined Reports or proxy statements or
proxy-related material to prospective Participants.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of typesetting, printing or distributing any of
the foregoing documents other than those actually distributed to existing
Participants.
The Fund shall pay no fee or other compensation to the Company under this
Agreement, except that if the Fund or any Portfolio adopts and implements a plan
pursuant to Rule 12b-1 to finance distribution expenses, then the Underwriter
may make payments to the Company or to the underwriter for the Contracts if and
in amounts agreed to by the Underwriter in writing.
All expenses, including expenses to be borne by the Fund pursuant to
Section 3.2 hereof, incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed available by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares.
3.2(c) Expenses Borne by AGSI.
Fund Prospectuses
With respect to prospective Participants, AGSI shall pay one half of the
cost of setting in type, printing and distributing Fund Prospectuses made
available by the Company as sales literature to such prospective Participants.
With respect to prospective Participants, in the event the Company elects to
prepare a Combined Prospectus, AGSI shall pay one half of the cost of printing
and distributing the Combined Prospectus made available by the Company to its
prospective Participants as sales literature. In such event, AGSI shall bear the
cost of typesetting to provide the Fund Prospectus to the Company in the format
in which the Fund is accustomed to formatting prospectuses. Notwithstanding the
foregoing, in no event shall AGSI pay for any such costs that exceed by more
than five (5) percent what AGSI would have paid to print such documents.
Fund SAIs, Fund Reports and Proxy Material.
With respect to prospective Participants, AGSI shall pay one half of the
cost of setting in type and printing Fund SAIs, Fund Reports and Fund proxy
material made available by the Company to its prospective Participants as sales
literature. In the event the Company elects to prepare a Combined SAI or
Combined Reports, AGSI shall pay one half of the cost of printing the Combined
SAI or Combined Reports, respectively, made available by the Company to its
prospective Participants as sales literature. In such event, AGSI shall bear the
cost of typesetting to provide the Fund SAI and Fund Reports to the Company in
the format in which the Fund is accustomed to formatting statements of
additional information and annual and semi-annual reports. Notwithstanding the
foregoing, in no event shall AGSI pay for any such costs that exceed by more
than five (5) percent what AGSI would have paid to print such documents. AGSI
shall pay one half the cost of distributing Fund SAIs, Combined SAIs, Fund
Reports, Combined Reports, and Fund proxy material to such prospective
Participants as sales literature.
3.2(d) If the Company chooses to receive camera-ready film or computer
diskettes in lieu of receiving printed copies of the Fund Prospectus, Fund SAI
or Fund Reports, the Fund or its designee will be responsible for providing the
Fund Prospectus, Fund SAI or Fund Reports in the format in which it is
accustomed to formatting such documents, and, notwithstanding anything in
Sections 3.2(b) or 3.2(c), the Company shall bear the expense of adjusting or
changing the format to conform with any of its prospectuses or reports.
3.3. The Fund SAI shall be obtainable from the Fund, the Company or such
other person as the Fund may designate.
3.4. If and to the extent required by law the Company shall distribute all
proxy material furnished by the Fund to Participants to whom voting privileges
are required to be extended and shall:
(i) solicit voting instructions from Participants;
(ii) vote the Fund shares in accordance with instructions received from
Participants; and
(iii)vote Fund shares for which no instructions have been received in the
same proportion as Fund shares of such Portfolio for which
instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners. The Company
reserves the right to vote Fund shares held in any segregated asset account in
its own right, to the extent permitted by law. The Fund and the Company shall
follow the procedures, and shall have the corresponding responsibilities, for
the handling of proxy and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by reference. Participating
Insurance Companies shall be responsible for ensuring that each of their
separate accounts participating in the Fund calculates voting privileges in a
manner consistent with the standards set forth on Schedule C, which standards
will also be provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings (except insofar as the Securities and Exchange Commission may
interpret Section 16 not to require such meetings) or comply with Section 16(c)
of the 1940 Act (although the Fund is not one of the trusts described in Section
16(c) of that Act) as well as with Sections 16(a) and, if and when applicable,
16(b). Further, the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with respect to
periodic elections of directors and with whatever rules the Commission may
promulgate with respect thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material
prepared by the Company, AGSI or any person contracting with the Company or AGSI
in which the Fund or the Adviser is named, at least ten Business Days prior to
its use. No such material shall be used if the Fund, the Adviser, or their
designee reasonably objects to such use within ten Business Days after receipt
of such material.
4.2. Neither the Company, AGSI nor any person contracting with the Company
or AGSI shall give any information or make any representations or statements on
behalf of the Fund or concerning the Fund in connection with the sale of the
Contracts other than the information or representations contained in the
registration statement or the Fund Prospectus, as such registration statement or
Fund Prospectus may be amended or supplemented from time to time, or in reports
or proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee, except with the permission of the
Fund.
4.3. The Fund or its designee shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature or
other promotional material prepared by the Fund in which the Company or its
Account(s) are named at least ten Business Days prior to its use. No such
material shall be used if the Company or its designee reasonably objects to such
use within ten Business Days after receipt of such material.
4.4. Neither the Fund nor the Adviser shall give any information or make
any representations on behalf of the Company or concerning the Company, each
Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in published reports or solicitations for voting instructions for
each Account which are in the public domain or approved by the Company for
distribution to Participants, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for no-action letters, and all amendments
to any of the above, that relate to the Fund or its shares, contemporaneously
with the filing of such document with the SEC or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional information,
reports, solicitations for voting instructions, sales literature and other
promotional materials, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the investment
in an Account or Contract contemporaneously with the filing of such document
with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, any of the following:
advertisements (such as material published, or designed for use in, a newspaper,
magazine, or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public media),
sales literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or excerpts of
any other advertisement, sales literature, or published article), educational or
training materials or other communications distributed or made generally
available to some or all agents or employees, and registration statements,
prospectuses, statements of additional information, shareholder reports, and
proxy materials.
ARTICLE V. DIVERSIFICATION
5.1. The Adviser represents, as to the Portfolios for which it acts as
investment adviser, that it will use its best efforts at all times to comply
with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life insurance
contracts and any amendments or other modifications to such Section or
Regulations. In the event a Portfolio ceases to so qualify, the Adviser will
take all reasonable steps (a) to notify the Company of such breach and (b) to
adequately diversify the Portfolio so as to achieve compliance within the grace
period afforded by Regulation 1.817-5.
ARTICLE VI. POTENTIAL CONFLICTS
6.1. The parties acknowledge that the Fund intends to file an application
with the SEC to request an order granting relief from various provisions of the
'40 Act and the rules thereunder to the extent necessary to permit the Fund
shares to be sold to and held by variable contract separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and Qualified
Plans. It is anticipated that the Exemptive Order, when and if issued, shall
require the Fund and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Article VI. If the
Exemptive Order imposes conditions materially different from those provided for
in this Article VI, the conditions and undertakings imposed by the Exemptive
Order shall govern this Agreement and the parties hereto agree to amend this
Agreement consistent with the Exemptive Order.
6.2. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract owners and variable life insurance contract owners;
(f) a decision by a Participating Insurance Company to disregard the voting
instructions of Contract owners or (g) if applicable, a decision by a Qualified
Plan to disregard the voting instructions of plan participants. The Board shall
promptly inform the Company if it determines that an irreconcilable material
conflict exists and the implications thereof.
6.3. The Company will report any potential or existing material
irreconcilable 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. These responsibilities of the Company
shall be carried out with a view only to the interests of the Contract owners.
6.4. If a majority of the Board or majority of its disinterested Members,
determines that a material irreconcilable conflict exists affecting Life
Company, Life Company, at its expense and to the extent reasonably practicable
(as determined by a majority of the Board's disinterested Members), will take
any steps necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing the assets allocable to some or all of the Separate
Accounts from the Fund or any portfolio thereof and reinvesting those assets in
a different investment medium, which may include another Portfolio of the Fund,
or another investment company; (b) submitting the question as to whether such
segregation should be implemented to a vote of all affected Variable Contract
owners and as appropriate, segregating the assets of any appropriate group (i.e.
variable annuity or variable life insurance Contract owners of one or more
Participating Insurance Companies) that votes in favor of such segregation, or
offering to the affected Variable Contract owners the option of making such a
change; and (c) establishing a new registered management investment company (or
series thereof) or managed separate account. If a material irreconcilable
conflict arises because of Life Company's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a majority vote, Life Company may be required, at the
election of the Fund, to withdraw the Separate Account's investment in the Fund,
and no charge or penalty will be imposed as a result of such withdrawal. The
responsibility to take such remedial action shall be carried out with a view
only to the interests of the Variable Contract owners.
6.5. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account's
investment in the Fund and terminate this Agreement with respect to such Account
(at the Company's expense); 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. No charge or penalty will be imposed as a result of such
withdrawal. The Company agrees that it bears the responsibility to take remedial
action in the event of a Board determination of an irreconcilable material
conflict and the cost of such remedial action, and these responsibilities will
be carried out with a view only to the interests of Contract owners.
6.6. For purposes of Sections 6.4 and 6.5 of this Agreement, a majority of
the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish a new funding medium for the Contracts.
The Company shall not be required by Section 6.4 or 6.5 to establish a new
funding medium for the Contracts if an offer to do so has been declined by vote
of a majority of Contract owners materially adversely affected by the
irreconcilable material conflict.
6.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Shared Funding Exemptive Order) on terms and conditions
materially different from those contained in the Shared Funding Exemptive Order,
then the Fund and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable.
6.8 The Company and the Adviser shall at least annually submit to the Board
of the Fund such reports, materials or data as the Board may reasonably request
so that the Board may fully carry out the obligations imposed upon them by the
provisions hereof, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Board. All reports received by the Board
of potential or existing conflicts, and all Board action with regard to
determining the existence of a conflict, notifying Participating Insurance
Companies of a conflict, and determining whether any proposed action adequately
remedies a conflict, shall be properly recorded in the minutes of the Board or
other appropriate records, and such minutes or other records shall be made
available to the SEC upon request.
ARTICLE VII. INDEMNIFICATION
7.1. Indemnification By The Company and AGSI
7.1(a) The Company and AGSI agree to indemnify and hold harmless the Fund
and each member of the Board and officers, and the Adviser and each director and
officer of the Adviser, and each person, if any, who controls the Fund or the
Adviser within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 7.1) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company or
AGSI) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
registration statement or prospectus for the Contracts or in the Contracts
or sales literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature of the Fund not supplied by the
Company or AGSI, or persons under its control and other than statements or
representations authorized by the Fund or the Adviser) or wrongful conduct
of the Company or AGSI or persons under its control, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, or sales literature of the Fund or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or omission was made
in reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company or AGSI; or
(iv) arise as a result of any failure by the Company or AGSI to
provide the services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company or AGSI in this
Agreement or arise out of or result from any other material breach of this
Agreement by the Company or AGSI, as limited by and in accordance with the
provisions of Sections 7.1(b) and 7.1(c) hereof.
7.1(b). Neither the Company nor AGSI shall be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against an Indemnified Party as
such may arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or duties
under this Agreement.
7.1(c). Neither the Company nor AGSI shall be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Company or AGSI in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company or AGSI
of any such claim shall not relieve the Company or AGSI from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, the Company or AGSI shall be
entitled to participate, at its own expense, in the defense of such action. The
Company or AGSI also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Company or AGSI to such Party of the Company's or AGSI's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses under
this Agreement for any legal or other expenses subsequently incurred by such
Party independently in connection with the defense thereof other than reasonable
costs of investigation.
7.1(d). The Indemnified Parties will promptly notify the Company or AGSI of
the commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund shares or the Contracts or the operation
of the Fund.
7.2. Indemnification by the Adviser
7.2(a). The Adviser agrees, with respect to each Portfolio that it manages,
to indemnify and hold harmless the Company and each of its directors and
officers and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" and
individually, "Indemnified Party," for purposes of this Section 7.2) against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Adviser) or litigation (including
legal and other expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements,
result from the gross negligence, bad faith, willful misconduct of the Adviser
or any director, officer, employee or agent thereof, are related to the
operation of the Adviser or the Fund and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the Adviser or the Fund or the Underwriter by or
on behalf of the Company for use in the registration statement or
prospectus for the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature for the Contracts not supplied by
the Adviser or persons under its control and other than statements or
representations authorized by the Company) or unlawful conduct of the
Adviser or persons under its control, with respect to the sale or
distribution of the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any amendment
thereof or supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statement or statements therein not misleading, if such statement or
omission was made in reliance upon information furnished to the Company by
or on behalf of the Adviser; or
(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Fund or the Adviser; including without limitation any failure by the
Fund or the Adviser to comply with the conditions of Article VI hereof.
7.2(b).The Adviser shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
7.2(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such Party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Adviser will not be
liable to such Party under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.2(d). The Company and AGSI agree promptly to notify the Adviser of the
commencement of any litigation or proceedings against it or any of its officers,
trustees or directors in connection with this Agreement, the issuance or sale of
the Contracts with respect to the operation of each Account, or the sale or
acquisition of shares of the Fund.
ARTICLE VIII. APPLICABLE LAW
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Maryland.
8.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 Acts, and the rules and regulations and rulings thereunder, including
such exemptions from those statutes, rules and regulations as the SEC may grant
(including, but not limited to, the Shared Funding Exemptive Order) and the
terms hereof shall be interpreted and construed in accordance therewith.
ARTICLE IX. TERMINATION
9.1. This Agreement shall continue in full force and effect until the first
to occur of:
(a) termination by any party for any reason upon 180 days advance
written notice delivered to the other parties; or
(b) termination by the Company or AGSI by written notice to the Fund
and the Adviser with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said termination
to be effective ten (10) days after receipt of notice unless the Fund makes
available a sufficient number of shares to reasonably meet the requirements
of the Account within said ten (10) day period; or
(c) termination by the Company or AGSI by written notice to the Fund
and the Adviser with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment medium of the Contracts issued or to be
issued by the Company. The terminating party shall give prompt notice to
the other parties of its decision to terminate; or
(d) termination by the Company or AGSI by written notice to the Fund
and the Adviser with respect to any Portfolio in the event that such
Portfolio 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 or AGSI reasonably believes that the Fund may fail to so
qualify; or
(e) termination by the Company or AGSI by written notice to the Fund
and the Adviser with respect to any Portfolio in the event that such
Portfolio fails to meet the diversification requirements specified in
Article V hereof; or
(f) termination by either the Fund or the Adviser by written notice to
the Company if the Adviser or the Fund shall determine, in its sole
judgment exercised in good faith, that the Company, AGSI and/or their
affiliated companies has suffered a material adverse change in its
business, operations, financial condition or prospects since the date of
this Agreement or is the subject of material adverse publicity, provided
that the Fund or the Adviser will give the Company sixty (60) days' advance
written notice of such determination of its intent to terminate this
Agreement, and provided further that after consideration of the actions
taken by the Company or AGSI and any other changes in circumstances since
the giving of such notice, the determination of the Fund or the Adviser
shall continue to apply on the 60th day since giving of such notice, then
such 60th day shall be the effective date of termination; or
(g) termination by the Company or AGSI by written notice to the Fund
and the Adviser, if the Company or AGSI shall determine, in its sole
judgment exercised in good faith, that either the Fund or the Adviser (with
respect to the appropriate Portfolio) has suffered a material adverse
change in its business, operations, financial condition or prospects since
the date of this Agreement or is the subject of material adverse publicity;
provided that the Fund or the Adviser will give the Company sixty (60)
days' advance written notice of such determination of its intent to
terminate this Agreement, and provided further that after consideration of
the actions taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the Company or AGSI
shall continue to apply on the 60th day since giving of such notice, then
such 60th day shall be the effective date of termination; or
(h) termination by the Fund or the Adviser by written notice to the
Company, if the Company gives the Fund and the Adviser the written notice
specified in Section 1.5 hereof and at the time such notice was given there
was no notice of termination outstanding under any other provision of this
Agreement; provided, however any termination under this Section 9.1(h)
shall be effective sixty (60) days after the notice specified in Section
1.5 was given; or
(i) termination by any party upon the other party's breach of any
representation in Article II or any material provision of this Agreement,
which breach has not been cured to the satisfaction of the terminating
party within ten (10) days after written notice of such breach is delivered
to the Fund or the Company, as the case may be; or
(j) termination by the Fund or the Adviser by written notice to the
Company in the event an Account or Contract is not registered or sold in
accordance with applicable federal or state law or regulation, or the
Company fails to provide pass-through voting privileges as specified in
Section 3.4.
9.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the 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") unless such
further sale of Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The Company
agrees however: (i) to immediately terminate the availability of shares of the
Fund to Contracts other than Existing Contracts and (ii) as soon as reasonably
practicable to request and diligently pursue approval from the SEC to replace
shares of the Fund with other investments for Contracts and, if and when granted
such approval, thereafter to so replace the shares of the Fund as soon as
reasonably practicable. Furthermore, the parties agree that this Section 9.2
shall not apply to any terminations under Article VI and the effect of such
Article VI terminations shall be governed by Article VI of this Agreement.
9.3. The Company shall not redeem Fund shares attributable to the Contracts
(as distinct from Fund shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract Owner initiated or
approved transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory to the Fund and
the Adviser) to the effect that any redemption pursuant to clause (ii) above is
a Legally Required Redemption. Furthermore, except in cases where permitted
under the terms of the Contracts, the Company shall not prevent Contract Owners
from allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the appropriate Adviser 90 days prior
written notice of its intention to do so.
ARTICLE X. Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
Navellier Variable Insurance Series Fund, Inc.
One East Liberty, Third Floor
Reno, Nevada, 89501
Attention: Dennis A. Holtorf
If to Adviser:
Navellier Management, Inc.
One East Liberty, Third Floor
Reno, Nevada 89501
Attention: Dennis A. Holtorf
If to the Company:
American General Life Insurance Company
2727-A Allen Parkway
Houston, Texas 77019
Attention: Steven A. Glover
If to AGSI:
American General Securities Incorporated
2727 Allen Parkway
Houston, Texas 77019
Attention: F. Paul Kovach, Jr.
ARTICLE XI. FOREIGN TAX CREDITS
The Fund and the Adviser agree to consult with the Company concerning
whether any Portfolio of the Fund qualifies to provide a foreign tax credit
pursuant to Section 853 of the Code.
ARTICLE XII. MISCELLANEOUS
12.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Board, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.
12.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts 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.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
12.5. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
12.6. Each party hereto 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.
12.7. 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.
12.8. This Agreement or any of the rights and obligations hereunder may not
be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may assign this Agreement or any
rights or obligations hereunder to any affiliate of or company under common
control with the Adviser, if such assignee is duly licensed and registered to
perform the obligations of the Adviser under this Agreement.
12.9 The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee copies of the following reports upon request from the Fund:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under generally accepted
accounting principles ("GAAP"), if any), as soon as practical and in any
event within 90 days after the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory) (and
GAAP, if any), as soon as practical and in any event within 45 days after
the end of each semi-annual period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the SEC or any state insurance regulator,
as soon as practical after the filing thereof;
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Company, as soon as practical after the receipt
thereof.
12.10. It is agreed by the parties hereto that Article VII and Sections
12.1, 12.6 and 12.7 shall survive any termination of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its duly authorized representative
hereto as of the date specified above.
AMERICAN GENERAL LIFE INSURANCE COMPANY on behalf of itself
and each of its Accounts named in Schedule B hereto, as
amended from time to time.
By:
Name: Rodney O. Martin, Jr.
Title: President and Chief Executive Officer
AMERICAN GENERAL SECURITIES INCORPORATED
By:
Name: F. Paul Kovach, Jr.
Title: President
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
By:
Name:
Title:
NAVELLIER & ASSOCIATES, INC.
By:
Name:
Title:
SCHEDULE A
PORTFOLIOS OF NAVELLIER VARIABLE INSURANCE
SERIES FUND, INC.
AVAILABLE FOR
PURCHASE BY AMERICAN GENERAL LIFE
INSURANCE COMPANY UNDER THIS AGREEMENT
1. Navellier Growth Portfolio
SCHEDULE B
SEPARATE ACCOUNTS AND CONTRACTS
<TABLE>
<CAPTION>
<S> <C>
Name of Separate Account and Form Numbers and Names of Contract Funded by
Date Established by Board of Directors Separate Account
American General Life Insurance Company Form No:
Separate Account D
Established: November 19, 1973
Name of Contract:
</TABLE>
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
enable the Company to consider and prepare for the solicitation of voting
instructions from owners of the Contracts and to facilitate the
establishment of tabulation procedures. At this time the Fund will inform
the Company of the Record, Mailing and Meeting dates. This will be done
verbally approximately two months before meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units which are attributed to each contract owner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund , as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the Company
either before or together with the Customers' receipt of a proxy statement
or other voting instructions and solicitation material. The Fund will
provide at least one copy of the last Annual Report to the Company pursuant
to the terms of Section 3.3 of the Agreement to which this Schedule
relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is
provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be sent to Company for insertion into envelopes
(envelopes and return envelopes are provided and paid for by the Company).
Contents of envelope sent to Customers by the Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved
in advance by the Fund.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews and
approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to the Fund.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time
is calculated as calendar days from (but not including,) the meeting,
counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used. An often
used procedure is to sort Cards on arrival by proposal into vote categories
of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
9. Signatures on Card checked against legal name on account registration which
was printed on the Card.
Note: For example, if the account registration is under "John A. Smith,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not signed
properly, they are sent back to Customer with an explanatory letter and a
new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have been "kicked out" (e.g. mutilated,
illegible) of the procedure are "hand verified," i.e., examined as to why
they did not complete the system. Any questions on those Cards are usually
remedied individually.
11. There are various control procedures used to ensure proper tabulation of
votes and accuracy of that tabulation. The most prevalent is to sort the
Cards as they first arrive into categories depending upon their vote; an
estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of shares.) The Fund must review
and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to the Fund on
the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund
may request an earlier deadline if reasonable and if required to calculate
the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from the
Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, the Fund will be
permitted reasonable access to such Cards.
16. All approvals and "signing-off' may be done orally, but must always be
followed up in writing.
PARTICIPATION AGREEMENT
AMONG
AMERICAN GENERAL LIFE INSURANCE COMPANY
AMERICAN GENERAL SECURITIES INCORPORATED
AND
NAVELLIER VARIABLE INSURANCE SERIES FUND, INC.
DATED AS OF
___________, 199
TABLE OF CONTENTS
PAGE
ARTICLE I. Fund Shares
ARTICLE II. Representations and Warranties
ARTICLE III. Prospectuses, Reports to Shareholders and Proxy Statements; Voting
ARTICLE IV. Sales Material and Information
ARTICLE V. Diversification
ARTICLE VI. Potential Conflicts
ARTICLE VII. Indemnification
ARTICLE VIII. Applicable Law
ARTICLE IX. Termination
ARTICLE X. Notices
ARTICLE XI. Foreign Tax Credits
ARTICLE XII. Miscellaneous
SCHEDULE A
PORTFOLIOS OF NAVELLIER VARIABLE INSURANCE
SERIES FUND, INC.
AVAILABLE FOR
PURCHASE BY AMERICAN GENERAL LIFE
INSURANCE COMPANY UNDER THIS AGREEMENT
SCHEDULE B
SEPARATE ACCOUNTS AND CONTRACTS
SCHEDULE C
PROXY VOTING PROCEDURES
Blazzard, Grodd & Hasenauer, P.C.
943 Post Road East
Westport, CT 06880
(203) 226-7866
February 2, 1998
Board of Directors
Navellier Variable Insurance Series Fund, Inc.
One East Liberty, Third Floor
Reno, NV 89501
Re: Opinion of Counsel - Navellier Variable Insurance Series Fund, Inc.
Gentlemen:
You have requested our Opinion of Counsel in connection with the filing with the
Securities and Exchange Commission of a Pre-Effective Amendment to a
Registration Statement on Form N-1A with respect to Navellier Variable Insurance
Series Fund, Inc.
We have made such examination of the law and have examined such records and
documents as in our judgment are necessary or appropriate to enable us to render
the opinions expressed below.
We are of the following opinions:
1. Navellier Variable Insurance Series Fund, Inc. ("Fund") is an open-end
management investment company.
2. The Fund is created and validly existing pursuant to the Maryland Laws.
3. All of the prescribed Fund procedures for the issuance of the shares
have been followed, and, when such shares are issued in accordance with the
Prospectus contained in the Registration Statement for such shares, all state
requirements relating to such Fund shares will have been complied with.
4. Upon the acceptance of purchase payments made by shareholders in
accordance with the Prospectus contained in the Registration Statement and upon
compliance with applicable law, such shareholders will have legally-issued,
fully paid, non-assessable shares of the Fund.
We consent to the reference to our Firm under the caption "Legal Counsel"
contained in the Statement of Additional Information which forms a part of the
Registration Statement.
You may use this opinion letter, or a copy thereof, as an exhibit to the
Registration.
Sincerely,
BLAZZARD, GRODD & HASENAUER, P.C.
By: /s/RAYMOND A. O'HARA III
____________________________
Raymond A. O'Hara III
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the references to our firm in Pre-Effective Amendment No. 1 to the
Registration Statement on Form N-1A of the Navellier Variable Insurance Series
Fund, Inc. and to the use of our report dated January 15, 1998 on the financial
statement of the Navellier Growth Portfolio, a series of shares of the Navellier
Variable Insurance Series Fund, Inc. Such financial statement is incorporated by
reference in the Registration Statement and Prospectus.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 29, 1998
FORM OF STOCK SUBSCRIPTION AGREEMENT
THIS AGREEMENT by and between Louis G. Navellier and Navellier Variable
Insurance Series Fund, Inc. (the "Fund"), a corporation organized and existing
under and by virtue of the laws of the State of Maryland.
In consideration of the mutual promises set forth herein, the parties agree
as follows:
1. The Fund agrees to sell to Louis G. Navellier and Louis G. Navellier
hereby subscribes to purchase the specified number of shares of common stock of
the following Portfolio of the Fund: 10,000 shares of the Navellier Growth
Portfolio each with a par value of $0.001 per Share, at a price of ten dollars
($10.00) per each Share.
2. Louis G. Navellier agrees to pay $100,000 for all such Shares at the
time of their issuance, which shall occur upon call of the President of the
Fund, at any time on or before the effective date of the Fund's Registration
Statement filed by Navellier Variable Insurance Series Fund, Inc. on Form N-1A
with the Securities and Exchange Commission ("Registration Statement") on
February 28, 1997.
3. Louis G. Navellier acknowledges that the Shares to be purchased
hereunder have not been, and will not be, registered under the federal
securities laws and that, therefore, the Fund is relying on certain exemptions
from such registration requirements, including exemptions dependent on the
intent of the undersigned in acquiring the Shares. Louis G. Navellier also
understands that any resale of the Shares, or any part thereof, may be subject
to restrictions under the federal securities laws, and that Louis G. Navellier
may be required to bear the economic risk of any investment in the Shares for an
indefinite period of time.
4. Louis G. Navellier represents and warrants that he is acquiring the
Shares solely for his own account and solely for investment purposes and not
with a view to the resale or disposition of all or any part thereof, and that he
has no present plan or intention to sell or otherwise dispose of the Shares or
any part thereof.
5. Louis G. Navellier agrees that he will not sell or dispose of the Shares
or any part thereof unless the Registration Statement with respect to such
Shares is then in effect under the Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement this
_____ day of _______________, 1998.
____________________________________
Louis G. Navellier
NAVELLIER VARIABLE INSURANCE SERIES
FUND, INC.
By:_________________________________
Title:
