EXHIBIT (8)(s)
PARTICIPATION AGREEMENT
AMONG
▇▇▇▇▇▇▇ ▇▇▇▇▇ LIFE INSURANCE COMPANY,
▇▇▇▇▇▇▇▇ VALUE FUND SERIES, INC., AND
▇▇▇▇▇▇ ADVISORS, INC.
THIS AGREEMENT, dated as of the _____ day of _________, 2002, by and
among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Life Insurance Company (the "Company"), an Arkansas life
insurance company, on its own behalf and on behalf of each segregated asset
account of the Company set forth on Schedule A hereto as may be amended from
time to time (hereinafter referred to individually and collectively as the
"Account"), Seilgman Value Fund Series, Inc. (the "Fund"), a Maryland
corporation, and ▇▇▇▇▇▇ Advisors, Inc. (the "Underwriter"), a Delaware
company.
WHEREAS, the shares of beneficial interests of the Fund are divided
into several series of shares, each designated a "Portfolio" and representing
the interest in a particular managed portfolio of securities and other assets;
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended, (the "1940 Act")
and shares of the Portfolios are registered under the Securities Act of 1933,
as amended (the "1933 Act");
WHEREAS, J. & ▇. ▇▇▇▇▇▇▇▇ & Co., Incorporated (the "Adviser"), a
Delaware company, which serves as investment adviser to the Fund, is duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended;
WHEREAS, the Underwriter, which serves as distributor to the Fund, is
registered as a broker-dealer with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and is a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD");
WHEREAS, the Account is duly established and maintained as a
segregated asset account, duly established by the Company, on the date shown
for such Account on Schedule A hereto, to set aside and invest assets
attributable to variable annuity contracts set forth in Schedule A hereto, as
it may be amended from time to time by mutual written agreement (the
"Contracts");
WHEREAS, each Portfolio issues shares to the general public and
pursuant to this Agreement, will issue shares to the separate accounts of
insurance companies ("Participating Insurance Companies") to fund variable
annuity contracts sold to certain qualified pension and retirement plans;
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WHEREAS, the Company intends to purchase shares of other open-end
management investment companies that offer shares to the general public to
fund the Contracts;
WHEREAS, the Fund and the Underwriter know of no reason why shares in
any Portfolio may not be sold to Participating Insurance Companies to fund
variable annuity contracts sold to certain qualified pension and retirement
plans; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios (and
classes thereof) listed in Schedule B hereto, as it may be amended from time
to time by mutual written agreement (the "Designated Portfolios") on behalf of
the Account to fund the aforesaid Contracts, and the Underwriter is authorized
to sell such shares in the Designated Portfolios, and classes thereof, to the
Account at net asset value.
NOW, THEREFORE, in consideration of their mutual promises, the
Company, the Fund, and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund has granted to the Underwriter exclusive authority
to distribute the Fund's shares, and pursuant to a written agreement between
the Fund and the Underwriter, the Underwriter is authorized to make available
to the Company for purchase on behalf of the Account Fund shares of the
Designated Portfolios and classes thereof listed on Schedule B to this
Agreement (the "Shares"). Pursuant to such authority and instructions, and
subject to Article IX hereof, the Underwriter agrees to make the Shares
available to the Company for purchase on behalf of the Account, such purchases
to be effected at net asset value in accordance with Section 1.3 of this
Agreement. Notwithstanding the foregoing, the Board of Directors of the Fund
(the "Board") may suspend or terminate the offering of Shares of any
Designated Portfolio or class thereof, if such action is required by law or by
regulatory authorities having jurisdiction or if, in the sole discretion of
the Board acting in good faith and in light of its fiduciary duties under
federal and any applicable state laws, suspension or termination is necessary
in the best interests of the shareholders of such Designated Portfolio.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Shares held by the Company on behalf of the Account, such
redemptions to be effected at net asset value in accordance with Section 1.3
of this Agreement. Notwithstanding the foregoing, (i) the Company shall not
redeem Shares attributable to Contract owners except in the circumstances
permitted in Section 9.4 of this Agreement, and (ii) the Fund may delay
redemption of Shares of any Designated Portfolio to the extent permitted by
the 1940 Act, and any rules, regulations, or orders thereunder.
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1.3. Purchase and Redemption Procedures
The Fund hereby appoints the Company as an agent of the Fund for the limited
purpose of receiving purchase and redemption requests on behalf of the Account
(but not with respect to any Fund shares that may be held in the general
account of the Company) for the Shares made available hereunder, based on
allocations of amounts to the Account or subaccounts thereof under the
Contracts and other transactions relating to the Contracts or the Account. All
transactions in Account shares shall be executed through the Omnibus Accounts
of Company's affiliate ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. ("Omnibus
Accounts"). Receipt of any such request (or relevant transactional information
therefor) on any day 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
(a "Business Day") by the Company as such limited agent of the Fund prior to
the time that the Fund ordinarily calculates its net asset value as described
from time to time in the Fund Prospectus (which as of the date of execution of
this Agreement is 4:00 p.m. Eastern Time) shall constitute receipt by the Fund
on that same Business Day, provided that the Fund receives notice of such
request by 10 a.m. Eastern Time on the next following Business Day, or in the
event of systems issues necessitating later delivery of such purchase and
redemption requests by 11 a.m. Eastern Time on the next following Business
Day. Company and Fund understand that it is the intent of the parties that
Fund receive such purchase and redemption requests from Company on behalf of
the Account by 9:00 a.m. Eastern Time on the next following Business Day.
Company will provide to the Transfer Agent or its designee via the NSCC Fund
SERV DCC & S platform (which utilizes the "as of" record layout within
Fund/SERV) one or more files detailing the instructions received with respect
to each Plan prior to 4:00 p.m. Eastern Time on the prior Business Day for
each of the Funds. If for any reason ▇▇▇▇▇▇▇ ▇▇▇▇▇ is unable to transmit the
file(s) with respect to any Business Day, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will notify the
Transfer Agent or its designee by 11:00 a.m. Eastern Time on the next
following Business Day.
(b) The Company shall pay for Shares on the same day that it
notifies the Fund of a purchase request for such Shares. Payment for Shares
shall be made in federal funds transmitted to the Fund via the NSCC Fund/SERV
DCC&S platform to be received by the Fund by 6:30 p.m. Eastern Time on the day
the Fund is notified of the purchase request for Shares (unless the Fund
determines and so advises the Company that sufficient proceeds are available
from redemption of Shares of other Designated Portfolios effected pursuant to
redemption requests tendered by the Company on behalf of the Account). Upon
receipt of federal funds transmitted via the NSCC Fund/SERV DCC&S platform,
such funds shall cease to be the responsibility of the Company and shall
become the responsibility of the Fund. Notwithstanding any provision of this
Agreement to the contrary, for purchase and redemption instructions with
respect to any Shares, Company and the Fund will settle the purchase and
redemption transactions referred to herein, via the NSCC Fund/SERV platform
settlement process on the next Business Day following the effective trade
date. The Fund will provide to Company a daily transmission of positions and
trading activity taking place in the Omnibus Accounts using Company's
affiliate's proprietary Inventory Control System ("ICS").
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(c) To the extent practicable, payment for Shares redeemed by
the Account or the Company shall be made in federal funds transmitted via the
NSCC Fund/SERV DCC&S platform to the Company on the next Business Day after
the Fund is properly notified of the redemption order of such Shares (unless
redemption proceeds are to be applied to the purchase of Shares of other
Designated Portfolios in accordance with Section 1.3(b) of this Agreement),
except that the Fund reserves the right to redeem Shares in assets other than
cash and to delay payment of redemption proceeds to the extent permitted under
Section 22(e) of the 1940 Act and any Rules thereunder, and in accordance with
the procedures and policies of the Fund as described in the then current
prospectus. The Fund shall not bear any responsibility whatsoever for the
proper disbursement or crediting of redemption proceeds by the Company; the
Company alone shall be responsible for such action.
(d) Any purchase or redemption request for Shares held or to be
held in the Company's general account shall be effected at the closing net
asset value per share next determined after the Fund's receipt of such request
as set forth in Section 1.3(a) herein.
1.4. The Fund shall use its best efforts to make the closing
net asset value per Share for each Designated Portfolio available to the Company
by 6:30 p.m. Eastern Time each Business Day via the NSCC Profile 1 platform, and
in any event, as soon as reasonably practicable after the closing net asset
value per Share for such Designated Portfolio is calculated, and shall calculate
such closing net asset value, including any applicable daily dividend factor, in
accordance with the Fund's Prospectus. In the event the Fund is unable to make
the 6:30 p.m. deadline stated herein, it shall provide additional time for the
Company to place orders for the purchase and redemption of Shares. Such
additional time shall be equal to the additional time that the Fund takes to
make the closing net asset value available to the Company. Neither the Fund, any
Designated Portfolio, the Underwriter, nor any of their affiliates shall be
liable for any information provided to the Company pursuant to this Agreement
which information is based on incorrect information supplied by the Company to
the Fund or the Underwriter. Any material error in the calculation or reporting
of the closing net asset value, including any applicable daily dividend factor
per Share shall be reported promptly upon discovery to the Company. In such
event the Company shall be entitled to an adjustment to the number of Shares
purchased or redeemed to reflect the correct closing net asset value, including
any applicable daily dividend factor per Share and the Fund shall bear the cost
of correcting such errors. Any error of a lesser amount shall be corrected in
the next business day's net asset value per Share.
1.5. Notwithstanding anything to the contrary contained in this
Agreement, the Fund will make available for purchase by the Company, on its
behalf and on behalf of the Account a class of shares available at net asset
value which are not subject to a contingent deferred sales charge or
redemption fee. In addition, no exchange fees will be applicable to shares of
the Funds purchased by the Company, on its behalf and on behalf of the
Account. The Fund shall furnish notice (via the NSCC Profile II platform to
the Company as soon as reasonably practicable of any income dividends or
capital gain distributions payable on any Shares. The form of payment of
dividends and capital gains distributions will be determined in accordance
with the Company's operational procedures in effect at the time of the payment
of such dividend or distribution. At this time the Company, on its behalf and
on behalf of the Account, hereby elects to receive all
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such dividends and distributions as are payable on any Shares in the form of
additional Shares of that Designated Portfolio. Company will reinvest the
additional Shares of that Designated Fund through a trade processed via the
NSCC platform. The Company reserves the right, on its behalf and on behalf of
the Account, to revoke this election and to receive all such dividends and
capital gain distributions in the form of cash. The parties understand and
agree that all transactions of Account shares contemplated herein shall be
executed through the Omnibus Account and that Company's affiliate, ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. will receive all such dividends and
distributions in the form of cash which Company, in turn, will immediately
reinvest in the form of additional Shares of that Designated Portfolio. The
Transfer Agent shall notify the Company promptly of the number of Shares so
issued as payment of such dividends and distributions.
1.6. Issuance and transfer of Shares shall be by book entry only
and executed through the Omnibus Accounts. Stock certificates will not be
issued to the Company or the Account. Purchase and redemption orders for Fund
shares shall be recorded in an appropriate ledger for the Account or the
appropriate subaccount of the Account.
1.7 Fund Information.
(a) The Fund will provide (or cause to be provided) to Company the
information set forth in Schedule C hereto. In addition, notwithstanding
anything contained in this Agreement to the contrary, the Fund hereby agrees
that Company may use such information in communications prepared for the
Contracts, including, but not limited to, application, marketing, sales and
other communications materials. The Fund will provide timely notification to
Company of any change to the information described in Part I of Schedule C
including without limitation any change to the CUSIP number or symbol
designation of a Fund. Such notification shall be given to Company at least
ten (10) Business Days prior to the effective date of the change or the effect
of the change with respect to transactions by the Account in any affected Fund
shall be delayed for a reasonable time following notification hereunder.
(b) Notwithstanding anything to the contrary in this Agreement, upon
request, the Fund will provide Company with prospectuses, proxy materials,
financial statements, reports and other materials relating to each Fund in
sufficient quantity for each Contract owner invested in the Fund.
(c) With the exception of (i) listings of product offerings; (ii)
materials in the public domain (e.g., magazine articles and trade
publications); and (iii) materials used by on an internal basis only, Company
agrees not to furnish or cause to be furnished to any third parties or to
display publicly or publish any information or materials relating to the
Funds, except such materials and information as may be distributed to Company
by Fund or approved for distribution by Fund upon Company's request.
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1.8. The parties hereto acknowledge that the arrangement
contemplated by this Agreement is not exclusive; the Fund's shares may be sold
to other investors and the cash value of the Contracts may be invested in
other investment companies. The Company acknowledges that shares of the Fund
are offered and sold directly to members of the general public, and are not
and will not be sold directly to insurance companies and their separate
accounts and certain qualified retirement plus in accordance with Section 817
(h)(4) of the Internal Revenue Code of 1986, as amended, and Treasury
Regulation 1.817-5.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts (a)
are, or prior to issuance will be, registered under the 1933 Act, or (b) are
not registered because they are properly exempt from registration under the
1933 Act or will be offered exclusively in transactions that are properly
exempt from registration under the 1933 Act. The Company further represents
and warrants that the Contracts will be issued and sold in compliance in all
material respects with all applicable federal securities and state securities
and insurance laws and that the sale of the Contracts shall comply in all
material respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly organized
and in good standing under applicable law, that it has legally and validly
established the Account prior to any issuance or sale thereof as a segregated
asset account under Arkansas insurance laws, and that it (a) has registered
or, prior to any issuance or sale of the Contracts, will register the Account
as a unit investment trust in accordance with the provisions of the 1940 Act
to serve as a segregated investment account for the Contracts, or
alternatively (b) has not registered the Account in proper reliance upon an
exclusion from registration under the 1940 Act. The Company shall register and
qualify the Contracts or interests therein as securities in accordance with
the laws of the various states only if and to the extent deemed advisable by
the Company.
2.2. The Fund represents and warrants that Shares sold pursuant
to this Agreement shall be registered under the 1933 Act and, duly authorized
for issuance and sold in compliance with applicable state and federal
securities laws. and that the Fund is and shall remain registered under the
▇▇▇▇ ▇▇▇. 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, the Adviser, or the Underwriter.
2.3. The Fund and the Underwriter agree to comply in all material
respects with any applicable state insurance laws or regulations (including
the furnishing of information not otherwise available to the Company which is
required by state insurance law to enable the Company to obtain the authority
needed to issue the Contracts in any applicable state, and including
cooperating with the Company in any filings of sales literature for the
Contracts), to the
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extent notified thereof in writing by the Company; provided that such
compliance is not inconsistent with any other laws or regulations applicable
to the Fund or the Underwriter.
2.4. The Fund represents that it is lawfully organized and
validly existing under the laws of the State of Maryland and that it does and
will comply in all material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member
in good standing of the NASD and is registered as a broker-dealer with the
SEC. The Underwriter further represents that it will sell and distribute the
Fund shares in compliance with all material respects with any applicable state
and federal securities laws.
2.7. The Fund represents and warrants that all of its
trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity bond
or similar coverage for the benefit of the Fund in an amount not less than the
minimum coverage as required currently by Rule 17g-1 of the 1940 Act or
related provisions as may be promulgated from time to time. The aforesaid bond
shall include coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many
copies of the Fund's current prospectus as the Company may reasonably request.
The Fund or the Underwriter shall bear the expense of printing copies of the
current prospectus and profiles for the Fund that will be distributed to
existing Contract owners whose contracts are funded by the Fund's shares, and
the Company shall bear the expense of printing copies of the Fund's prospectus
and profiles that are used in connection with offering the Contracts issued by
the Company. If requested by the Company in lieu thereof, the Fund shall
provide such documentation (including a final copy of the new prospectus on
diskette at the Fund's or Underwriter's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the prospectus
for the Contracts and the Fund's prospectus printed together in one document
(such printing of the Fund's prospectus and profiles for existing Contract
owners whose contracts are funded by the Fund's shares to be at the Fund's or
Underwriter's expense).
3.2. The Fund's prospectus shall state that the current Statement
of Additional Information ("SAI") for the Fund is available, and the
Underwriter (or the Fund), at its expense, shall provide a reasonable number
of copies of such SAI free of charge to the Company for itself and for any
owner of a Contract who requests such SAI.
3.3. Upon the reasonable request of the Company, the Fund shall
provide the Company with information regarding the Fund's expenses, which
information may include a
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table of fees and related narrative disclosure for use in any prospectus or
other descriptive document relating to a Contract.
3.4. The Fund, at its or the Underwriter's expense, shall provide
the Company with copies of its proxy material, reports to shareholders, and
other communications to shareholders in such quantity as the Company shall
reasonably require for distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Shares in accordance with instructions
received from Contract owners; and
(iii) vote Shares for which no instructions have been
received in the same proportion as 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 or to
the extent otherwise required by law. The Company will vote Shares held in any
segregated asset account for it's own account in the same proportion as Shares
of such portfolio for which voting instructions have been received from
Contract owners, to the extent permitted by law.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished,
to the Fund, the Underwriter, or their designees, each piece of sales
literature or other promotional material that the Company develops and in
which the Fund (or a Designated Portfolio thereof) or the Adviser or the
Underwriter is named. No such material shall be used until approved by the
Fund, the Underwriter or their designees. The Fund, the Underwriter, or their
designees will be deemed to have approved such sales literature or promotional
material unless the Fund or its designee objects or provides comments to the
Company within ten (10) Business Days after receipt of such material. The
Fund, the Underwriter, or their designees reserve the right to reasonably
object to the continued use of any such sales literature or other promotional
material in which the Fund (or a Designated Portfolio thereof) or the Adviser
or the Underwriter is named, and no such material shall be used if the Fund,
the Underwriter or their designees so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or profiles or prospectus or SAI for the Fund shares, as such
registration statement and profiles and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the
Fund, or in sales literature or other
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promotional material approved by the Fund or its designee or by the
Underwriter, except with the permission of the Fund or the Underwriter or the
designee of either.
4.3. The Fund and the Underwriter, or their designee, shall
furnish, or cause to be furnished, to the Company, each piece of sales
literature or other promotional material that it develops and in which the
Company, and/or its Account, is named. No such material shall be used until
approved by the Company. The Company will be deemed to have approved such
sales literature or promotional material unless the Company objects or
provides comments to the Fund, the Underwriter, or their designee within ten
Business Days after receipt of such material. The Company reserves the right
to reasonably object to the continued use of any such sales literature or
other promotional material in which the Company and/or its Account is named,
and no such material shall be used if the Company so objects.
4.4. The Fund and the Underwriter shall not give any information
or make any representations on behalf of the Company or concerning the
Company, the Account, or the Contracts other than the information or
representations contained in a registration statement and prospectus (which
shall include an offering memorandum, if any, if the Contracts issued by the
Company or interests therein are not registered under the 1933 Act), or SAI
for the Contracts, as such registration statement, prospectus, or SAI may be
amended or supplemented from time to time, or in published reports for the
Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission
of the Company.
4.5. The Fund will provide to the Company at least one complete
copy of all registration statements, profiles, prospectuses, SAIs, shareholder
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,
promptly after the filing of such document(s) with the SEC or other regulatory
authorities.
4.6. The Company will provide to the Fund or the Underwriter at
least one complete copy of all registration statements, prospectuses (which
shall include an offering memorandum, if any, if the Contracts issued by the
Company or interests therein are not registered under the 1933 Act), SAIs,
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 Contracts
or the Account, promptly after the filing of such document(s) with the SEC or
other regulatory authorities. The Company shall provide to the Fund and the
Underwriter any complaints received from the Contract owners pertaining to the
Fund or the Designated Portfolio.
4.7. The Fund will provide the Company with as much notice as is
reasonably practicable of any proxy solicitation for any Designated Portfolio,
and of any material change in the Fund's registration statement, particularly
any change resulting in a change to the registration statement or prospectus
for any Account. The Fund will work with the Company so as to enable
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the Company to solicit proxies from Contract owners, or to make changes to its
prospectus or registration statement, in an orderly manner.
4.8. For purposes of this Article IV, the phrase "sales
literature and other promotional materials" includes, but is not limited to,
any of the following that refer to the Fund or any affiliate of the Fund:
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, 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, SAIs, shareholder reports, proxy materials, and any
other communications distributed or made generally available with regard to
the Fund.
ARTICLE V. Fees and Expenses
5.1. All expenses 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 advisable 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, preparation and filing of the Fund's prospectus and registration
statement, proxy materials and reports, setting the prospectus in type,
setting in type and printing the proxy materials and reports to shareholders
(including the costs of printing a prospectus that constitutes an annual
report), the preparation of all statements and notices required by any federal
or state law, and all taxes on the issuance or transfer of the Fund's shares.
5.2. The Company shall bear the expenses of distributing the
Fund's prospectus to owners of Contracts in connection with the offer of
Contracts, issued by the Company and of distributing the Fund's proxy
materials and reports to such Contract owners.
ARTICLE VI. Diversification and Qualification
6.1. The Fund represents that it is or will be qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it will
use it's best efforts to maintain such qualification (under Subchapter M or
any successor or similar provisions) and that it will notify the Company
immediately upon having a reasonable basis for believing that it has ceased to
so qualify or that it might not so qualify in the future.
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ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless
the Fund and the Underwriter and each of its trustees/directors and officers,
and each person, if any, who controls the Fund or the Underwriter within the
meaning of Section 15 of the 1933 Act or who is under common control with the
Underwriter (collectively, the "Indemnified Parties" 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 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:
(i) arise out of or are based upon any untrue statement
or alleged untrue statements of any material fact contained
in the registration statement, prospectus (which shall
include a written description of a Contract that is not
registered under the 1933 Act), or SAI for the Contracts or
contained in 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, prospectus or SAI 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, SAI, or
sales literature of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the
Company or its agents or persons under the Company's
authorization or control, with respect to the sale or
distribution of the Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, 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 information furnished to
the Fund by or on behalf of the Company; or
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(iv) arise as a result of any material failure by the
Company to provide the services and furnish the materials
under the terms of this Agreement (including a failure,
whether unintentional or in good faith or otherwise, to
comply with the qualification requirements specified in
Section 6.1 of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company;
as limited by and in accordance with the provisions of Sections 7.1(b) and
7.1(c) hereof.
7.1(b). The Company 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 its obligations or
duties under this Agreement.
7.1(c). The Company shall not be liable under this
indemnification provision with respect to any claim made against an
Indemnified Party unless such Indemnified Party shall have notified the
Company in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but failure to
notify the Company of any such claim shall not relieve the Company from any
liability which it may have to the Indemnified Party against whom such action
is brought otherwise than on account of this indemnification provision. In
case any such action is brought against an Indemnified Party, the Company
shall be entitled to participate, at its own expense, in the defense of such
action. The Company also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After notice from the
Company to such party of the Company's election to assume the defense thereof,
the Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Company will not be liable to such 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.
7.1(d). The Indemnified Parties will promptly notify the
Company 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.
12
7.2. Indemnification by the Underwriter
7.2(a). The Underwriter agrees 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" 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 Underwriter) 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:
(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 profile or prospectus or
SAI 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
Underwriter or the Fund by or on behalf of the Company for
use in the registration statement, profile, prospectus or
SAI 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 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, SAI or
sales literature for the Contracts not supplied by the
Underwriter or persons under their control) or wrongful
conduct of the Fund or the Underwriter or persons under
their control, with respect to the sale or distribution of
the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI 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
Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the
materials under the terms of this Agreement (including a
failure of the Fund, whether unintentional or in good faith
or
13
otherwise, to comply with the qualification requirements
specified in Section 6.1 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Underwriter in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Underwriter; or
(vi) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value
per share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). The Underwriter 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 or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such 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 Indemnified Party will promptly notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
14
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 New York.
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 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 with respect to
some or all Designated Portfolios, by three (3) months
advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the Fund
and the Underwriter based upon the Company's
determination that shares of the Fund are not reasonably
available to meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund
and the Underwriter in the event any of the 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 media of the Contracts issued or to be issued
by the Company; or
(d) termination by the Fund or the Underwriter in the event
that formal administrative proceedings are instituted
against the Company by the NASD, the SEC, the Insurance
Commissioner, or like official of any state or any other
regulatory body regarding the Company's duties under
this Agreement or related to the sale of the Contracts,
the operation of any Account, or the purchase of the
Shares; provided, however, that the Fund or the
Underwriter determines in its sole judgment exercised in
good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of
the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the
Fund or the Underwriter by the NASD, the SEC, or any
state securities or insurance department, or any other
regulatory body; provided, however, that the Company
determines in
15
its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse
effect upon the ability of the Fund or the Underwriter
to perform its obligations under this Agreement; or
(f) termination by the Company by written notice to the Fund
and the Underwriter with respect to any Designated
Portfolio in the event that such Portfolio ceases to
qualify as a Regulated Investment Company under
Subchapter M as specified in Section 6.1 hereof, or if
the Company reasonably believes that such Portfolio may
fail to so qualify or comply; or
(g) termination by the Fund or the Underwriter by written
notice to the Company, if the Fund or the Underwriter
respectively, shall determine, in their sole judgment
exercised in good faith, that the Company 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; or
(h) termination by the Company by written notice to the Fund
and the Underwriter, if the Company shall determine, in
its sole judgment exercised in good faith, that the
Fund, the Adviser, or the Underwriter 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; or
(i) termination by the Company upon any substitution of the
shares of another investment company or series thereof
for Shares in accordance with the terms of the
Contracts, provided that the Company has given at least
45 days prior written notice to the Fund and the
Underwriter of the date of substitution; or
(j) transaction by any party upon another party's failure to
cure a material breech of any provision of this
Agreement within 30 days after written notice thereof.
9.2. (a) Notwithstanding any termination of this Agreement, the Fund and the
Underwriter shall, at the option of the Company, continue to make
available additional Shares 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"), provided the Company continues to pay the costs set forth
in Section 3.1 and 5.2 and unless the Underwriter requests that the
Company seek an order pursuant to Section 26(c) of the 1940 Act to
permit the substitution of other securities for the Shares. The
Underwriter agree to split the cost of seeking such an order, and the
Company agrees that it shall reasonably cooperate with the Underwriter
and seek such an order upon
16
request. Specifically, the owners of the Existing Contracts may be
permitted to reallocate investments in the Fund, redeem investments
in the Fund, and/or invest in the Fund upon the making of additional
purchase payments under the existing Contracts (subject to any such
election by the Underwriter). The parties agree that this Section 9.2
shall not apply to any terminations under Section 9.1(i) of this
Agreement.
(b) In the event of a termination of this agreement pursuant to
Section 9.1 ( other than 9.1(i)), the Company shall promptly notify
the Fund and the Underwriter whether the Fund and the Underwriter
will be required to continue to make shares available after such
termination; in such circumstances, the provisions of this Agreement
shall remain in effect except for Section 9.1 hereof, and thereafter
any party may terminate the Agreement ( the "Final Termination"), as
so continued pursuant this Section 9.2,upon prior written notice to
the other parties, such notice to be for a period this reasonable
under the circumstances but, if given by the Fund or the Underwriter,
need not be greater than six months.
(c) The Company, the Fund and the Underwriter agree to cooperate in
respect of the measures that are necessary or appropriate to effect
the Final Termination of this Agreement, and will give reasonable
assistance to each other in that regard, including steps necessary or
appropriate to ensure that an Account owns no shares of the Fund
after the Final Termination of this Agreement.
9.3 The Company shall not redeem Shares attributable to the
Contracts (as opposed to Shares attributable to the Company's assets held in the
Account) except (i) as necessary to implement Contract owner initiated or
approved transactions, (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"), (iii) upon 45 days
prior written notice to the Fund and Underwriter, as permitted by an order of
the SEC pursuant to Section 26(c) of the 1940 Act, but only if a substitution of
other securities for the Shares is consistent with the terms of the Contracts,
or (iv) as permitted under the terms of the Contract. Upon request, the Company
will promptly furnish to the Fund and the Underwriter reasonable assurance that
any redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contacts,
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 Underwriter 45 days notice of its intention to do so.
9.4. Notwithstanding any termination of this Agreement, each party's
obligation under Article VII to indemnify the other parties and the Company's
obligation under Section 3.5 regarding pass-through and voting shall survive.
17
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: ▇▇▇▇▇▇▇▇ Value Fund Series, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
If to the Company: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Senior Vice President and General Counsel
▇▇▇▇▇▇▇ ▇▇▇▇▇ Life Insurance Company
▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
If to the Underwriter: ▇▇▇▇▇▇▇▇ Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the
property of the Fund, and in the case of a series company, the respective
Designated Portfolios listed on Schedule B hereto as though each such Designated
Portfolio had separately contracted with the Company and the Underwriter for the
enforcement of any claims against the Fund. The parties agree that neither the
Board nor any member thereof, officers, agents, or shareholders of the Fund
assume any personal liability or responsibility for obligations entered into by
or on behalf of the Fund.
11.2. 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 without the express written consent
of the affected party until such time as such information has come into the
public domain.
11.3. 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.
18
11.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.5. 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.
11.6. 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Arkansas Insurance Commissioner with any information or
reports in connection with services provided under this Agreement which such
Commissioner may request in order to ascertain whether the variable contract
operations of the Company are being conducted in a manner consistent with the
Arkansas variable annuity laws and regulations and any other applicable law or
regulations. The Company agrees to pay the reasonable costs and expenses
incurred by the Fund or the Underwriter in connection with responding to such a
request.
11.7. 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.
11.8. 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.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
▇▇▇▇▇▇▇ ▇▇▇▇▇ LIFE INSURANCE COMPANY:
By its authorized officer
By: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President & Secretary
Date:
-------------------------------------------
[FUND]
By its authorized officer
By:
-------------------------------------------
Title:
-------------------------------------------
19
Date:
-------------------------------------------
[FUND DISTRIBUTOR]
By its authorized officer
By:
-------------------------------------------
Title:
-------------------------------------------
Date:
-------------------------------------------
20
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: ______________, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ Life Variable Annuity Separate Account D.
SCHEDULE B
DESIGNATED PORTFOLIOS AND CLASSES
Dated: ______________, 2002
SCHEDULE C
FUND MATERIALS
PART I. Fund Description
- The Fund will provide to Company or a common service provider designated
by Company within ten (10) days of the end of each month, the Fund's
average annual return for the 1, 5, and 10 year periods ending the
current month on a Net Asset Value basis.
- The Fund will provide to Company a description of the Fund including
holdings, portfolio composition, largest sectors and geographical
allocation and a statement of objective in a mutually acceptable format.
Part II. Fund Information and Materials
The Fund will provide to Company the following information and materials
on an as needed basis, as requested by Company:
- A supply of materials relating to the Funds (prospectuses,
quarterly reports and other brochures) to include with contract
application sales, marketing and communication materials.
- Specific investment performance information that may be
requested that cannot be obtained from the prospectus. This
would include specific calculations on various performance
parameters and will require an aggressive turnaround time
(usually 5 business days).