EXHIBIT (8)(j)
PARTICIPATION AGREEMENT
AMONG
▇▇▇▇▇▇▇ ▇▇▇▇▇ LIFE INSURANCE COMPANY
AMERICAN FUNDS SERVICE COMPANY, AND
AMERICAN FUNDS DISTRIBUTORS, 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"), American Funds Service Company (the "Transfer Agent"), a California
corporation, and American Funds Distributors, Inc. (the "Underwriter"), a
California corporation on its behalf and on behalf of the funds identified on
Schedule B of this Agreement (the "Fund" or "Funds").
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended, (the "1940 Act")
and its shares are registered under the Securities Act of 1933, as amended (the
"1933 Act");
WHEREAS, Capital Research and Management Company (the "Adviser"), a
Delaware corporation, 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 Transfer Agent, which services as the transfer and
shareholder servicing agent for the Fund, is registered as a transfer agent with
the SEC under the 1934 Act;
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 Fund issues shares to the general public and may also
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 Underwriter knows of no reason why the Funds' shares may
not be sold to Participating Insurance Companies to fund variable annuity
contracts sold to certain qualified pension and retirement plans that operate in
compliance with applicable tax laws and regulations; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares of the Funds (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
and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. Each Fund has granted to the Underwriter exclusive authority to
distribute the Fund's shares, and accordingly 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 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 each 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. Each Fund or its Transfer Agent 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 9.3 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
(a) The Transfer Agent hereby appoints the Company as its
agent 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.
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 Transfer Agent 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 Transfer Agent receives notice of such
request by 8:00 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 Transfer Agent of a purchase request for such Shares. Payment for
Shares shall be made in federal funds transmitted to the Fund by wire to be
received by the Fund by 4:00 p.m. Eastern Time on the day the Transfer Agent is
notified of the purchase request for Shares (unless the Transfer Agent
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 so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of the Fund.
(c) Payment for Shares redeemed by the Account or the Company
shall be made in federal funds transmitted by wire to the Company or any other
designated person on the next Business Day after the Transfer Agent 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,
provided that, in the case of a purchase request, payment for Shares so
requested is received by the Fund in federal funds prior to close of business
for determination of such value, as defined from time to time in the Fund
Prospectus.
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1.4. The Transfer Agent 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, 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 in accordance with the Fund's Prospectus. In the event the Transfer Agent
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
Transfer Agent 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 per Share shall be
reported immediately 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 per Share. Any error of a lesser
amount shall be corrected in the next Business Day's net asset value per Share.
1.5. The Transfer Agent shall furnish notice (in writing or telephone
followed by written confirmation) to the Company as soon as reasonably
practicable of any income dividends or capital gain distributions payable on any
Shares. The Company, on its behalf and on behalf of the Account, hereby elects
to receive all such dividends and distributions as are payable on any Shares in
the form of additional Shares of that Designated Portfolio. 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 cash. 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. 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. 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 Underwriter agrees that it will not enter into a
comparable agreement with a Participating Insurance Companies in respect of the
Shares unless the compensation arrangements of such agreement are no more
beneficial to the insurance company than those in this Agreement.
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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 Underwriter represents and warrants that Shares sold pursuant
to this Agreement shall be registered under the 1933 Act, 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 1940 Act. The
Underwriter shall ensure that the Fund will 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 Underwriter shall
ensure that the Fund will 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 Underwriter agrees to comply 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 extent notified thereof in writing
by the Company.
2.4. The Underwriter represents that each Fund is lawfully organized
and validly existing under the laws of its State of incorporation 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 accordance with any applicable state and federal securities laws.
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2.7. The Underwriter and Transfer Agent represent and warrant that all
of their 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 describing only the Classes of the Designated
Portfolios listed on Schedule B as the Company may reasonably request. The Fund
or the Underwriter shall bear the expense of printing copies of the current
prospectus and profiles, if any, for the Fund that will be distributed to
existing Contract owners, 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 to be at the Fund's or Underwriter's expense, provided, however,
that such expense shall not exceed the cost the Fund or the Underwriter
otherwise would incur to print the prospectuses).
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. The Fund shall provide the Company with information regarding the
Fund's expenses, which information may include a table of fees and related
narrative disclosure for use in any prospectus or other descriptive document
relating to a Contract.
3.4. The Transfer Agent, 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 invested in the Fund.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
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(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 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
Underwriter, 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 Underwriter. The Underwriter will be deemed to have approved
such sales literature or promotional material unless it objects or provides
comments to the Company within ten (10) Business Days after receipt of such
material. The Underwriter reserves 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 Underwriter so
objects.
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 promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of 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.
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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 Underwriter will provide to the Company at least one complete
copy of all registration statements, profiles, prospectuses, SAIs, 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 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 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 the Company to
solicit proxies from Contract owners, or to make changes to its prospectus or
registration statement, in an orderly manner. The Fund will make reasonable
efforts to attempt to have changes affecting Contract prospectuses become
effective simultaneously with the annual updates for such prospectuses. The
Company understands that, in the ordinary course, the Funds update their
registration statements, including their prospectuses, 60 days following the
close of their fiscal year ends, which are disclosed on Schedule B.
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
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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
applicable to the Fund, and all taxes on the issuance or transfer of the Fund's
shares. To the extent the Company arranges for any of the foregoing functions to
be performed, the Fund shall pay only the reasonable cost of such functions.
5.2. The Company shall bear the expenses of distributing the Fund's
prospectus to owners 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 Underwriter represents that each Fund is or will be qualified
as a Regulated Investment Company under Subchapter M of the Code, and that it
will 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 a Fund 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, the Transfer Agent, and the Underwriter and each of their respective
trustees/directors and officers, and each person, if any, who controls the Fund,
the Transfer Agent, 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 to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or
omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the
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 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 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.
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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 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 to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission was made in reliance upon
and in conformity with information furnished to the
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 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 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 otherwise, to
comply with the qualification requirements specified in
Section 6.1 of this Agreement); or
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(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund, the Transfer
Agent, or the Underwriter in this Agreement or arise out of or
result from any other material breach of this Agreement by the
Fund, the Transfer Agent, 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.
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.
13
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; 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; 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
14
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) termination by the Fund or the Underwriter in the event
the Fund terminates its Distribution Agreement with the
Underwriter.
9.2. 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"), 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 Company
agrees that it shall reasonably cooperate with the Underwriter and seek such an
order upon 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) or Section 9.1(j) 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
15
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 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 shall survive.
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 Company: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Senior Vice President and General Counsel
▇▇▇▇▇▇▇ ▇▇▇▇▇ Life Insurance Company
▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
If to the Fund, Transfer Agent, or Underwriter:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
American Funds Distributors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Counsel
American Funds Distributors, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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, officers, agents, or shareholders of the Fund assume any personal
liability or responsibility for obligations entered into by or on behalf of the
Fund.
16
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.
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.
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:
-------------------------------------
Date:
-------------------------------------
17
AMERICAN FUNDS SERVICE COMPANY
By its authorized officer
By:
-------------------------------------
Title: Vice President
-------------------------------------
Date:
-------------------------------------
AMERICAN FUNDS DISTRIBUTORS, INC.
By its authorized officer
By:
-------------------------------------
Title: President
-------------------------------------
Date:
-------------------------------------
18
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: September 18, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ Variable Annuity Separate Account D
SCHEDULE B
DESIGNATED PORTFOLIOS AND CLASSES
FUND NAME CLASS FISCAL YEAR END
The Bond Fund of America, Inc. F December ▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, Inc. F August 31
The Income Fund of America, Inc. F July 31
The Investment Company of America F December 31
Dated: September 18, 2002