EXHIBIT (8)(p)
ML DRAFT 09/18/02
PARTICIPATION AGREEMENT
AMONG
▇▇▇▇▇▇▇ ▇▇▇▇▇ LIFE INSURANCE COMPANY,
AND
OPPENHEIMER FUNDS DISTRIBUTOR, 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"), and ▇▇▇▇▇▇▇▇▇▇▇ Funds Distributor, Inc.(the "Underwriter"), a New
York company.
WHEREAS, the shares of beneficial interests of the each Fund listed on
Schedule A attached hereto (each a "Fund" and collectively referred to as the
"Funds") 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, each 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, OppenheimerFunds, Inc. (the "Adviser"), a Colorado company,
which serves as investment adviser to each 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 each 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 B hereto, to set aside and invest assets attributable to
variable annuity contracts set forth in Schedule B hereto, as it may be amended
from time to time by mutual written agreement (the "Contracts");
WHEREAS, each Portfolio may issues shares to the general public and to
the separate accounts of insurance companies ("Participating Insurance
Companies") to fund variable annuity contracts sold to certain qualified pension
and retirement plans;
1
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 A 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 without the payment of a sales commission to the
broker-dealer of record.
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. of the Designated Portfolios and classes thereof
listed on Schedule A 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 (and without the
payment of a sales commission to the broker-dealer of record)in accordance with
Section 1.3 of this Agreement. Notwithstanding the foregoing, the Underwriter
reserves the right, without notice, to suspend or terminate the offering of
Shares of any Designated Portfolio or class thereof, in whole or in part, or to
make a limited offering of Shares of any Fund or redeem Shares or take such
other action as the Underwriter or the Board of Trustees of the Fund (the
"Board") determine is appropriate.
1.2. Each 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 each 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.
1.3. Purchase and Redemption Procedures
The Underwriter 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. All transactions in
Account shares shall be
2
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 a 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
Underwriter receives notice of such request by 9:30 a.m. Eastern Time on the
next following Business Day. Company will provide to the Fund 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. ET 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 Fund or
its designee by 11:00 a.m. ET on the next following Business Day. Except as
provided above, Company shall not be, nor hold itself out to the public or
engage in any activity as an agent or distributor for the Funds, the Underwriter
or any of their respective affiliates.
(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").
(c) 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 or any other designated person 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
3
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. Neither a 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 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, including any applicable daily
dividend factor per Share. 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, each 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. Each 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 such dividends and distributions as are
payable on any Shares in the form of cash. Company will reinvest a portion or
all of the cash proceeds for additional Shares of that Designated Portfolio
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
additional Shares of that Designated Portfolio The Underwriter shall notify the
Company promptly of the number of Shares so issued as payment of such dividends
and distributions. All transactions of Account shares contemplated herein shall
be executed through the Omnibus Accounts.
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.
4
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 Underwriter 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 Company may use such
information in communications prepared for the Contracts, including, but not
limited to, application, marketing, sales and other communications materials
provided any such communications are provided to Underwriter prior to use and
Underwriter does not object. The Underwriter 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 Underwriter will provide Company with a copy of prospectuses, proxy
materials, financial statements, reports and other materials relating to each
Fund via electronic data delivery.
(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 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 Underwriter or
approved for distribution by Underwriter upon Company's request.
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.
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 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 each Fund is registered under the 1940 Act. Each 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. Each 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 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 the State of its organization and that
each Fund does 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.
6
2.7. The Underwriter represents and warrants that all of its and each
Fund's trustees/directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of each Fund
are 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. If requested by the Company the Underwriter shall provide a final
copy of the then current prospectus for each Fund 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.
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 copy of such SAI free of charge
to the Company via electronic data delivery for the Company to provide to any
owner of a Contract who requests such SAI.
3.3. The Underwriter shall provide the Company with information
regarding each 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 Underwriter shall provide the Company with a copy of each
Fund's proxy material, reports to shareholders, and other communications to
shareholders via electronic data delivery.
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 in the same proportion as
7
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 a 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 the Underwriter 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 a 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 a Fund or concerning a 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 prospectus or SAI for the Fund shares, as such registration statement 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 Underwriter, except with the permission of
the Underwriter.
4.3. The Underwriter 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 Underwriter 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 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.
8
4.5. The Company will provide to the Fund 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, 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 the Underwriter any complaints
received from the Contract owners pertaining to the Fund or the Designated
Portfolio.
4.7. The Underwriter 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 a Fund's registration statement,
particularly any change resulting in a change to the registration statement or
prospectus for any Account. The Underwriter 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. When timing
permits, the Underwriter will make reasonable efforts to attempt to have changes
affecting Contract prospectuses become effective simultaneously with the annual
updates for such prospectuses.
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 a Fund or any affiliate of a 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 a Fund.
ARTICLE V. Fees and Expenses
5.1. All expenses incident to performance by the Underwriter under
this Agreement shall be paid by the Underwriter. The Underwriter hall see to it
that all Fund shares are registered and authorized for issuance in accordance
with applicable federal law and, if and to the extent deemed advisable by the
Underwriter, in accordance with applicable state laws prior to their sale. The
Company shall not bear the expenses for the cost of registration and
qualification of a Fund's shares, preparation and filing of a 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 a Fund's
shares.
9
5.2. The Company shall bear the expenses of distributing each Fund's
prospectus to owners of Contracts issued by the Company and of distributing each
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 each
Fund currently intends 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 a Fund has ceased to so
qualify or that a Fund might not so qualify in the future.
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 a Fund not supplied by the Company or
persons under
10
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 a 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 Underwriter by or on behalf of
the Company; or
(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 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
11
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 Fund shares or the Contracts or the operation of a
Fund.
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 prospectus or SAI or sales literature
of a 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, prospectus or SAI for a 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
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
12
such statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Underwriter; or
(iv) arise as a result of any failure by the Underwriter to
provide the services and furnish the materials under the terms of
this Agreement ; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Underwriter; or
(vi) arise out of or result from the materially incorrect
calculation or reporting of the daily net asset value per share
or dividend or capital gain distribution rate. Notwithstanding
the foregoing, Underwriter shall only be obligated to reimburse
Company for its reasonable and customary out-of-pocket costs
directly incurred in making adjustments to the Account that are
submitted to Underwriter in sufficient detail as requested by
Underwriter promptly after any such adjustment but in no event
more than 30 days after Company is notified of such error, and
Underwriter shall not be liable for Company's or its affiliate's
or agent's overhead or other previously allocated costs incurred
in making adjustments to the Account;
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
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and duties under this
Agreement 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
13
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.
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 thirty (30) days'
advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the
Underwriter based upon the Company's determination that
shares of a Fund are not reasonably available to meet
the requirements of the Contracts; or
(c) termination by the Company by written notice to 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 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 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
14
(e) termination by the Company in the event that formal
administrative proceedings are instituted against a 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 its sole judgment exercised in good faith,
that any such administrative proceedings will have a
material adverse effect upon the ability of the
Underwriter to perform its obligations under this
Agreement; or
(f) termination by the Company by written notice to 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 Underwriter by written notice to the
Company, if the Underwriter shall determine, in its 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
Underwriter, if the Company shall determine, in its sole
judgment exercised in good faith, that a 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 Underwriter of the
date of substitution.
9.2. Notwithstanding any termination by the Company of this Agreement
and subject to section 1.1 hereof, 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. Specifically, the owners of the Existing Contracts
may be permitted to reallocate investments in a Fund, redeem investments in a
Fund, and/or invest in a 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.
15
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 a 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 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 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 Underwriter: OppenheimerFunds Distributor,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: General Counsel
16
ARTICLE XI. Miscellaneous
11.1. All persons dealing with a Fund organized as a Massachusetts
business trust must look solely to the property of a 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 such Fund.
The parties agree that neither the Board, officers, agents, or shareholders of
the a 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.
11.4. Company shall not make representations concerning the Funds or
the Underwriter except those contained in the Fund's then-current
Prospectuses, Statements of Additional Information, in current
printed sales literature of the Funds created by the Underwriter,
and in sales literature created by Company and approved in
writing by Underwriter.
11.5. Except as otherwise provided for in this Agreement, neither party
shall use the name or any trademark or service ▇▇▇▇ of the other
party without their prior written consent. In the event this
Agreement is terminated, Company shall not use ▇▇▇▇▇▇▇▇▇▇▇'▇ name
or any other words that may be reasonably construed to imply a
continuing relationship.
11.6. 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 information or
reports reasonably requested in connection with services provided under this
Agreement which such Commissioner
17
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.
11.7. 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.
11.8. No party shall be liable, nor shall any party be considered in
breach of this Agreement, due to any failure or delay in
performance of its obligations under this Agreement, as a result
of a cause beyond its reasonable control including but not
limited to any act of God or public enemy, act of any military,
civil or regulatory authority, change in any law or regulation,
fire, flood, tornado, earthquake, storm, or other like event,
disruption or outage of computers or communications, equipment
failure, power or other utility failure, labor strikes, exchange
action, action or inaction on the part of pricing services
utilized by the Adviser to price the Fund's shares, unusual
trading activity or the suspension or disruption of trading on
any exchange or another other cause, whether similar or
dissimilar to any of the foregoing, which could not have been
prevented with reasonable care.
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: ▇▇▇▇▇ ▇. SkolnickTitle:Senior Vice
President & General Counsel
Date:
-------------------------------------
[FUND DISTRIBUTOR]
By its authorized officer
By:
-------------------------------------
Title:
-------------------------------------
Date:
-------------------------------------
18
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Dated: September 18, 2002
▇▇▇▇▇▇▇ ▇▇▇▇▇ Life Variable Annuity Separate Account D
SCHEDULE B
DESIGNATED PORTFOLIOS AND CLASSES
Dated: , 2002
--------------
SCHEDULE C
FUND MATERIALS
PART I. Fund Description
- The Underwriter will provide to Company or a common service provider
designated by Company within ten (15) days of the end of each month,
each Fund's average annual return for the 1, 5, and 10 year periods
ending the current month on a Net Asset Value basis.
- The Underwriter will provide to Company a description of each 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 Underwriter ill provide to Company the following information and materials
on an as needed basis, as requested by Company:
- A copy of each Fund's prospectus, quarterly reports and other
brochures via electronic data delivery.
- 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).