EXHIBIT (8)(h)
PARTICIPATION AGREEMENT
AMONG
XXXXXXX XXXXX LIFE INSURANCE COMPANY,
ALLIANCE GLOBAL INVESTOR SERVICES, INC., AND
ALLIANCE FUND DISTRIBUTORS, INC.
THIS AGREEMENT, dated as of the 16th day of September, 2002, by and
among Xxxxxxx Xxxxx 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"), Alliance Global Investor Services, Inc. (the "Transfer Agent"), a
Delaware company, and Alliance Fund Distributors, Inc. (the "Underwriter"), a
Delaware company which serves as distributor of the funds listed in Schedule B
(the "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 shares of each Fund are registered under the Securities Act of 1933, as
amended (the "1933 Act");
WHEREAS, Alliance Capital Management L.P. (the "Adviser"), a Delaware
limited partnership, which serves as investment adviser to the Funds, 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 Funds, 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 serves transfer agent for the Funds,
is registered as a transfer agent 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 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 shares in any Fund 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 Funds (and classes
thereof) listed in Schedule B hereto, as it may be amended from time to time by
mutual written agreement (the "Designated Funds") on behalf of the Account to
fund the aforesaid Contracts, and the Underwriter is authorized to sell such
shares in the Designated Funds, 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
serve as principal underwriter and distributor of the Fund's shares, and the
Underwriter has the authority to make available to the Company for purchase on
behalf of the Account Fund shares of the Designated Funds 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 Trustees of any Fund
(the "Board") may suspend or terminate the offering of Shares of any Designated
Fund 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 Fund.
1.2. The Fund shall redeem, at the Company's request, any full or
fractional Shares held by the Company on behalf of the Account, such redemptions
to be effected at net asset value in accordance with Section 1.3 of this
Agreement. Notwithstanding the foregoing, (i) the Company shall not redeem
Shares attributable to Contract owners except in the circumstances permitted in
Section 9.3 of this Agreement, and (ii) the Fund may delay redemption of Shares
of any Designated Fund 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. All
transactions in Account shares shall be executed through the Omnibus Accounts of
Company's affiliate Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. ("Omnibus
Accounts").Any such request (or relevant transactional information therefor)
received by the Company 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") 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 be executed by the Transfer Agent at the net asset value
determined as of the close of trading on that same Business Day, provided that
the Transfer Agent receives notice of such request by 10 a.m. Eastern Time on
the next following Business Day, or in the event of systems issues necessitating
later delivery of such purchase and redemption requests by 11 a.m. Eastern Time
on the next following Business Day. Company and Fund understand that it is the
intent of the parties that Fund receive such purchase and redemption requests
from Company on behalf of the Account by 6:00 a.m. Eastern Time on the next
following Business Day. Company will provide to the Transfer Agent or its
designee via the NSCC Fund SERV DCC & S platform (which utilizes the "as of"
record layout within Fund/SERV) one or more files detailing the instructions
received with respect to each Plan prior to 4:00 p.m. Eastern Time on the prior
Business Day for each of the Funds. If for any reason Xxxxxxx Xxxxx is unable to
transmit the file(s) with respect to any Business Day, Xxxxxxx Xxxxx will notify
the Transfer Agent or its designee by 10:00 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 via the NSCC
Fund/SERV DCC&S platform to be received by the Fund by 4:00 p.m. Eastern Time on
the day the Fund 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 Funds 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 Transfer Agent will provide to Company a daily transmission of positions and
trading activity taking place in the Omnibus Accounts using Company's
affiliate's proprietary Inventory Control System ("ICS").
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(c) 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 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 Funds 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. Neither the Fund nor the Transfer Agent shall 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 Transfer Agent's receipt of such
request as set forth in Section 1.3(a) herein.
1.4. The Transfer Agent shall use its best efforts to make the
closing net asset value per Share for each Designated Fund 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 Fund is calculated, and shall
calculate such closing net asset value, including any applicable daily dividend
factor, in accordance with the Fund's Prospectus. In the event the 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 Fund, 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 Transfer Agent 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 and the Transfer Agent or the Fund shall bear the reasonable and
demonstrable cost of correcting such errors. Any error of a lesser amount shall
be corrected in the next Business Day's net asset value per Share.
1.5. Notwithstanding anything to the contrary contained in this
Agreement, the Underwriter will make available for purchase by the Company, on
its behalf and on behalf of the Account a class of shares available at net asset
value which are not subject to a contingent deferred sales charge or redemption
fee. In addition, no exchange fees will be applicable to shares of the Funds
purchased by the Company, on its behalf and on behalf of the Account. The
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Transfer Agent 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 additional Shares of that Designated
Portfolio. Company will reinvest the additional Shares of that Designated Fund
through a trade processed via the NSCC platform. The Company reserves the right,
on its behalf and on behalf of the Account, to revoke this election and to
receive all such dividends and capital gain distributions in the form of cash.
The parties understand and agree that all transactions of Account shares
contemplated herein shall be executed through the Omnibus Account and that
Company's affiliate, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Inc. will receive
all such dividends and distributions in the form of cash which Company, in turn,
will immediately reinvest in the form of additional Shares of that Designated
Portfolio. The Transfer Agent shall notify the Company promptly of the number of
Shares so issued as payment of such dividends and distributions.
1.6. Issuance and transfer of Shares shall be by book entry only and
executed through the Omnibus Accounts. Stock certificates will not be issued to
the Company or the Account. Purchase and redemption orders for Fund shares shall
be recorded in an appropriate ledger for the Account or the appropriate
subaccount of the Account.
1.7 Fund Information.
(a) The 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 Underwriter hereby
agrees that Company may use such information in communications prepared for the
Contracts, including, but not limited to, application, marketing, sales and
other communications materials. The 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. Notification of a change to the CUSIP number or symbol
designation of a Fund 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 prospectuses, proxy
materials, financial statements, reports and other materials relating to each
Fund in sufficient quantity for each Contract owner invested in the Fund.
(c) With the exception of (i) listings of product offerings; (ii)
materials in the public domain (e.g., magazine articles and trade publications);
and (iii) materials used by Company on an internal basis only, Company agrees
not to furnish or cause to be furnished to any third parties or to display
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publicly or publish any information or materials relating to the Funds, except
such materials and information as may be distributed to Company by the
Underwriter or approved for distribution by the 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.
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 0000
Xxx. The Fund shall amend the registration statement for its shares under the
1933 Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Fund shall register and qualify the
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Fund, the Adviser, or the Underwriter.
2.3. The Transfer Agent and the Underwriter agree 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.
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2.4. The Underwriter represents that the Funds are lawfully organized
and validly existing under the laws of the State of Maryland and that it does
and will comply in all material respects with the 1940 Act.
2.6. The Underwriter represents and warrants that it is a member in
good standing of the NASD and is registered as a broker-dealer with the SEC. The
Underwriter further represents that it will sell and distribute the Fund shares
in accordance with any applicable state and federal securities laws.
2.7. The Transfer Agent and the Underwriter 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
each Fund's current prospectus as the Company may reasonably request. The Fund
or the Underwriter shall bear the expense of printing copies of the current
prospectus for the Fund that will be distributed to the Company, and the Company
shall bear the expense of printing copies of the Fund's prospectus that are used
in connection with offering the Contracts issued by the Company. If requested by
the Company in lieu thereof, the Transfer Agent shall provide such documentation
(including a final copy of the new prospectus on diskette at the Transfer
Agent'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).
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 Underwriter 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.
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3.4. The Underwriter, at its expense, shall provide the Company with
copies of Fund proxy material, reports to shareholders, and other communications
to shareholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.5. The Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Shares in accordance with instructions received
from Contract owners; and
(iii) vote Shares for which no instructions have been received
in the same proportion as Shares of such portfolio for
which instructions have been received,
so long as and to the extent that the SEC continues to interpret the 1940 Act to
require pass-through voting privileges for variable contract owners or to the
extent otherwise required by law. The Company will vote Shares held in any
segregated asset account 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 or its designee, each piece of sales literature or other
promotional material that the Company develops and in which a Designated Fund or
the Adviser or the Underwriter is named. No such material shall be used until
approved by the Underwriter or its designee. The Underwriter or its designee
will be deemed to have approved such sales literature or promotional material
unless the Underwriter or its designee objects or provides comments to the
Company within ten (10) Business Days after receipt of such material. The
Underwriter or its designee reserves the right to reasonably object to the
continued use of any such sales literature or other promotional material in
which a Designated Fund or the Adviser or the Underwriter is named, and no such
material shall be used if the Underwriter or its designee so object.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund or
the Adviser or the Underwriter in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or profiles or prospectus or SAI for the Fund shares, as such
registration statement and profiles and prospectus or SAI may be amended or
supplemented from time to time, or in reports or proxy statements for the Fund,
or in sales literature or other promotional material approved by the Fund or its
designee or by the Underwriter, except with the permission of the Fund or the
Underwriter or the designee of either.
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4.3. The Transfer Agent 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 Transfer Agent, the Underwriter, or their designee within ten
Business Days after receipt of such material. The Company reserves the right to
reasonably object to the continued use of any such sales literature or other
promotional material in which the Company and/or its Account is named, and no
such material shall be used if the Company so objects.
4.4. The Transfer Agent 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 prospectuses, SAIs, reports, proxy statements,, and all
amendments to any of the above, that relate to any Fund or its shares, within a
reasonable time after the filing of such document(s) with the SEC or other
regulatory authorities. Upon request, the Underwriter will provide to the
Company at least one complete copy of sales literature and other promotional
materials that relate to any Fund or its shares, within a reasonable time after
such request.
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 Fund and the Underwriter any
complaints received from the Contract owners pertaining to the Fund or the
Designated Portfolio.
4.7. The Underwriter or the Transfer Agent will provide the Company
with as much notice as is reasonably practicable of any proxy solicitation for
any Designated Fund, 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 Underwriter or the Transfer Agent
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.
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4.8. For purposes of this Article IV, the phrase "sales literature
and other promotional materials" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund: advertisements
(such as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media), sales
literature (i.e., any written communication distributed or made generally
available to customers or the public, including brochures, circulars, reports,
market letters, form letters, seminar texts, reprints or excerpts of any other
advertisement, sales literature, or published article), educational or training
materials or other communications distributed or made generally available to
some or all agents or employees, and registration statements, prospectuses,
SAIs, shareholder reports, proxy materials, and any other communications
distributed or made generally available with regard to the Fund.
ARTICLE V. Fees and Expenses
5.1. All expenses incident to performance by the Underwriter under
this Agreement shall be paid by the Underwriter or an affiliate of the
Underwriter. The Fund shall see to it that all its shares are registered and
authorized for issuance in accordance with applicable federal law and, if and to
the extent deemed advisable by the Fund, in accordance with applicable state
laws prior to their sale. The Fund shall bear the expenses for the cost of
registration and qualification of the Fund's shares, preparation and filing of
the Fund's prospectus and registration statement, proxy materials and reports,
setting the prospectus in type, setting in type and printing the proxy materials
and reports to shareholders (including the costs of printing a prospectus that
constitutes an annual report), the preparation of all statements and notices
required by any federal or state law, and all taxes on the issuance or transfer
of the Fund's shares.
5.2. The Company shall bear the expenses of distributing the Fund's
prospectus to owners of Contracts 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 it has ceased to so qualify or that it
might not so qualify in the future.
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ARTICLE VII. Indemnification
7.1. Indemnification By the Company
7.1(a). The Company agrees to indemnify and hold harmless the
Fund, the Transfer Agent and the Underwriter and each of its trustees/directors
and officers, and each person, if any, who controls them within the meaning of
Section 15 of the 1933 Act or who is under common control with the Underwriter
or the Transfer Agent (collectively, the "Indemnified Parties" for purposes of
this Section 7.1) against any and all losses, claims, damages (excluding
consequential damages), liabilities (including amounts paid in settlement with
the written consent of the Company) or litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any statute
or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statements of any material fact contained in the
registration statement, prospectus (which shall include a
written description of a Contract that is not registered under
the 1933 Act), or SAI for the Contracts or contained in sales
literature for the Contracts (or any amendment or supplement to
any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in
the registration statement, prospectus or SAI for the Contracts
or in the Contracts or sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of
the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI, or
sales literature of the Fund not supplied by the Company or
persons under its control) or wrongful conduct of the Company or
its agents or persons under the Company's authorization or
control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI, or sales literature of the Fund or
any amendment thereof or supplement thereto or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading if such a statement or omission was
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made in reliance upon information furnished to the Fund 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
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 to the Contracts.
12
7.2. Indemnification by the Underwriter
7.2(a). The Underwriter agrees to indemnify and hold harmless
the Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 7.2)
against any and all losses, claims, damages (excluding consequential damages),
liabilities (including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(i) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or profile or prospectus or SAI or sales
literature of 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, the Transfer Agent or the Fund by
or on behalf of the Company for use in the registration
statement, profile, prospectus or SAI for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the registration statement, prospectus, SAI or
sales literature for the Contracts not supplied by the
Underwriter or persons under their control) or wrongful conduct
of the Fund or the Underwriter or persons under their control,
with respect to the sale or distribution of the Contracts or
Fund shares; or
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, prospectus, SAI or sales literature covering the
Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement or statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Company by or on behalf of the Fund or the
Underwriter; or
(iv) arise as a result of any failure by the Fund or the
Underwriter to provide the services and furnish the materials
under the terms of this Agreement (including a failure of the
Fund, whether unintentional or in good faith or
13
otherwise, to comply with the qualification requirements
specified in Section 6.1 of this Agreement); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Underwriter in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Underwriter; or
(vi) arise out of or result from the materially incorrect or
untimely calculation or reporting of the daily net asset value
per share or dividend or capital gain distribution rate;
as limited by and in accordance with the provisions of Sections 7.2(b) and
7.2(c) hereof.
7.2(b). The Underwriter shall not be liable under this
indemnification provision with respect to any losses, claims, damages,
liabilities or litigation to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance or such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Company or the Account, whichever is applicable.
7.2(c). The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Underwriter of
any such claim shall not relieve the Underwriter from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Party, the Underwriter will be entitled to participate,
at its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Underwriter to such party of the
Underwriter's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Underwriter will not be liable to such party under this Agreement for any
legal or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
7.2(d). The Indemnified Party will promptly notify the
Underwriter of the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance or sale of the
Contracts or the operation of the Account.
14
ARTICLE VIII. Applicable Law
8.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
8.2. This Agreement shall be subject to the provisions of the 1933,
1934, and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules, and regulations as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
ARTICLE IX. Termination
9.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party, for any reason with respect to
some or all Designated Funds, by three (3) months
advance written notice delivered to the other parties;
or
(b) termination by the Company by written notice to the
Transfer Agent 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
Transfer Agent 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 Transfer Agent or the Underwriter in
the event that formal administrative proceedings are
instituted against the Company by the NASD, the SEC, the
Insurance Commissioner, or like official of any state or
any other regulatory body regarding the Company's duties
under this Agreement or related to the sale of the
Contracts, the operation of any Account, or the purchase
of the Shares; provided, however, that the Fund or the
Underwriter determines in its sole judgment exercised in
good faith, that any such administrative proceedings
will have a material adverse effect upon the ability of
the Company to perform its obligations under this
Agreement; or
(e) termination by the Company in the event that formal
administrative proceedings are instituted against the
Transfer Agent or the Underwriter by the NASD, the SEC,
or any state securities or insurance department, or any
15
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 Transfer Agent or the Underwriter to perform its
obligations under this Agreement; or
(f) termination by the Company by written notice to the
Transfer Agent and the Underwriter with respect to any
Designated Fund in the event that such Fund 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 Fund may fail
to so qualify or comply; or
(g) termination by the Transfer Agent or the Underwriter by
written notice to the Company, if the Transfer Agent or
the Underwriter respectively, shall determine, in their
sole judgment exercised in good faith, that the Company
has suffered a material adverse change in its business,
operations, financial condition, or prospects since the
date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Company by written notice to the
Transfer Agent and the Underwriter, if the Company shall
determine, in its sole judgment exercised in good faith,
that the Transfer Agent, 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
90 days prior written notice to the Transfer Agent and
the Underwriter of the date of substitution.
9.2. Notwithstanding any termination of this Agreement, the Transfer
Agent 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
Underwriter agree to split the cost of seeking such an order, and the Company
agrees that it shall reasonably cooperate with the Underwriter and seek such an
order upon 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
16
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.
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 Transfer Agent and the Underwriter reasonable
assurance that any redemption pursuant to clause (ii) above is a Legally
Required Redemption. Furthermore, except in cases where permitted under the
terms of the Contacts, the Company shall not prevent Contract owners from
allocating payments to a Fund that was otherwise available under the Contracts
without first giving the Transfer Agent 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: Xxxxx X. Xxxxxxxx, Esq.
Senior Vice President and General Counsel
Xxxxxxx Xxxxx Life Insurance Company
0 Xxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If to the Underwriter Xxxxxx X. Xxxxxx, Xx.
or the Transfer Agent: Senior Vice President and General counsel
Alliance Global Investor Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
17
ARTICLE XI. Miscellaneous
11.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund. 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.
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.
18
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.
XXXXXXX XXXXX LIFE INSURANCE COMPANY:
By its authorized officer
By: Xxxx X. Xxxxx
Title: Vice President & Secretary
Date:
-------------------------------------------
ALLIANCE GLOBAL INVESTOR SERVICES, INC.
By its authorized officer
By:
-------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President and General Counsel
Date:
-------------------------------------------
ALLIANCE FUND DISTRIBUTORS, INC.
By its authorized officer
By:
-------------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President and General Counsel
Date:
-------------------------------------------
19
SCHEDULE A
SEPARATE ACCOUNTS OF THE COMPANY
Xxxxxxx Xxxxx Life Variable Annuity Separate Account D
Dated: September 16, 2002
SCHEDULE B
DESIGNATED FUNDS AND CLASSES
NAME OF FUND SHARE CLASS CUSIP/ISIN TICKER
Alliance Premier Growth Fund, Inc. A 00000X000 APGAX
Alliance Growth and Income Fund, Inc. A 018597104 CABDX
Dated: September 16, 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 (10) 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 will provide to Company the following information and
materials on an as needed basis, as requested by Company:
- A supply of materials relating to the Funds (prospectuses,
quarterly reports and other brochures) to include with contract
application sales, marketing and communication materials.
- Specific investment performance information that may be
requested that cannot be obtained from the prospectus. This
would include specific calculations on various performance
parameters and will require an aggressive turnaround time
(usually 5 business days).
