PARTICIPATION AGREEMENT
Among
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS,
OPPENHEIMERFUNDS, INC.
and
COLUMBUS LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of the 12th day
of January, 2001 by and among Columbus Life Insurance Company (hereinafter the
"Company"), on its own behalf and on behalf of each separate account of the
Company named in Schedule 1 to this Agreement, as may be amended from time to
time by mutual consent (hereinafter collectively the "Accounts"), Xxxxxxxxxxx
Variable Account Funds (hereinafter the "Fund") and OppenheimerFunds, Inc.
(hereinafter the "Adviser").
WHEREAS, the Fund is an open-end management investment company and is
available to act as the investment vehicle for separate accounts now in
existence or to be established at any date hereafter for variable life insurance
policies, variable annuity contracts and other tax-deferred products
(collectively, the "Variable Insurance Products") offered by insurance companies
(hereinafter "Participating Insurance Companies");
WHEREAS, the beneficial interest in the Fund is divided into several series
of shares, each designated a "Portfolio", and each representing the interests in
a particular managed pool of securities and other assets;
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated July 16, 1986 (File No. 812-6324) granting Participating
Insurance Companies and variable annuity and variable life insurance separate
accounts exemptions from the provisions
of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940,
as amended, (hereinafter the "1940 Act") and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies
(hereinafter the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act");
WHEREAS, the Adviser is duly registered as an investment adviser under the
federal Investment Advisers Act of 1940;
WHEREAS, the Company has registered or will register certain variable
annuity and/or life insurance contracts under the 1933 Act (hereinafter
"Contracts") (unless an exemption from registration is available);
WHEREAS, the Accounts are or will be duly organized, validly existing
segregated asset accounts, established by resolution of the Board of Directors
of the Company, to set aside and invest assets attributable to the aforesaid
variable contracts (the Contract(s) and the Account(s) covered by the Agreement
are specified in Schedule 1 attached hereto, as may be modified by mutual
consent from time to time);
WHEREAS, the Company has registered or will register the Accounts as unit
investment trusts under the 1940 Act (unless an exemption from registration is
available);
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios (the
Portfolios and classes of shares of such Portfolios covered by this Agreement
are specified in Schedule 2 attached hereto as may be modified by mutual consent
from time to time), on behalf of the Accounts to fund the Contracts named in
-2-
Schedule 1, as may be amended from time to time by mutual consent, and the Fund
is authorized to sell such shares to unit investment trusts such as the Accounts
at net asset value; and
NOW, THEREFORE, in consideration of their mutual promises, the Fund, the
Adviser and the Company agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Fund agrees to sell to the Company those shares and classes of
shares of the Fund listed on Schedule 1 hereto which the Company orders on
behalf of the Account, executing such orders on a daily basis at the net asset
value next computed after receipt by the Fund or its designee of the order for
the shares of the Fund. For purposes of this Section 1.1, the Company shall be
the designee of the Fund for receipt of such orders from each Account and
receipt by such designee shall constitute receipt by the Fund; provided that the
Fund receives written (or facsimile) notice of such order by 9:30 a.m. New York
time on the next following Business Day. "Business Day" shall mean any day on
which the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the SEC.
1.2. The Company shall pay for Fund shares by 1:00 P.M. New York time on
the next Business Day after it places an order to purchase Fund shares in
accordance with Section 1.1 hereof. Payment shall be in federal funds
transmitted by wire or by a credit for any shares redeemed.
1.3. The Fund agrees to make Fund shares available for purchase at the
applicable net asset value per share by the Company for their separate Accounts
listed in Schedule 1 on those days on which the Fund calculates its net asset
value pursuant to rules of the SEC; provided, however, that the Board of
Trustees of the Fund (hereinafter the "Trustees") may refuse to sell shares of
any Portfolio to any person, or suspend or terminate the offering of shares of
any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion
-3-
of the Trustees, acting in good faith and in light of their fiduciary duties
under federal and any applicable state laws, in the best interests of the
shareholders of any Portfolio.
1.4. The Fund agrees to redeem, upon the Company's request, any full or
fractional shares of the Fund held by the Company, executing such requests on a
daily basis at the net asset value next computed after receipt by the Fund or
its designee of the request for redemption. For purposes of this Section 1.4,
the Company shall be the designee of the Fund for receipt of requests for
redemption and receipt by such designee shall constitute receipt by the Fund;
provided that the Fund receives written (or facsimile) notice of such request
for redemption by 9:30 a.m. New York time on the next following Business Day.
Payment shall be made within the time period specified in the Fund's prospectus
or statement of additional information, in federal funds transmitted by wire to
the Company's account as designated by the Company in writing from time to time,
provided, however, that if the Fund does not pay for the Fund shares that are
redeemed on the next Business Day after a request to redeem shares is made, then
the Fund shall apply any such delay in redemptions uniformly to all holders of
shares of that Portfolio.
1.5. The Company shall pay for the Fund shares on the next Business Day
after an order to purchase shares is made in accordance with the provisions of
Section 1.1 hereof. Payment shall be in federal funds transmitted by wire
pursuant to the instructions of the Fund's treasurer or by a credit for any
shares redeemed.
1.6. The Company agrees to purchase and redeem the shares of the Portfolios
named in Schedule 2 offered by the then current prospectus and statement of
additional information of the Fund in accordance with the provisions of such
prospectus and statement of additional information. The Company shall not permit
any person other than a Contract owner to give instructions to the Company which
would require the Company to redeem or exchange shares of the Fund.
-4-
1.7. The Fund shall furnish notice as soon as reasonably practicable to the
Company of any income, dividends or capital gain distributions payable on the
Portfolio's shares. The Company hereby elects to receive all such dividends and
distributions as are payable on the Portfolio shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and
thereafter to receive all such dividends and distributions in cash. The Fund
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.8. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall use its best efforts to
make such net asset value per share available by 6:30 p.m. New York time. In the
event the Fund is unable to meet the 6:30 p.m. time 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
which the Fund takes to make the closing net asset value available to the
Company. If the Fund provides materially incorrect share net asset value
information, the Fund shall make an adjustment to the number of shares purchased
or redeemed for the Accounts to reflect the correct net asset value per share.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gains information shall be reported promptly upon discovery
by the Adviser or the Fund to the Company.
ARTICLE II. Sales Material, Prospectuses and Other Reports
2.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or its designee, each piece of sales literature or other promotional material in
which the Fund or the Adviser is named, at least ten Business Days prior to its
use. No such material shall be used if the Fund or its designee reasonably
object to such use within ten Business Days after receipt of such material.
"Business Day" shall mean any day in which the New York Stock Exchange is open
for
-5-
trading and in which the Fund calculates its net asset value pursuant to the
rules of the Securities and Exchange Commission.
2.2. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund in connection with
the sale of the Contracts other than the information or representations
contained in the registration statement or prospectus for the Fund shares, as
such registration statement and prospectus may be amended or supplemented from
time to time, or in reports or proxy statements for the Fund, or in sale
literature or other promotional material approved by the Fund or its designee,
except with the permission of the Fund.
2.3. For purposes of this Article II, the phrase "sales literature or other
promotional material" means 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 billboard
or electronic media), and sales literature (such as brochures, circulars, market
letters and form letters), distributed or made generally available to customers
or the public.
2.4. The Fund shall provide a copy of its current prospectus within a
reasonable period of its filing date, and provide other assistance as is
reasonably necessary in order for the Company once each year (or more frequently
if the prospectus for the Fund is supplemented or amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in one
document (such printing to be at the Company's expense). The Adviser shall be
permitted to review and approve the typeset form of the Fund's Prospectus prior
to such printing.
2.5. The Fund or the Adviser shall provide the Company with either: (i) a
copy of the Fund's reports to shareholders, other information relating to the
Fund necessary to prepare financial reports, and other communications to
shareholders for printing and distribution to Contract owners at the Company's
expense, or (ii) camera ready and/or printed copies, if appropriate, of such
material, and printed copies of the Fund's proxy materials (or similar materials
such as voting
-6-
instruction solicitation materials) for distribution to Contract owners at the
Company's expense, within a reasonable period of the filing date for definitive
copies of such material. The Adviser shall be permitted to review and approve
the typeset form of such proxy material, shareholder reports and communications
prior to such printing provided such materials have been provided within a
reasonable period.
ARTICLE III. Fees and Expenses
3.1. The Fund and Adviser shall pay no fee or other compensation to the
Company under this agreement, and the Company shall pay no fee or other
compensation to the Fund or Adviser, except as provided herein.
3.2. All expenses incident to performance by each party of its respective
duties under this Agreement shall be paid by that party. 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 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, and the preparation of all statements
and notices required by any federal or state law.
3.3. The Company shall pay for the reasonable costs of typesetting,
printing and mailing all shareholder reports and notices of the Fund that are
required by the federal securities laws to be sent to owners of policies issued
by the Company for which the Fund is serving or is to serve as an investment
vehicle. The Company shall also pay the reasonable costs of typesetting,
printing and distributing the Fund's prospectuses and statements of additional
information to owners of contracts and applicants and prospective owners of
Policies for which Service shares of the Fund is serving or is to serve as an
investment vehicle. At any time that the distribution and service plan and
agreement (the "Plan") by and between the Fund and OppenheimerFunds Distributor,
Inc. ("OFDI")
-7-
for the Service Shares of a Portfolio listed on Schedule 2 remains in effect,
the Fund on behalf of that Portfolio may pay OFDI and OFDI may pay either to the
Company or to any entity providing services to Contract owners holding Service
shares, for services rendered with respect to the Service shares in accordance
with the terms and conditions of the Plan and at the annual rate authorized by
the Fund's Board of Trustees.
3.4. In the event the Fund adds one or more additional Portfolios and the
parties desire to make such Portfolios available to the respective Contract
owners as an underlying investment medium, a new Schedule 2 or an amendment to
this Agreement shall be executed by the parties authorizing the issuance of
shares of the new Portfolios to the particular Account. The amendment may also
provide for the sharing of expenses for the establishment of new Portfolios
among Participating Insurance Companies desiring to invest in such Portfolios
and the provision of funds as the initial investment in the new Portfolios.
ARTICLE IV. Potential Conflicts
4.1. The Board of Trustees of the Fund (the "Board") will monitor the Fund
for the existence of any material irreconcilable conflict between the interests
of the Contract owners of all separate accounts investing in the Fund. An
irreconcilable material conflict may arise for a variety of reasons, including:
(a) an action by any state insurance regulatory authority; (b) a change in
applicable federal or state insurance, tax, or securities laws or regulations,
or a public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory authorities;
(c) an administrative or judicial decision in any relevant proceeding; (d) the
manner in which the investments of any Portfolio are being managed; (e) a
difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of Contract owners. The Board
-8-
shall promptly inform the Company if it determines that an irreconcilable
material conflict exists and the implications thereof.
4.2. The Company has reviewed a copy of the Mixed and Shared Funding
Exemptive Order, and in particular, has reviewed the conditions to the requested
relief set forth therein. The Company agrees to be bound by the responsibilities
of a participating insurance companies as set forth in the Mixed and Shared
Funding Exemptive Order, including without limitation the requirement that the
Company report any potential or existing conflicts of which it is aware to the
Board. The Company will assist the Board in carrying out its responsibilities in
monitoring such conflicts under the Mixed and Shared Funding Exemptive Order, by
providing the Board in a timely manner with all information reasonably necessary
for the Board to consider any issues raised. This includes, but is not limited
to, an obligation by the Company to inform the Board whenever Contract owner
voting instructions are disregarded and by confirming in writing, at the Fund's
request, that the Company are unaware of any such potential or existing material
irreconcilable conflicts.
4.3. If it is determined by a majority of the Board, or a majority of its
disinterested Trustees, that a material irreconcilable conflict exists, the
Company shall, at its expense and to the extent reasonably practicable (as
determined by a majority of the disinterested trustees), take whatever steps are
necessary to remedy or eliminate the irreconcilable material conflict, up to an
including: (1) withdrawing the assets allocable to some or all of the separate
accounts from the Fund or any Portfolio and reinvesting such assets in a
different investment medium, including (but not limited to) another Portfolio of
the Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract owners,
life insurance contract owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such
-9-
segregation, or offering to the affected Contract owners the option of making
such a change; and (2) establishing a new registered management investment
company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
could conflict with the majority of Contract owner instructions, the Company may
be required, at the Fund's election, to withdraw the Account's investment in the
Fund and terminate this Agreement; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested members
of the Board. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of the six month period the Fund shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six months
after the Board informs the Company in writing that it has determined that such
decision has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination shall be limited to the extent required by
the foregoing material irreconcilable conflict as determined by a majority of
the disinterested members of the Board. Until the end of the foregoing six month
period, the Fund shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Fund, subject to applicable
regulatory limitation.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested members of the Board shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Fund be required to establish
-10-
a new funding medium for the Contracts. The Company shall not be required by
Section 4.3 to establish a new funding medium for Contracts if an offer to do so
has been declined by vote of a majority of Contract owners materially adversely
affected by the irreconcilable material conflict. In the event that the Board
determines that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the particular
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Board informs the Company in writing of the foregoing
determination, provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested members of the Board.
ARTICLE V. Applicable Law
5.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York.
5.2. This Agreement shall be subject to the provisions of the 1933 Act, the
Securities Exchange Act of 1934 and the 1940 Act, and the rules and regulations
and rulings thereunder, including such exemption from those statutes, rules and
regulations as the Securities and Exchange Commission may grant (including, but
not limited to, the Shared Funding Exemptive Order) and the terms hereof shall
be interpreted and construed in accordance therewith, provided however that the
term "Registration Statement or Prospectus for the variable Contracts" and terms
of similar import shall include (i) any offering circular or similar document
and sales literature or other promotional materials used to offer and/or sell
the variable Contracts in compliance with the private offering exemption in the
1933 Act and applicable federal and state laws and regulations, and (ii) the
term "Registration Statement" and "Prospectus" as defined in the 1933 Act.
ARTICLE VI. Termination
6.1 This Agreement shall terminate with respect to some or all Portfolios:
-11-
(a) at the option of any party upon six month's advance written notice
to the other parties;
(b) at the option of the Company to the extent that shares of
Portfolios are not reasonably available to meet the requirements of its
Contracts or are not appropriate funding vehicles for the Contracts, as
determined by the Company reasonably and in good faith. Prompt notice of
the election to terminate for such cause and an explanation of such cause
shall be furnished by the Company; or
(c) as provided in Article IV
6.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 6.1(a) may be exercised for cause
or for no cause.
ARTICLE VII. 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 to the other party.
If to the Fund:
Xxxxxxxxxxx Variable Account Funds
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Vice President and Secretary
If to the Adviser:
OppenheimerFunds, Inc.
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxx, Vice President/Manager
Variable Annuity Operations
-12-
If to the Company:
Columbus Life Insurance Company
000 Xxxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
General Counsel
ARTICLE VIII. Miscellaneous
8.1. The Company represents and warrants that any Contracts eligible to
purchase shares of the Fund and offered and/or sold in private placements will
comply in all material respects with the exemptions from the registration
requirements of the 1933 Act and applicable federal and state laws and
regulations.
8.2. 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
(i) this Agreement and (ii) by Title V, Subtitle A of the Xxxxx-Xxxxx-Xxxxxx Act
and by regulations adopted thereunder by regulators having jurisdiction over the
parties hereto, 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 it may come into the public domain.
8.3. 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.
8.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.5. 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.
-13-
8.6. Each party hereto shall cooperate with, and promptly notify each other
party and all appropriate governmental authorities (including without limitation
the Securities and Exchange Commission, the National Association of Securities
Dealers, Inc. 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.
8.7. 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.
8.8. It is understood by the parties that this Agreement is not an
exclusive arrangement in any respect.
8.9. The Company and the Adviser each understand and agree that the
obligations of the Fund under this Agreement are not binding upon any
shareholder of the Fund personally, but bind only the Fund and the Fund's
property; the Company and the Adviser each represent that it has notice of the
provisions of the Declaration of Trust of the Fund disclaiming shareholder
liability for acts or obligations of the Fund.
8.10. This Agreement shall not be assigned by any party hereto without the
prior written consent of all the parties. Notwithstanding the foregoing or
anything to the contrary set forth in this Agreement, the Adviser may transfer
or assign its rights, duties and obligations hereunder or interest herein to any
entity owned, directly or indirectly, by Xxxxxxxxxxx Acquisition Corp. (the
Company's parent corporation) or to a successor in interest pursuant to a
merger, reorganization, stock sale, asset sale or other transaction, without the
consent of the Company, as long as (i) that assignee agrees to assume all the
obligations imposed on the Adviser by this Agreement, and (ii) the Fund consents
to that assignment.
-14-
8.11. This Agreement sets forth the entire agreement between the parties
and supercedes all prior communications, agreements and understandings, oral or
written, between the parties regarding the subject matter hereof.
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 as of the date specified below.
COLUMBUS LIFE INSURANCE
COMPANY
By: __________________________________
Title: _______________________________
Date: ________________________________
XXXXXXXXXXX VARIABLE ACCOUNT
FUNDS
By: __________________________________
Title: Vice President and Secretary
Date: ________________________________
OPPENHEIMERFUNDS, INC.
By: __________________________________
Title: Executive Vice President and
General Counsel
Date: ________________________________
-15-
SCHEDULE 1
Separate Accounts Products
Columbus Life Insurance Company
Separate Account I Pinnacle Variable Universal Life
-16-
SCHEDULE 2
1. Portfolios of Xxxxxxxxxxx Variable Account Funds:
Xxxxxxxxxxx Aggressive Growth Fund/VA
Xxxxxxxxxxx Strategic Bond Fund/VA
2. Class of Shares: Service Class
-17-
