Exhibit (h)(34)
PARTICIPATION AGREEMENT
BY AND AMONG
OCC ACCUMULATION TRUST,
AND
ALLSTATE LIFE INSURANCE COMPANY,
AND
OCC DISTRIBUTORS
THIS AGREEMENT, made and entered into this 1ST day of August 2001 by and among
ALLSTATE LIFE INSURANCE COMPANY, an Illinois Corporation (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 (each account referred to as the "Account"), OCC ACCUMULATION TRUST, an
open-end diversified management investment company organized under the laws of
the State of Massachusetts (hereinafter the "Fund") and OCC DISTRIBUTORS, a
Delaware general partnership (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end diversified,
management investment company and was established for the purpose of
serving as the investment vehicle for separate accounts established for
variable life insurance contracts and variable annuity contracts to be
offered by insurance companies which have entered into participation
agreements substantially identical to this Agreement (hereinafter
"Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several
series of shares, each representing the interest in a particular
managed portfolio of securities and other assets (the "Portfolios");
and
WHEREAS, the Fund has obtained an order from the Securities & Exchange
Commission (alternatively referred to as the "SEC" or the
"Commission"), dated February 22, 1995 (File No. 812-9290), granting
Participating Insurance Companies and variable annuity separate
accounts and variable life insurance separate accounts relief 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
separate accounts and variable life insurance separate accounts of both
affiliated and unaffiliated Participating Insurance Companies and
qualified pension and retirement plans (hereinafter the "Mixed and
Shared Funding Exemptive Order");and
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"); and
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WHEREAS, the Company has registered or will register certain variable
annuity contracts (the "Contracts") under the 1933 Act; and
WHEREAS, the Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of
the Company under the insurance laws of the State of Illinois, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, the Company has registered the Account as a unit investment
trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended (hereinafter the
"1934 Act"), and is a member in good standing of the National
Association of Securities Dealers, Inc. (hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios
named in Schedule 2 on behalf of the Account to fund the Contracts and
the Underwriter is authorized to sell such shares to unit investment
trusts such as the Account at net asset value; NOW, THEREFORE, in
consideration of their mutual promises, the Company, the Fund and the
Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the Fund
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 and
acceptance by the Fund or its agent 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 notice of such order by 10:00 a.m. Eastern 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 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.
1.3. The Fund agrees to make its shares available indefinitely for purchase
at the applicable net asset value per share by Participating Insurance
Companies and their separate accounts 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
"Directors") 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 of the Directors, acting in good faith and in light
of their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of any Portfolio.
1.4. The Fund and the Underwriter agree that shares of the Fund will be sold
only to Participating Insurance Companies and their separate accounts,
qualified pension and
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retirement plans or such other persons as are permitted under applicable
provisions of the Internal Revenue Code of 1986, as amended, (the "Internal
Revenue Code"), and regulations promulgated thereunder, the sale to which
will not impair the tax treatment currently afforded the contracts. No
shares of any Portfolio will be sold to the general public.
1.5. The Fund and the Underwriter will not sell Fund shares to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, and VII of this Agreement are
in effect to govern such sales. The Fund shall make available upon written
request from the Company (i) a list of all other Participating Insurance
Companies and (ii) a copy of the Participation Agreement executed by any
other Participating Insurance Company.
1.6. The Fund agrees to redeem for cash, 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 and acceptance by the Fund or its agent of the request for
redemption. For purposes of this Section 1.6, the Company shall be the
designee of the Fund for receipt of requests for redemption from each
Account and receipt by such designee shall constitute receipt by the Fund;
provided the Fund receives notice of request for redemption by 10:00 a.m.
Eastern Time on the next following Business Day. Payment shall be in
federal funds transmitted by wire to the Company's account as designated by
the Company in writing from time to time, on the same Business Day the Fund
receives notice of the redemption order from the Company except that the
Fund reserves the right to delay payment of redemption proceeds, but in no
event may such payment be delayed longer than the period permitted under
Section 22(e) of the 1940 Act. Neither the Fund nor the Underwriter shall
bear any responsibility whatsoever for the proper disbursement or crediting
of redemption proceeds; the Company alone shall be responsible for such
action. If notification of redemption is received after 10:00 a.m. Eastern
Time, payment for redeemed shares will be made on the next following
Business Day.
1.7. The Company agrees to purchase and redeem the shares of the Portfolios
named in Schedule 2 offered by the then current prospectus of the Fund in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the Contracts shall be invested in the
Fund, or in the Company's general account; provided that such amounts may
also be invested in an investment company other than the Fund if (a) such
other investment company, or series thereof, has investment objectives or
policies that are substantially different from the investment objectives
and policies of the portfolios of the Fund named in Schedule 2; or (b) the
Company gives the Fund and the Underwriter 45 days written notice of its
intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement; or (d) the Fund or Underwriter consents in
writing to the use of such other investment company.
1.8. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate subaccount of each
Account.
1.9. The Fund shall furnish notice as soon as reasonably practicable to the
Company of any income, dividends or capital gain distributions payable on
the Fund's shares. The Company hereby elects to receive all such dividends
and distributions as are payable on the Portfolio
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shares in the form of additional shares of that Portfolio. The Company
reserves the right to revoke this election and 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.
1.10. 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 5:30 p.m.,
Eastern Time, each business day.
1.11. The Fund will provide notice of error in calculation of net value of
each portfolio as soon as reasonable practical after discovery thereof. Any
such notice will state for each day for which an error occurred, the
incorrect price and the reason for the price change. The Fund shall make
the Company whole for any payments or adjustments to the number of shares
in the Separate Accounts that are demonstrated to be required as a result
of pricing errors.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account as a segregated asset account under
applicable state law and has registered each Account as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as
segregated investment accounts for the Contracts, and that it will maintain
such registration for so long as any Contracts are outstanding. The Company
shall amend the registration statement under the 1933 Act for the Contracts
and the registration statement under the 1940 Act for the Account from time
to time as required in order to effect the continuous offering of the
Contracts or as may otherwise be required by applicable law. The Company
shall register and qualify the Contracts for sale in accordance with the
securities laws of the various states only if and to the extent deemed
necessary by the Company.
2.2. The Company represents that it believes that the Contracts are
currently and at the time of issuance will be treated as annuity contracts
under applicable provisions of the Internal Revenue Code and that it will
make every effort to maintain such treatment and that it will notify the
Fund and the Underwriter immediately upon having a reasonable basis for
believing that the Contracts have ceased to be so treated or that they
might not be so treated in the future.
2.3. The Fund represents and warrants that Fund shares sold pursuant to this
Agreement shall be registered under the 1933 Act and duly authorized for
issuance in accordance with applicable law and that the Fund is and shall
remain registered under the 1940 Act for as long as the Fund shares are
sold. 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 or the
Underwriter.
2.4. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code, and
that it will make every effort to
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maintain such qualification (under Subchapter M or any successor or similar
provision) 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.
2.5. The Fund represents that its investment objectives, policies and
restrictions comply with applicable state investment laws as they may apply
to the Fund. The Fund makes no representation as to whether any aspect of
its operations (including, but not limited to, fees and expenses and
investment policies) complies with the insurance laws and regulations of
any state. The Company alone shall be responsible for informing the Fund of
any insurance restrictions imposed by state insurance laws which are
applicable to the Fund. To the extent feasible and consistent with market
conditions, the Fund will adjust its investments to comply with the
aforementioned state insurance laws upon written notice from the Company of
such requirements and proposed adjustments, it being agreed and understood
that in any such case the Fund shall be allowed a reasonable period of time
under the circumstances after receipt of such notice to make any such
adjustment.
2.6. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. To the extent
that it decides to finance distribution expenses pursuant to Rule 12b-1,
the Fund undertakes to have its Board of Trustees, a majority of whom are
not interested persons of the Fund, formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the National Association of Securities Dealers, Inc., ("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 all applicable federal and state securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 0000 Xxx.
2.8. The Fund represents that it is lawfully organized and validly existing
under the laws of Massachusetts and that it does and will comply with
applicable provisions of the 0000 Xxx.
2.9. The Underwriter represents and warrants that the Fund's Adviser, OpCap
Advisors, is and shall remain duly registered under all applicable federal
and state securities laws and that the Adviser will perform its obligations
to the Fund in accordance with the laws of Massachusetts and any applicable
state and federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities having access to the funds and/or securities of the
Fund are and 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 minimal 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 includes coverage for larceny and embezzlement and is issued
by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund, in
an amount not less than $5 million. The aforesaid includes coverage for
larceny and embezzlement and is issued by a reputable bonding company. The
Company agrees to
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make all reasonable efforts to see that this bond or another bond
containing these provisions is always in effect, and agrees to notify the
Fund and the Underwriter in the event that such coverage no longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company, at the Company's expense,
with as many copies of the Fund's current prospectus as the Company may
reasonably request for use with prospective contractowners and applicants.
The Underwriter shall print and distribute, at the Fund's or Underwriter's
expense, as many copies of said prospectus as necessary for distribution to
existing contractowners or participants. If requested by the Company in
lieu thereof, the Fund shall provide such documentation including a final
copy of a current prospectus set in type at the Fund's expense and other
assistance as is reasonably necessary in order for the Company at least
annually (or more frequently if the Fund prospectus is amended more
frequently) to have the new prospectus for the Contracts and the Fund's new
prospectus printed together in one document. In such case the Fund shall
bear its share of expenses as described above.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or alternatively
from the Company (or, in the Fund's discretion, the Prospectus shall state
that such Statement is available from the Fund), and the Underwriter (or
the Fund) shall provide such Statement, at its expense, to the Company and
to any owner of or participant under a Contract who requests such Statement
or, at the Company's expense, to any prospective contractowner and
applicant who requests such statement.
3.3. The Fund, at its expense, shall provide the Company with copies of its
proxy material, if any, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require and
shall bear the costs of distributing them to existing contractowners or
participants.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from contractowners or participants;
(ii) vote the Fund shares held in the Account in accordance with
instructions received from contractowners or participants; and
(iii) vote Fund shares held in the Account for which no timely
instructions have been received, in the same proportion as Fund shares
of such Portfolio for which instructions have been received from the
Company's contractowners or participants;
so long as and to the extent that the SEC continues to interpret the
1940 Act to require pass through voting privileges for variable
contractowners. The Company reserves the right to vote Fund shares held
in any segregated asset account in its own right, to the extent
permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner
consistent with other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular as required, the Fund will either
provide for annual meetings
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or comply with Section 16(c) of the 1940 Act (although the Fund is not one
of the trusts described in Section 16(c) of that Act) as well as with
Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will
act in accordance with the SEC interpretation of the requirements of
Section 16(a) with respect to periodic elections of directors and with
whatever rules the Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the Fund
or the Underwriter, each piece of sales literature or other promotional
material in which the Fund or the Fund's adviser or the Underwriter is
named, at least fifteen business days prior to its use. No such material
shall be used if the Fund or the Underwriter reasonably objects in writing
to such use within fifteen business days after receipt of such material.
4.2. 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 sales literature or other promotional
material approved by the Fund or by the Underwriter, except with the
permission of the Fund or the Underwriter. The Fund and the Underwriter
agree to respond to any request for approval on a prompt and timely basis.
4.3. The Fund or the Underwriter shall furnish, or shall cause to be
furnished, to the Company or its designee, each piece of sales literature
or other promotional material in which the Company or its separate account
is named, at least fifteen business days prior to its use. No such material
shall be used if the Company reasonably objects in writing to such use
within fifteen business days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make any
representations on behalf of the Company or concerning the Company, each
Account, or the Contracts other than the information or representations
contained in a registration statement or prospectus for the Contracts, as
such registration statement and prospectus may be amended or supplemented
from time to time, or in published reports for each Account which are in
the public domain or approved by the Company for distribution to
contractowners or participants, or in sales literature or other promotional
material approved by the Company, except with the permission of the
Company. The Company agrees to respond to any request for approval on a
prompt and timely basis.
4.5. The Fund will provide to the Company at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such document with the SEC
or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses, statements of additional
information, 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
7
relate to the Contracts or each Account, contemporaneously with the filing
of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or other
promotional material" includes, but is not limited to, 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, research 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, registration statements, prospectuses, statements of
additional information, shareholder reports, and proxy materials and any
other material constituting sales literature or advertising under NASD
rules, the 1940 Act or the 1933 Act.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to the
Company under this Agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then, subject to obtaining any required exemptive orders or other
regulatory approvals, the Underwriter may make payments to the Company or
to the underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund of this Agreement
shall be paid by the Fund to the extent permitted by law. All Fund shares
will be duly authorized for issuance and registered in accordance with
applicable federal law and to the extent deemed advisable by the Fund, in
accordance with applicable state law, prior to 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, Fund proxy materials and reports, setting in type, printing and
distributing the prospectuses, the proxy materials and reports to existing
shareholders and contractowners, the preparation of all statements and
notices required by any federal or state law, all taxes on the issuance or
transfer of the Fund's shares, and any expenses permitted to be paid or
assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the
1940 Act.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable
contracts under the Internal Revenue Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Fund will
comply with Section 817(h) of the Internal Revenue Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments
or other modifications to such Section or Regulations in accordance with
guidelines provided by the Company prior to the execution of this Agreement
and as necessary thereafter. In the event of a breach of this Article VI by
the Fund, it will take all reasonable steps (a) to notify the Company of
such breach and (b) to adequately diversify the Fund so as to achieve
compliance with the grace period afforded by Treasury Regulation 1.817-5.
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ARTICLE VII. Potential Conflicts
7.1. The Board of Trustees of the Fund (the "Fund Board") will monitor the
Fund for the existence of any material irreconcilable conflict among the
interests of the contractowners 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 Participating Insurance Companies or by variable
annuity contract and variable life insurance contractowners; or (f) a
decision by an insurer to disregard the voting instructions of
contractowners. The Board shall promptly inform the Company if it
determines that an irreconcilable material conflict exists and the
implications thereof. A majority of the Fund Board shall consist of persons
who are not "interested" persons of the Fund.
7.2. 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. As set forth in the Mixed and Shared
Funding Exemptive Order, the Company will report any potential or existing
conflicts of which it is aware to the Fund Board. The Company agrees to
assist the Fund Board in carrying out its responsibilities under the Mixed
and Shared Funding Exemptive Order, by providing the Fund Board with all
information reasonably necessary for the Fund Board to consider any issues
raised. This includes, but is not limited to, an obligation by the Company
to inform the Fund Board whenever contractowner voting instructions are
disregarded. The Fund Board shall record in its minutes or other
appropriate records, all reports received by it and all action with regard
to a conflict.
7.3. If it is determined by a majority of the Fund Board, or a majority of
its disinterested Directors, that an irreconcilable material conflict
exists, the Company and other Participating Insurance Companies shall, at
their expense and to the extent reasonably practicable (as determined by a
majority of the disinterested Directors), take whatever steps are necessary
to remedy or eliminate the irreconcilable material conflict, up to and
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 contractowners
and, as appropriate, segregating the assets of any appropriate group (i.e.,
variable annuity contractowners or variable life insurance contractowners,
of one or more Participating Insurance Companies) that votes in favor of
such segregation, or offering to the affected contractowners the option of
making such a change; and (2) establishing a new registered management
investment company or managed separate account.
7.4. If the Company's disregard of voting instructions could conflict with
the majority of contractowner voting instructions, and the Company's
judgment represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement with respect
to such Account. Any such withdrawal and termination must take place within
60 days after the Fund gives written notice to the Company that this
provision is being implemented. Until the end of such 60 day period the
Underwriter and Fund shall continue to
9
accept and implement orders by the Company for the purchase (and
redemption) of shares of the Fund.
7.5. If a particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state insurance regulators,
then the Company will withdraw the Account's investment in the Fund and
terminate this Agreement with respect to such Account. Any such withdrawal
and termination must take place within 60 days after the Fund gives written
notice to the Company that this provision is being implemented. Until the
end of such 60 day period the Underwriter and Fund shall continue to accept
and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority
of the disinterested members of the Fund Board shall determine whether any
proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund or Quest Advisors be required to establish a
new funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of contractowners
materially adversely affected by the irreconcilable material conflict.
7.7. The Company shall at least annually submit to the Fund Board such
reports, materials or data as the Fund Board may reasonably request so that
the Fund Board may fully carry out the duties imposed upon it as delineated
in the Mixed and Shared Funding Exemptive Order, and said reports,
materials and data shall be submitted more frequently if deemed appropriate
by the Fund Board.
7.8. If and to the extent that Rule 6e-2 and Rule 6e-3 (T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Mixed and Shared Funding Exemptive Order) on
terms and conditions materially different from those contained in the Mixed
and Shared Funding Exemptive Order, (a) the Fund and/or the Participating
Insurance Companies, as appropriate, shall take such steps as may be
necessary to comply with Rules 6e-2 and 6e-3 (T), as amended, and Rule
6e-3, as adopted, to the extent such rules are applicable; and (b) Sections
3.4, 3.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in
effect only to the extent that terms and conditions substantially identical
to such Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company (a) The Company agrees to indemnify and
hold harmless the Fund, the Underwriter, and each of the Fund's or the
Underwriter's directors, officers, employees or agents and each person, if
any, who controls or is associated with the Fund or the Underwriter within
the meaning of such terms under the federal securities laws (collectively,
the "indemnified parties" for purposes of this Section 8.1) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Company) or litigation
(including reasonable legal and other expenses), to which the indemnified
parties may become subject under any statute, 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 statements or alleged
untrue statements of any material fact contained in the registration
statement, prospectus or statement of
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additional information for the Contracts or contained in the Contracts
or sales literature or other promotional material 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 in light of the circumstances in
which they were made; 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 statement
of additional information for the Contracts or in the Contracts or
sales literature or other promotional material for the Contracts (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 by or on behalf of the Company
(other than statements or representations contained in the Fund
registration statement, Fund prospectus, Fund statement of additional
information or sales literature or other promotional material of the
Fund not supplied by the Company or persons under its control) or
wrongful conduct of the Company or persons under its 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 the Fund registration statement, Fund
prospectus, statement of additional information or sales literature or
other promotional material 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 in light of the circumstances in
which they were made, if such a statement or omission was made in
reliance upon and in conformity with information furnished to the Fund
by or on behalf of the Company or persons under its control; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials or to make any payments under the
terms of this Agreement; or
(v) arise out of 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 by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.3 hereof. This
indemnification shall be in addition to any liability which the Company
may otherwise have.
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party
seeking indemnification.
(c) The indemnified parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Fund shares or the
Contracts or the operation of the Fund.
8.2. Indemnification By the Underwriter
(a) The Underwriter, on its own behalf and on behalf of the Fund,
agrees to indemnify and hold harmless the Company and each of its
directors, officers, employees or agents and each person, if any, who
controls or is associated with the Company within the meaning of such
terms under the federal securities laws (collectively, the "indemnified
11
parties" for purposes of this Section 8.2) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Underwriter) or litigation (including
reasonable legal and other expenses) to which the indemnified parties
may become subject under any statute, 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,
prospectus or statement of additional information for the Fund or sales
literature or other promotional material of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were
made; 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 Fund by or on behalf of the
Company for use in the registration statement, prospectus or statement
of additional information for the Fund or in sales literature or other
promotional material of the Fund (or any amendment or supplement
thereto) 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 Contracts or
in the Contract or Fund registration statement, the Contract or Fund
prospectus, statement of additional information, or sales literature or
other promotional material for the Contracts or of the Fund not
supplied by the Underwriter or the Fund or persons under the control of
the Underwriter or the Fund respectively) or wrongful conduct of the
Underwriter or the Fund or persons under the control of the Underwriter
or the Fund respectively, 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,
statement of additional information or sales literature or other
promotional material 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 in light of the
circumstances in which they were made, if such statement or omission
was made in reliance upon and in conformity with information furnished
to the Company by or on behalf of the Underwriter or the Fund or
persons under the control of the Underwriter or the Fund; or
(iv) arise as a result of any failure by the Fund 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 diversification requirements and
procedures related thereto specified in Article VI of this Agreement
except if such failure is a result of the Company's failure to comply
with the notification procedures specified in Article VI); or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter or the Fund in
this Agreement or arise out of or result from any other material breach
of this Agreement by the Underwriter or the Fund; except to the extent
provided in Sections 8.2(b) and 8.3 hereof. This indemnification shall
be in addition to any liability which the Underwriter may otherwise
have.
12
(b) No party shall be entitled to indemnification if such loss, claim,
damage, liability or litigation is due to the willful misfeasance, bad
faith, gross negligence or reckless disregard of duty by the party
seeking indemnification.
(c) The indemnified parties will promptly notify the Underwriter of the
commencement of any litigation or proceedings against them in
connection with the issuance or sale of the Contracts or the operation
of the Account.
8.3. Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("indemnifying party" for the purpose of this Section 8.3) shall not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under
this Article VIII ("indemnified party" for the purpose of this Section 8.3)
unless such indemnified party shall have notified the indemnifying party 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 party shall have received
notice of such service on any designated agent), but failure to notify the
indemnifying party of any such claim shall not relieve the indemnifying
party from any liability which it may have to the indemnified party against
whom such action is brought under the indemnification provision of this
Article VIII, except to the extent that the failure to notify results in
the failure of actual notice to the indemnifying party and such
indemnifying party is damaged solely as a result of failure to give such
notice. In case any such action is brought against the indemnified party,
the indemnifying party will be entitled to participate, at its own expense,
in the defense thereof. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in
the action. After notice from the indemnifying party to the indemnified
party of the indemnifying party'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 indemnifying party 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, unless (i)
the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
A successor by law of the parties to this Agreement shall be entitled to
the benefits of the indemnification contained in this Article VIII. The
indemnification provisions contained in this Article VIII shall survive any
termination of this Agreement.
8.4. Contribution
In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Article VIII is due in
accordance with its terms but for any reason is held to be unenforceable
with respect to a party entitled to indemnification
13
("indemnified party" for purposes of this Section 8.4) pursuant to the
terms of this Article VIII, then each party obligated to indemnify pursuant
to the terms of this Article VIII shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and litigations in such proportion as is appropriate
to reflect the relative benefits received by the parties to this Agreement
in connection with the offering of Fund shares to the Account and the
acquisition, holding or sale of Fund shares by the Account, or if such
allocation is not permitted by applicable law, in such proportions as is
appropriate to reflect the relative net benefits referred to above but also
the relative fault of the parties to this Agreement in connection with any
actions that lead to such losses, claims, damages, liabilities or
litigations, as well as any other relevant equitable considerations.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York.
9.2. 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 (including, but not limited to the Mixed and Shared Funding Exemptive
Order) and the terms hereof shall be interpreted and construed in
accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one-year advance written notice to
the other parties unless otherwise agreed in a separate written
agreement among the parties; or
(b) at the option of the Company if shares of the Portfolios delineated
in Schedule 2 are not reasonably available to meet the requirements of
the Contracts as determined by the Company; or
(c) at the option of the Fund upon institution of formal proceedings
against the Company by the NASD, the SEC, the insurance commission 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
administration of the Contracts, the operation of the Account, or the
purchase of the Fund shares, which would have a material adverse effect
on the Company's ability to perform its obligations under this
Agreement; or
(d) at the option of the Company upon institution of formal proceedings
against the Fund or the Underwriter by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body, which
would have a material adverse effect on the Fund's or the Underwriter's
ability to perform its obligations under this Agreement; or
(e) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the contractowners
having an interest in the Account (or any subaccount) to substitute the
shares of another investment company for the corresponding Portfolio
shares of the Fund in accordance with the terms of the Contracts for
which those Portfolio shares had been selected to serve as the
underlying investment
14
media. The Company will give 30 days prior written notice to the Fund
of the date of any proposed vote or other action taken to replace the
Fund's shares; or (f) at the option of the Company or the Fund upon a
determination by a majority of the Fund Board, or a majority of the
disinterested Fund Board members, that an irreconcilable material
conflict exists among the interests of (i) all contractowners of
variable insurance products of all separate accounts or (ii) the
interests of the Participating Insurance Companies investing in the
Fund as delineated in Article VII of this Agreement; or
(g) at the option of the Company if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Internal Revenue
Code, or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(h) at the option of the Company if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of any party to this Agreement, upon another party's
material breach of any provision of this Agreement; or
(j) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith, that either the Fund or the
Underwriter has suffered a material adverse change in its business,
operations or financial condition since the date of this Agreement or
is the subject of material adverse publicity which is likely to have a
material adverse impact upon the business and operations of the
Company; or
(k) at the option of the Fund or Underwriter, if the Fund or
Underwriter respectively, shall determine in its sole judgment
exercised in good faith, that the Company has suffered a material
adverse change in its business, operations or financial condition since
the date of this Agreement or is the subject of material adverse
publicity which is likely to have a material adverse impact upon the
business and operations of the Fund or Underwriter; or
(l) at the option of the Fund in the event any of the Contracts are not
issued or sold in accordance with applicable federal and/or state law.
Termination shall be effective immediately upon such occurrence without
notice.
10.2. Notice Requirement
(a) In the event that any termination of this Agreement is based upon
the provisions of Article VII, such prior written notice shall be given
in advance of the effective date of termination as required by such
provisions.
(b) In the event that any termination of this Agreement is based upon
the provisions of Sections 10.1(b) - (d) or 10.1(g) - (i), prompt
written notice of the election to terminate this Agreement for cause
shall be furnished by the party terminating the Agreement to the
non-terminating parties, with said termination to be effective upon
receipt of such notice by the non-terminating parties.
(c) In the event that any termination of this Agreement is based upon
the provisions of Sections 10.1(j) or 10.1(k), prior written notice of
the election to terminate this Agreement for cause shall be furnished
by the party terminating this Agreement to the
15
non-terminating parties. Such prior written notice shall be given by
the party terminating this Agreement to the non-terminating parties at
least 30 days before the effective date of termination.
10.3. It is understood and agreed that the right to terminate this Agreement
pursuant to Section 10.1(a) may be exercised for any reason or for no
reason.
10.4. Effect of Termination
(a) Notwithstanding any termination of this Agreement pursuant to
Section 10.1 of this Agreement, and subject to Section 1.3 of this
Agreement, the Company may require the Fund and the Underwriter to,
continue to make available additional shares of the Fund for so long
after the termination of this Agreement as the Company desires pursuant
to the terms and conditions of this Agreement as provided in paragraph
(b) below, for all Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts.
The parties agree that this Section 10.4 shall not apply to any
terminations under Article VII and the effect of such Article VII
terminations shall be governed by Article VII of this Agreement.
(b) If shares of the Fund continue to be made available after
termination of this Agreement pursuant to this Section 10.4, the
provisions of this Agreement shall remain in effect except for Section
10.1(a) and thereafter the Fund, the Underwriter, or the Company may
terminate the Agreement, as so continued pursuant to this Section 10.4,
upon written notice to the other party, such notice to be for a period
that is reasonable under the circumstances but, if given by the Fund or
Underwriter, need not be for more than 90 days.
10.5. Except as necessary to implement contractowner initiated or approved
transactions, or as required by state insurance laws or regulations, the
Company shall not redeem Fund shares attributable to the Contracts (as
opposed to Fund shares attributable to the Company's assets held in the
Account), and the Company shall not prevent contractowners from allocating
payments to a Portfolio that was otherwise available under the Contracts,
until 90 days after the Company shall have notified the Fund or Underwriter
of its intention to do so.
ARTICLE XI. Notices
Any notice shall be deemed duly given only if sent by hand, evidenced by
written receipt or by certified mail, return receipt requested, 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. All notices shall be deemed given three business days after the date
received or rejected by the addressee.
16
IF TO THE FUND: IF TO THE COMPANY:
--------------- ------------------
Xxxxxxx X. Xxxxxxxxx, Esq. Xxxx Xxxxx
Vice President Director
OpCap Advisors Allstate Life Insurance Company
000 Xxxxxxx Xxxxxx 0000 Xxxxxxx Xxxx
Xxx Xxxx, XX 00000 Xxxxxxxxxx, Xxxxxxxx 00000
Xxxx Xxxxxx
Counsel
Lincoln Benefit Life
0000 X. 00xx Xxxxxx, Xxxxx 0X0
Xxxxxxx, XX 00000
IF TO THE UNDERWRITER:
----------------------
Xxxxxxx X. Xxxx, Esq.
Secretary
OCC Distributors
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
ARTICLE XII. Miscellaneous
12.1. All persons dealing with the Fund must look solely to the property of
the Fund for the enforcement of any claims against the Fund as neither the
Directors, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Fund.
12.2. Subject to law and regulatory authority, each party hereto shall treat
as confidential all information reasonably identified as such in writing by
any other party hereto (including without limitation the names and
addresses of the owners of the Contracts) and, except as contemplated by
this Agreement, shall not disclose, disseminate or utilize such
confidential information until such time as it may come into the public
domain without the express prior written consent of the affected party.
12.3. 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.
12.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5. 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.
12.6. This Agreement shall not be assigned by any party hereto without the
prior written consent of all the parties.
17
12.7. 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 each other and
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.
12.8. Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or trust action, as applicable, by
such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with
its terms.
12.9. The parties to this Agreement may amend the schedules to this Agreement
from time to time to reflect changes in or relating to the Contracts, the
Accounts or the Portfolios of the Fund.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and behalf by its duly authorized
representative as of the date and year first written above.
COMPANY:
-------
ALLSTATE LIFE INSURANCE COMPANY SEAL
By:
---------------------------
FUND:
----
OCC ACCUMULATION TRUST SEAL
By:
---------------------------
UNDERWRITER:
-----------
OCC DISTRIBUTORS
By:
---------------------------
18
SCHEDULE 1
Participation Agreement
Among
OCC Accumulation Trust, Allstate Life Insurance Company
and
OCC Distributors
The following separate accounts of Allstate Life Insurance Company are permitted
in accordance with the provisions of this Agreement to invest in Portfolios of
the Fund shown in Schedule 2:
Allstate Financial Advisors Separate Account I
August 1, 2001
19
SCHEDULE 2
Participation Agreement
Among
OCC Accumulation Trust, Allstate Life Insurance Company
and
OCC Distributors
The Separate Account(s) shown on Schedule 1 may invest in the following
Portfolios of the OCC Accumulation Trust:
Science and Technology Portfolio
Small Cap Portfolio
August 1, 2001
20
