FUND PARTICIPATION AGREEMENT
This Fund Participation Agreement (the "Agreement"), dated as of the
1st of January, 1999, is made by and among WESTERN-SOUTHERN LIFE ASSURANCE
COMPANY ("Western-Southern"), on its own behalf and on behalf of
Western-Southern Life Assurance Company Separate Account 1 and Western-Southern
Life Assurance Company Separate Account 2 (each a "Separate Account") and the
various sub-accounts of each Separate Account as set forth in Exhibit A attached
hereto (each a "Sub-Account"), and TOUCHSTONE VARIABLE SERIES TRUST (formerly,
the Select Advisors Variable Insurance Trust), a Massachusetts business trust
(the "Trust"), and each separate series of the Trust, as set forth on Exhibit
B-2 attached hereto (each a "Fund" or together the "Funds"), all of which Funds
serve as underlying investment media for the Sub-Accounts.
The parties hereby agree as follows:
1. Representations and Agreements of the Parties.
1.1 The Trust makes the following representations and covenants:
(a) The Trust has been established and is validly existing and in
good standing as a business trust under the laws of the
Commonwealth of Massachusetts and consists of separate series
described in the most recent Post-Effective Amendment to its
Registration Statement on Form N-1A filed with the SEC (the
"Trust Registration Statement").
(b) The Trust is a no-load diversified, open-end, management
investment company and is duly registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The offering
of the securities of the Trust has been duly registered under
the Securities Act of 1933, as amended (the "1933 Act").
(c) The Trust has supplied the information regarding the Trust and
each of the Funds to Western-Southern for inclusion in the
Post-Effective Amendments to the Registration Statements filed
by Western-Southern with the SEC (the "Western-Southern
Registration Statements") for of the Contracts (as defined in
Section 1.2) to be issued by each of the Separate Accounts.
The information does not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(d) The Trust Registration Statement does not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or a material fact that is
necessary in order to make the statements therein not
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misleading. This representation does not extend to statements
or omissions made in reliance upon and in conformity with
written information furnished by Western-Southern for
inclusion in the Trust Registration Statement.
(e) The Trust and each Fund will comply with and qualify under the
requirements applicable to regulated investment companies
under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Trust will notify
Western-Southern immediately upon having a reasonable basis
for believing that the Trust or any Fund has ceased to comply
with these requirements.
(f) Each Fund will comply with the diversification requirements
set forth in Section 5(b)(1) of the 1940 Act and Section
817(h) of the Code and Section 1.817-5(b) of the regulations
under the Code, and the Trust will cause each Fund to comply
with these diversification requirements. The Trust will notify
Western-Southern immediately upon having a reasonable basis
for believing that any Fund has ceased to meet these
requirements or might not meet these requirements in the
future.
(g) Except for shares or interests sold for organizational
purposes prior to the effective date of its initial
Registration Statement, the Trust will not sell shares of or
interests in the Funds to purchasers other than the Separate
Accounts or one or more other separate accounts established by
Western-Southern or other life insurance companies.
1.2 Western-Southern represents and covenants as follows:
(a) It is an insurance company duly organized and in good standing
under applicable law and has legally and validly established
the Separate Accounts as separate accounts under Ohio law, and
has registered each Separate Account as a unit investment
trust under the 1940 Act to serve as an investment vehicle for
variable annuity contracts to be offered by the Separate
Accounts (the "Contracts").
(b) The Contracts provide for the allocation of net amounts
received by Western-Southern to the Separate Accounts and to
the Sub-Accounts. Selection of a particular Sub-Account is
made by the Contract owner, who may change such selection from
time to time in accordance with the terms of the applicable
Contract.
(c) The offering of the Contracts has been registered under the
1933 Act.
(d) Each Sub-Account is a "segregated asset account" for purposes
of diversification testing. Interests in each Sub-Account are
offered exclusively through the purchase of a "variable
contract," within the meaning of such term under Section
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817(d) of the Code. Western-Southern will exercise its best
efforts to continue to meet such definitional requirements,
and will notify the Trust immediately upon having a reasonable
basis for believing that a Sub-Account has ceased to meet
these requirements or might not meet these requirements in the
future.
(e) The information regarding Western-Southern and the Separate
Accounts that Western-Southern and the Separate Account have
supplied to the Trust for inclusion in the Trust Registration
Statement does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading.
1.3 The representations and covenants contained in Sections 1.1 and
1.2 are continuing representations and covenants of each party making them and
must be satisfied throughout the term of this Agreement. The Trust will provide
Western-Southern, within ten (10) business days (y) after the end of each year,
a letter from the appropriate officer of each Trust certifying to the continued
accuracy of the representations contained in Section 1.1, above, and (z) after
the end of each calendar quarter, a detailed listing of the individual
securities and other assets, if any, held by each Fund as of the end of such
calendar quarter. Western-Southern will provide the Trust, within ten (10)
business days after the end of each year, a letter from the appropriate officer
of Western-Southern certifying to the continued accuracy of the representations
contained in Section 1.2, above.
2. Marketing. Western-Southern through its Distributor, Touchstone
Securities, Inc. (the "Distributor") will make all reasonable efforts to market
the Contracts. In marketing the contracts, Western-Southern and the Distributor
will comply with all applicable state or federal securities and insurance laws.
3. Valuation and Order.
3.1 The Trust will cause Investors Bank and Trust Company, the
administrative services and fund accounting agent for the Trust ("IBT"), or any
other person acting in a similar role, to provide to Western-Southern, promptly
following the close of trading (the "Close") on each Business Day (as defined in
3.4, below), (x) the net asset value per share for each Fund as of the Close on
that Business Day, (y) the per share amount of any dividend or capital gain
distribution made by a Fund in respect of the shares held by the related
Sub-Account, if the "ex-dividend" date for such dividend or distribution has
occurred since the Close of the preceding Business Day, and (z) based on these
net asset values and dividends and distributions, the Accumulation Unit Value
(as such term is defined in the Western-Southern Registration Statement) to be
used in determining values in each Sub-Account.
3.2 Western-Southern shall be the designee of the Trust for receipt of
orders from the Separate Accounts. Accordingly, receipt of an order for the
purchase or the redemption of shares of the Trust by Western-Southern shall, for
purposes of the calculations described in Section 3.1,
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above, constitute receipt of an order by the Trust, provided that the Trust
receives notice of the order by 11:00 A.M. on the following Business Day. Orders
received by Western-Southern will be sent directly to the Trust or its specified
agent, and payment for purchases, net of redemptions, will be wired to a
custodial account designated by the Trust. If redemptions for the Trusts for any
period exceed purchases, the Trust will wire the excess amount to an account
designated by Western-Southern. The Trust will execute all orders from
Western-Southern (whether net purchases or net redemptions) at the net asset
value per share, as determined as of the Close on the preceding Business Day,
i.e., the Business Day on which the orders were duly received by
Western-Southern from owners of the Contracts in accordance with the
Western-Southern Registration Statement. Promptly after executing the orders,
the Trust will provide to Western-Southern a written confirmation, which shall
include (x) the number of shares of the Trust in each Fund at the Close of the
preceding Business Day, (y) a detailed account, by dollars and by shares, of the
purchases and redemptions for the Trust (and the net result of the purchases and
redemptions) by each Sub-Account since the Close of the preceding Business Day,
and (z) the number of shares of each Fund of the Trust held by each Fund's
corresponding Sub-Account after all such orders have been executed.
Notwithstanding the above, the Trusts shall not be held responsible for
providing Western-Southern with values, or with investment results, on any day
that is not a Business Day, when an emergency exists making the valuation of a
Fund's portfolio securities not reasonably practicable, or during any period
when the Securities and Exchange Commission ("SEC") has by order permitted the
suspension of pricing of shares for the protection of shareholders.
3.3 "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and each other day, if any, on which the Trust is
required to calculate the net asset value of a Fund, as set forth in the Trust's
Registration Statement.
4.1 Expenses. All expenses related to (y) the establishment and
operation of the Trust, including all costs of registration and other compliance
under state and federal laws and (z) the performance by the Trust of its
obligations under this Agreement, shall be paid by the Trust.
4.2 Documents and Information. The Trust will provide to
Western-Southern, for use by the Separate Accounts and the Sub-Accounts, a
reasonable quantity of (w) all prospectuses of the Trust or any Fund required
for delivery to existing Contract owners and all related statements of
additional information, (x) all proxy material required for meetings of
shareholders of the Trust or any Fund thereof, (y) all periodic reports to
shareholders of the Trust required to be delivered to the Contract owners and
(z) any other material reasonably required to be distributed to the owners of
the Contracts.
5. Sales Representations. Western-Southern and its agents shall not
make any representations concerning the Funds other than those contained in (y)
the then current prospectuses and related statements of additional information
of the Separate Accounts for the Contracts issued by the Separate Accounts and
(z) any current printed sales literature of either
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Separate Account related to the Contracts that is delivered to the Trust and as
to which the Trust has not objected by notice to Western-Southern given in
accordance with Section 12.
6. Administrative Services to Contract Owners. Administrative services
to Contract owners shall be the responsibility of Western-Southern and shall not
be the responsibility of the Trust. The Trust recognizes that Western-Southern,
through the Separate Accounts and the Sub-Accounts, will be the sole shareholder
of the Trust and the Funds for the benefit of owners of the Contracts.
7. Disclosures.
(a) The Trust will provide Western-Southern, after the end of each
fiscal year, with such investment advisory data and other
expense data of each Fund for the fiscal year, and with such
other information as may be necessary, to enable
Western-Southern to fulfill, on a timely basis, its prospectus
disclosure obligations under state and/or federal securities
laws and its obligations under variable annuity insurance
requirements.
(b) The Trust will provide Western-Southern, as soon as reasonably
practical after the end of each fiscal year, with all
information regarding the Funds required by Western-Southern
to meet the requirements imposed on it and/or the Separate
Accounts and the Sub-Accounts pursuant to Rule 30d-2
promulgated by the SEC under the 1940 Act.
(c) The Trust will promptly disclose in writing to
Western-Southern any information regarding the Trust, or any
Fund, that is reasonably required by Western-Southern in order
to cause the information regarding the Trust and the Funds
included in the prospectuses, statements of additional
information and other disclosure documents then being used by
Western-Southern in connection with its offering of the
Contracts to conform to the representations and covenants made
in Section 1.1.
8. Voting. So long as, and to the extent that, the SEC continues to
interpret the 1940 Act to require (and so long as any state insurance department
or agency having jurisdiction requires) pass-through voting privileges for
variable contract owners, the Trust will provide Western-Southern, on a timely
basis and at no cost to Western-Southern, with sufficient copies of all proxy
material for distribution to the Contract owners. Western-Southern will
distribute all the material and will vote shares in the Fund in accordance with
instructions received from the Contract owners. Western-Southern shall vote
those shares for which no instructions have been received in the same proportion
as the portion for which instructions have been received from Contract owners.
Western-Southern will not recommend or oppose action in connection with any such
vote or interfere with any such solicitation of proxies.
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9. Insurance. The Trust shall maintain, without cost or expense to
Western-Southern, (y) fidelity bond coverage in an amount not less than the
minimum coverage required by Rule 17g-1 under the 1940 Act, and (z) errors and
omissions coverage in an amount and with companies reasonably acceptable to
Western-Southern. The Trust and each Fund shall be named insureds under each
such coverage. At the request of Western-Southern, which may be made not more
frequently than twice in any calendar year, the Trust will supply, or cause the
company issuing such policies to supply, evidence in writing, satisfactory to
Western-Southern, that the bonds and other insurance policies called for by this
paragraph are then in force with such companies and in such amounts as either
comply with Rule 17g-1 or have been approved by Western-Southern.
10. Termination. This Agreement shall terminate as to the sale
and issuance of new Contracts:
(a) at the option of any party, upon not less than 60 days advance
written notice to the other parties;
(b) at the option of the Trust, with respect to any one or more of
the Funds, if the Trust determines and demonstrates to the
reasonable satisfaction of Western-Southern that liquidation
of the Fund or Funds is in the best interests of each Fund and
its beneficial owners; provided that any such Fund shall be
continued in operation for a sufficient period of time after
the determination to permit the substitution of the shares or
of another investment company for the shares of the Fund,
pursuant to SEC regulation;
(c) at the option of Western-Southern, immediately upon delivery
of written notice to the Trust, if (x) interests in any Fund
of the Trust are not available for any reason to meet the
requirements of the Contracts, as determined by
Western-Southern, provided that the termination shall be
effective only as to those Funds that are not reasonably
available, or (y) any one or more of the representations set
forth in Section 1.1 are, individually or in the aggregate,
materially untrue, or if the Trust breaches any one or more
of the terms of this Agreement and such breaches are,
individually or in the aggregate, material, or (z) any
combination of untrue representations and breaches of
agreement terms are, individually or in the aggregate,
material;
(d) at the option of the Trust, immediately upon delivery of
written notice to Western-Southern, upon institution of formal
proceedings against either Separate Account or
Western-Southern by the National Association of Securities
Dealers ("NASD"), the SEC or any other regulatory body;
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(e) at the option of Western-Southern, immediately upon delivery
of written notice to the Trust, upon institution of formal
proceedings against the Trust by the NASD, the SEC or any
other regulatory body;
(f) with respect to any Fund, if either the requisite vote of the
Contract owners having an interest in the Fund is obtained
for, or the SEC gives requisite approval to, the substitution
of the shares or interests of another investment company for
the shares of the Fund as investments for any one or more of
the Sub-Accounts; provided that Western-Southern gives the
Trust not less than 60 days prior written notice of either (y)
any such proposed vote of Contract owners or (z) any proposed
application for an order of substitution from the SEC; or
(g) if interests in the Funds are not issued or sold in
conformance with federal law or such law precludes the use of
shares in the Funds as an underlying investment media for the
Sub-Accounts or, indirectly, for the Contracts issued or to be
issued by Western-Southern. Prompt notice shall be given by
any party to the other such parties in the event the
conditions of this subparagraph (g) occur.
11. Termination Does Not Relieve Certain Obligations. Termination as
the result of any cause listed in Section 10, except as and in respect of any
Fund or Funds as to which this Agreement was terminated in accordance with
Section 10(b), shall not affect the obligation of the Trust to provide shares of
the Funds for investment by the Sub-Accounts (and all related information
required by Western-Southern, the Separate Accounts and the Sub-Accounts to meet
the requirements of the 1940 Act and the Code as to such investment) in
connection with the Contracts then in force for which the shares of the Funds
are serving as underlying investment media, unless the further sale of the
shares is proscribed by law, by the SEC or by any other regulatory body.
12. Notices. Any notice, claim, request or demand required by this
Agreement shall be in writing and shall be deemed to have been duly given on the
day delivered or transmitted by fax or on the third business day after mailing
(first class, postage prepaid) to the addresses or fax numbers set forth below:
(a) If to Western-Southern (for itself or on behalf of either
Separate Account or any Sub-Account):
Western-Southern Life Assurance Company
000 Xxxxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx
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with a copy to:
Xxxxxx X. Xxxxxxxxx
Vice President & General Counsel
Western-Southern Life Assurance Company
000 Xxxxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
(b) If to the Trust (for itself or on behalf of any of its Funds):
Touchstone Variable Series Trust
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. XxXxxxxx
with a copy to:
Xxxxx X. XxXxxxxxxx
Frost & Xxxxxx LLP
0000 XXX Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Fax: (000) 000-0000
13. No Waiver. The forbearance or neglect of any party to insist upon
strict compliance by any other party, with any of the provisions of this
Agreement, whether continuing or not, or to declare a termination against the
other parties, shall not be construed as a waiver or any of the rights or
privileges of any party hereunder. No waiver of any right or privilege of any
party arising from any default or failure of performance by any party shall
affect the rights or privileges of the other parties in the event of a further
default or failure of performance.
14. Assignment. No party to this Agreement may assign this Agreement
or any interest in the Agreement, by operation of law or otherwise, without
the prior written consent of all other parties to this Agreement.
15. Governing Law. This Agreement shall be construed and the provisions
of this Agreement interpreted under and in accordance with the laws of Ohio.
This Agreement shall be subject to the provisions of the federal securities
statutes, rules and regulations, including such exemptions from those statutes,
rules and regulations as the SEC may grant and the terms of this Agreement shall
be interpreted and construed in accordance therewith.
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16. Trust Liability. All persons dealing with the Trust must look
solely to the property of the Trust for the enforcement of any claims against
the Trust. None of the Trustees, officers, agents or shareholders of the Trust
shall be personally liable for obligations entered into on behalf of the Trust.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
1st day of January, 1999.
WESTERN-SOUTHERN LIFE ASSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Senior Vice President
TOUCHSTONE VARIABLE SERIES TRUST
By: /s/ Xxxx X. XxXxxxxx
Xxxx X. XxXxxxxx
President
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EXHIBIT A
Emerging Growth Sub-Account
International Equity Sub-Account
Income Opportunity Sub-Account
Value Plus Sub-Account
Growth & Income Sub-Account
Balanced Sub-Account
Bond Sub-Account
Standby Income Sub-Account
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EXHIBIT B
Touchstone Emerging Growth Fund
Touchstone International Equity Fund
Touchstone Income Opportunity Fund
Touchstone Value Plus Fund
Touchstone Growth & Income Fund
Touchstone Balanced Fund
Touchstone Bond Fund
Touchstone Standby Income Fund
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