Exhibit 8
Forms of Participation Agreements:
(d) Xxxxxxxxx Xxxxxx Advisers Management Trust
(e) Xxxxxxxxxxx Variable Account Funds
(f) Deutsche Asset Management VIT Funds
(g) Franklin Xxxxxxxxx Variable Insurance Products Trust
(h) Xxx Xxx Worldwide Insurance Trust
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the day of , 2002, by and between XXXXXXXXX
XXXXXX ADVISERS MANAGEMENT TRUST ("TRUST"), a Delaware business trust, ADVISERS
MANAGERS TRUST (Managers Trust"), a New York common law trust, XXXXXXXXX XXXXXX
MANAGEMENT INCORPORATED (" N B MANAGEMENT"), a New York corporation, and
AMERITAS VARIABLE LIFE INSURANCE COMPANY ("LIFE COMPANY"), a life insurance
company organized under the laws of the State of Virginia.
WHEREAS, TRUST and MANAGERS TRUST are registered with the Securities
and Exchange Commission ("MSEC") under the Investment Company Act of 1940, as
amended ("40 Act") as open-end, diversified management investment companies; and
WHEREAS, TRUST is organized as a series fund comprised of several
portfolios ("Portfolios"), the currently available of which are listed on
Appendix A hereto; and
WHEREAS, MANAGERS TRUST is organized as a series fund, comprised of
several portfolios ("Series"), the currently operational of which are listed on
Appendix A hereto; and
WHEREAS, each Portfolio of TRUST will invest all of its net investable
assets in a corresponding Series of MANAGERS TRUST; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts of such life
insurance companies ("Participating Insurance Companies") and also offers its
shares to certain qualified pension and retirement plans; and
WHEREAS, TRUST has received an order from the SEC, dated May 5, 1995
(File No. 812-9164), granting Participating Insurance Companies and their
separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a)
and 15(b) of the '40 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Portfolios of the TRUST to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated life insurance companies and
certain qualified pension and retirement plans (the "Order"); and
WHEREAS, LIFE COMPANY has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and is
desirous of having TRUST as one of the underlying funding vehicles for such
Variable Contracts; and
WHEREAS, N B MANAGEMENT is registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940 and as a broker-dealer under
the Securities Exchange Act of 1934, as amended; and
WHEREAS, N B MANAGEMENT is the administrator and distributor of the
shares of each Portfolio of TRUST and investment manager of the corresponding
Series of MANAGERS TRUST; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
LIFE COMPANY at net asset value;
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NOW, THEREFORE, in consideration of their mutual promises, LIFE
COMPANY, TRUST , MANAGERS TRUST and N B MANAGEMENT agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY shares of the selected Portfolios as listed on Appendix B for investment
of purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in TRUST's Prospectus.
1.2 TRUST agrees to sell to LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of TRUST for receipt of such orders from LIFE
COMPANY and receipt by such designee shall constitute receipt by TRUST; provided
that TRUST receives 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 TRUST calculates its net asset
value pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem for cash, on LIFE COMPANY's request, any
full or fractional shares of TRUST held by LIFE COMPANY, executing such requests
on a daily basis at the net asset value next computed after receipt by TRUST or
its designee of the request for redemption. For purposes of this Section 1.3,
LIFE COMPANY shall be the designee of TRUST for receipt of requests for
redemption from LIFE COMPANY and receipt by such designee shall constitute
receipt by TRUST; provided that TRUST receives notice of such request for
redemption by 9:30 a.m. New York time on the next following Business Day.
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to
LIFE COMPANY of any income dividends or capital gain distributions payable on
the shares of any Portfolio of TRUST. LIFE COMPANY hereby elects to receive all
such income dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. TRUST shall notify
LIFE COMPANY of the number of shares so issued as payment of such dividends and
distributions.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
If TRUST provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE COMPANY.
1.6 At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by LIFE COMPANY by 9:30 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
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1.7 If LIFE COMPANY's order requests the purchase of TRUST shares, LIFE
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. If LIFE COMPANY's order requests a net redemption resulting in a
payment of redemption proceeds to LIFE COMPANY, TRUST shall wire the redemption
proceeds to LIFE COMPANY by the next Business Day, unless doing so would require
TRUST to dispose of portfolio securities or otherwise incur additional costs,
but in such event, proceeds shall be wired to LIFE COMPANY within seven days and
TRUST shall notify the person designated in writing by LIFE COMPANY as the
recipient for such notice of such delay by 3:00 p.m. New York Time the same
Business Day that LIFE COMPANY transmits the redemption order to TRUST. If LIFE
COMPANY's order requests the application of redemption proceeds from the
redemption of shares to the purchase of shares of another fund administered or
distributed by N B MANAGEMENT, TRUST shall so apply such proceeds the same
Business Day that LIFE COMPANY transmits such order to TRUST .
1.8 TRUST agrees that all shares of the Portfolios of TRUST will be
sold only to Participating Insurance Companies which have agreed to participate
in TRUST to fund their Separate Accounts and/or to certain qualified pension and
other retirement plans, all in accordance with the requirements of Section
817(h) of the Internal Revenue Code of 1986, as amended ("Code") and Treasury
Regulation 1.817-5. Shares of the Portfolios of TRUST will not be sold directly
to the general public.
1.9 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the 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 Board of Trustees of TRUST, acting in good faith and
in light of its fiduciary duties under federal and any applicable state laws,
deemed necessary and in the best interests of the shareholders of such
Portfolios.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 LIFE COMPANY represents and warrants that it is an insurance
company duly organized and in good standing under the laws of Virginia and that
it has legally and validly established each Separate Account as a segregated
asset account under such laws, and that The Advisers Group, Inc., the principal
underwriter for the Contracts, is registered as a broker-dealer under the
Securities Exchange Act of 1934.
2.2 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
and further that the sale of the Variable Contracts shall comply in all material
respects with state insurance law suitability requirements.
2.4 LIFE COMPANY represents and warrants that the Variable Contracts
are currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
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2.5 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. TRUST shall amend its registration statement under the '33 Act and
the '40 Act from time to time as required in order to effect the continuous
offering of its shares. TRUST shall register and qualify its shares for sale in
accordance with the laws of the various states only if and to the extent deemed
necessary.
2.6 TRUST represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply or might not
so comply and will immediately take all reasonable steps to adequately diversify
the Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.
2.7 TRUST represents and warrants that each Portfolio invested in by
the Separate Account is currently qualified as a "regulated investment company"
under Subchapter M of the Code, that it will make every effort to maintain such
qualification and will notify LIFE COMPANY immediately upon having a reasonable
basis for believing it has ceased to so qualify or might not so qualify in the
future.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials) prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes to which an issuer is subject on the issuance and transfer of its
shares.
3.2 TRUST will bear the printing costs (or duplicating costs with
respect to the statement of additional information) and mailing costs associated
with the delivery of the following TRUST (or individual Portfolio) documents,
and any supplements thereto, to existing Variable Contract owners of LIFE
COMPANY who have elected to participate in the series:
(i) prospectuses and statements of additional information;
(ii) annual and semi-annual reports; and
(iii) proxy materials.
LIFE COMPANY will submit any bills for printing, duplicating
and/or mailing costs, relating to the TRUST documents described above, to TRUST
for reimbursement by TRUST. LIFE COMPANY shall monitor such costs and shall use
its best efforts to control these costs. LIFE COMPANY will provide TRUST on a
semi-annual basis, or more frequently as reasonably requested by TRUST, with a
current tabulation of the number of existing Variable Contract owners of LIFE
COMPANY whose Variable Contract values are invested in TRUST. This tabulation
will be sent to TRUST in the form of a letter signed by a duly authorized
officer of LIFE COMPANY attesting to the accuracy of the information contained
in the letter. If requested by LIFE COMPANY, the TRUST shall provide such
documentation (including a final copy of the TRUST's prospectus as set in type
or in camera-ready copy) and other assistance as is reasonably necessary in
order for LIFE COMPANY to print together in one document the current prospectus
for the Variable Contracts issued by LIFE COMPANY and the current prospectus for
the TRUST. Should LIFE COMPANY wish to print any of these documents in a format
different from that provided by TRUST, LIFE COMPANY shall provide
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Trust with sixty (60) days' prior written notice and LIFE COMPANY shall bear the
cost associated with any format change.
3.3 TRUST will provide, at its expense, LIFE COMPANY with the following
TRUST (or individual Portfolio) documents, and any supplements thereto, with
respect to prospective Variable Contract owners of LIFE COMPANY:
(i) camera-ready copy of the current prospectus for printing by
the LIFE COMPANY;
(ii) a copy of the statement of
additional information suitable for duplication;
(iii) camera-ready copy of proxy material suitable for printing;
and
(iv) camera-ready copy of the annual and semi-annual reports for
printing by the LIFE COMPANY.
3.4 TRUST will provide LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. LIFE
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 LIFE COMPANY will furnish, or will cause to be furnished, to TRUST
and N B MANAGEMENT, each piece of sales literature or other promotional material
in which TRUST , MANAGERS TRUST or N B MANAGEMENT is named, at least fifteen
(15) Business Days prior to its intended use. No such material will be used if
TRUST, MANAGERS TRUST or N B MANAGEMENT objects to its use in writing within ten
(10) Business Days after receipt of such material.
4.2 TRUST and N B MANAGEMENT will furnish, or will cause to be
furnished, to LIFE COMPANY, each piece of sales literature or other promotional
material in which LIFE COMPANY or its Separate Accounts are named, at least
fifteen (15) Business Days prior to its intended use. No such material will be
used if LIFE COMPANY objects to its use in writing within ten (10) Business
Days after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
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4.5 For purposes of this Article IV, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, 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 (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
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 National Association of Securities Dealers, Inc.
rules, the '40 Act or the '33 Act.
Article V. POTENTIAL CONFLICTS
5.1 The Board of Trustees of TRUST and MANAGERS TRUST (the "Boards")
will monitor TRUST and MANAGERS TRUST, respectively, (collectively the "Funds"),
for the existence of any material irreconcilable conflict between the interests
of the Variable Contract owners of Participating Insurance Company Separate
Accounts investing in the Funds. A material irreconcilable conflict may arise
for a variety of reasons, including: (a) state insurance regulatory authority
action; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling, 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 the Funds are being managed; (e) a difference
in voting instructions given by variable annuity and variable life insurance
contract owners or by contract owners of different Participating Insurance
Companies; or (f) a decision by a Participating Insurance Company to disregard
voting instructions of Variable Contract owners.
5.2 LIFE COMPANY will report any potential or existing conflicts to the
Boards. LIFE COMPANY will be responsible for assisting each appropriate Board in
carrying out its responsibilities under the Conditions set forth in the notice
issued by the SEC for the Funds on April 12, 1995 (the "Notice") (Investment
Company Act Release No. 21003), which LIFE COMPANY has reviewed, by providing
each appropriate Board with all information reasonably necessary for it to
consider any issues raised. This responsibility includes, but is not limited to,
an obligation by LIFE COMPANY to inform each appropriate Board whenever Variable
Contract owner voting instructions are disregarded by LIFE COMPANY. These
responsibilities will be carried out with a view only to the interests of the
Variable Contract owners.
5.3 If a majority of the Board of a Fund or a majority of its
disinterested trustees or directors, determines that a material irreconcilable
conflict exists, affecting the LIFE COMPANY, LIFE COMPANY, at its expense and to
the extent reasonably practicable (as determined by a majority of disinterested
trustees or directors), will take any steps necessary to remedy or eliminate the
irreconcilable material conflict, including: (a) withdrawing the assets
allocable to some or all of the Separate Accounts from the Funds or any series
thereof and reinvesting those assets in a different investment medium, which may
include another series of TRUST or MANAGERS TRUST, or another investment company
or submitting the question as to whether such segregation should be implemented
to a vote of all affected Variable Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., Variable Contract owners
of one or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected Variable Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account. If a material irreconcilable
conflict arises because of LIFE COMPANY's decision to disregard Variable
Contract owner voting instructions, and that decision represents a minority
position or would preclude a
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majority vote, LIFE COMPANY may be required, at the election of the relevant
Fund, to withdraw its Separate Account's investment in such Fund, and no charge
or penalty will be imposed as a result of such withdrawal. The responsibility to
take such remedial action shall be carried out with a view only to the interests
of the Variable Contract owners.
For the purposes of this Section 5.3, a majority of the
disinterested members of the applicable Board shall determine whether or not any
proposed action adequately remedies any irreconcilable material conflict, but in
no event will the relevant Fund or N B MANAGEMENT (or any other investment
adviser of the Funds) be required to establish a new funding medium for any
Variable Contract. Further, LIFE COMPANY shall not be required by this Section
5.3 to establish a new funding medium for any Variable Contract if any offer to
do so has been declined by a vote of a majority of Variable Contract owners
materially affected by the irreconcilable material conflict.
5.4 Any Board's determination of the existence of an irreconcilable
material conflict and its 1mplications shall be made known promptly and in
writing to LIFE COMPANY.
5.5 No less than annually, LIFE COMPANY shall submit to the Boards such
reports, materials or data as such Boards may reasonably request so that the
Boards may fully carry out the obligations imposed upon them by these
Conditions. Such reports, materials, and data shall be submitted more frequently
if deemed appropriate by the applicable Boards.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners. This
condition will apply to UIT -Separate Accounts investing in TRUST and to
managed separate accounts investing in MANAGERS TRUST to the extent a vote is
required with respect to matters relating to MANAGERS TRUST. Accordingly, LIFE
COMPANY, where applicable, will vote shares of a Fund held in its Separate
Accounts in a manner consistent with voting instructions timely received from
its Variable Contract owners. LIFE COMPANY will be responsible for assuring that
each of its Separate Accounts that participates in any Fund calculates voting
privileges in a manner consistent with other participants as defined in the
Conditions set forth in the Notice ("Participants"). The obligation to calculate
voting privileges in a manner consistent with all other Separate Accounts
investing in a Fund will be a contractual obligation of all Participants under
the agreements governing participation in the Funds. Each Participant will vote
shares for which it has not received timely voting instructions, as well as
shares it owns, in the same proportion as its votes those shares for which it
has received voting instructions.
6.2 If and to the extent 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 '40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Order,
then TRUST, MANAGERS TRUST and/or the Participants, as appropriate, shall take
such steps as may be necessary to comply with Rule 6e-2 and Rule 6e-3(T), as
amended, and Rule 6e-3, as adopted, to the extent such Rules are applicable.
Article VII. INDEMNIFICA TION
7 .1 Indemnification by LIFE COMPANY. LIFE COMPANY agrees to indemnify
and hold harmless TRUST, MANAGERS TRUST, N B MANAGEMENT and each of their
Trustees, directors, officers, employees and agents and each person, if any, who
controls TRUST or MANAGERS TRUST or N B MANAGEMENT within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified
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Parties" for purposes of this Article VII) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of LIFE COMPANY, which consent shall not be unreasonably withheld) or
litigation (including lega1 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 are related to the sale or
acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the
Registration Statement or prospectus for the Variable Contracts
or contained in the Variable Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to LIFE COMPANY by or on behalf of TRUST
for use in the registration statement or prospectus for the
Variable Contracts or in the Variable Contracts or sales
literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Variable Contracts or TRUST
shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of TRUST
not supplied by LIFE COMPANY, or persons under its control) or
wrongful conduct of LIFE COMPANY or persons under its control,
with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature of TRUST or any amendment thereof
or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such
statement or omission or such alleged statement or omission was
made in reliance upon and in conformity with information
furnished to TRUST by or on behalf of LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to substantially
provide the services and furnish the materials under the terms of
this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this
Agreement or arise out of or result from any other material
breach of this Agreement by LIFE COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement or to
TRUST, whichever is applicable.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such
8
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify LIFE COMPANY of any such claim shall not relieve
LIFE COMPANY from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against an
Indemnified Party, LIFE COMPANY shall be entitled to participate at its own
expense in the defense of such action. LIFE COMPANY also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from LIFE COMPANY to such party of LIFE COMPANY's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and LIFE COMPANY will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7 .4 Indemnification by N B MANAGEMENT: N B MANAGEMENT agrees to
indemnify and hold harmless LIFE COMPANY and each of its directors, officers,
employees, and agents and each person, if any, who controls LIFE COMPANY within
the meaning of Section 15 of the '33 Act (collectively, the "Indemnified
Parties" for the purposes of this Article VII) against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of N B MANAGEMENT which consent shall not be unreasonably
withheld) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, or regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of TRUST
(or any amendment or supplement to any of the foregoing), or
arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not
apply as to any Indemnified Party if such statement or omission
or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to N B MANAGEMENT or
TRUST by or on behalf of LIFE COMPANY for use in the registration
statement or prospectus for TRUST or in sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Variable contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Variable Contracts not supplied by N B MANAGEMENT or persons
under its control) or wrongful conduct of TRUST or N B MANAGEMENT
or persons under their control, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, or sales literature covering the Variable 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 statements therein not
misleading, if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to LIFE COMPANY for inclusion therein
by or on behalf of TRUST; or
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(d) arise as a result of (i) a failure by TRUST to substantially
provide the services and furnish the materials under the terms of
this Agreement; or (ii) a failure by a Portfolio(s) invested in
by the Separate Account to comply with the diversification
requirements of Section 817(h) of the Code; or (iii) a failure by
a Portfolio(s) invested in by the Separate Account to qualify as
a regulated investment company" under Subchapter M of the Code;
or
(e) arise out of or result from any material breach of any
representation and/or warranty made by N B MANAGEMENT in this
Agreement or arise out of or result from any other material
breach of this Agreement by N B MANAGEMENT.
7.5 N B MANAGEMENT shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
to which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
LIFE COMPANY.
7.6 N B MANAGEMENT shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified N B MANAGEMENT in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify N B MANAGEMENT of
any such claim shall not relieve N B MANAGEMENT from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, N B MANAGEMENT shall be entitled to participate
at its own expense in the defense thereof . N B MANAGEMENT also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from N B MANAGEMENT to such party of N B
MANAGEMENT'S election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and N B
MANAGEMENT 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.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the
following provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the date
hereof upon 120 days' notice, unless a shorter time is agreed to
by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined by LIFE COMPANY. Prompt notice of election to
terminate shall be furnished by LIFE COMPANY, said termination to
be effective ten days after receipt of notice unless TRUST makes
available a sufficient number of shares to reasonably meet the
requirements of the Variable Contracts within said ten-day
period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST by the SEC, or any other regulatory
body, the expected or anticipated ruling,
10
judgment or outcome of which would, in LIFE COMPANY's reasonable
judgment, materially impair TRUST's ability to meet and perform
TRUST's obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by LIFE COMPANY with
said termination to be effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY by the SEC, the National
Association of Securities Dealers, Inc., or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of
which would, in TRUST's reasonable judgment, materially impair
LIFE COMPANY's ability to meet and perform its obligations and
duties hereunder. Prompt notice of election to terminate shall be
furnished by TRUST with said termination to be effective upon
receipt of notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law
precludes the use of such shares as the underlying investment
medium of Variable Contracts issued or to be issued by LIFE
COMPANY. Termination shall be effective upon such occurrence
without notice;
(f) At the option of TRUST if the Variable Contracts cease to qualify
as annuity contracts or life insurance contracts, as applicable,
under the Code, or if TRUST reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall be effective
upon receipt of notice by LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon TRUST's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of LIFE COMPANY within ten days after
written notice of such breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement, which breach has not been
cured to the satisfaction of TRUST within ten days after written
notice of such breach is delivered to LIFE COMPANY;
(i} At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately upon
such occurrence without notice;
(j) In the event this Agreement is assigned without the prior written
consent of LIFE COMPANY, TRUST, MANAGERS TRUST and N B
MANAGEMENT, termination shall be effective immediately upon such
occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or LIFE COMPANY, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in TRUST,
redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, TRUST and N B MANAGEMENT, as
promptly as is practicable under the circumstances, shall notify LIFE COMPANY
whether TRUST elects to continue to make TRUST shares available after such
termination. If TRUST shares continue to be made available after such
termination, the provisions of this Agreement shall remain
11
in effect and thereafter either TRUST or LIFE COMPANY may terminate the
Agreement, as so continued pursuant to this Section 8.3, upon sixty (60) days
prior written notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the Separate
Accounts), and LIFE COMPANY shall not prevent Variable Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Variable Contracts, until thirty (30) days after the LIFE COMPANY shall have
notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or 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.
If to TRUST, MANAGERS TRUST or N B MANAGEMENT:
Xxxxxxxxx Xxxxxx Management Incorporated
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx, General Counsel
If to LIFE COMPANY:
Ameritas Variable Life Insurance Company
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 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. Nothing herein shall be construed to apply New
York Insurance Law to LIFE COMPANY.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10. 5 The parties agree that the assets and liabilities of each Series
are separate and distinct from the assets and liabilities of each other Series.
No Series shall be liable or shall be charged for any debt, obligation or
liability of any other Series. No Trustee, officer or agent shall be personally
liable for
12
such debt, obligation or liability of any Series or Portfolio and no Portfolio
or other investor, other than the Portfolio or other investors investing in the
Series which incurs a debt, obligation or liability, shall be liable therefor .
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, 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.
10.7 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.
10.8 No provision of this Agreement may be 1ended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
MANAGERS TRUST, N B MANAGEMENT and the LIFE COMPANY.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
XXXXXXXXX XXXXXX
ADVISERS MANAGEMENT TRUST
By:
Name:
Title:
ADVISERS MANAGERS TRUST
By:
Name:
Title:
XXXXXXXXX XXXXXX
MANAGEMENT INCORPORATED
By:
Name:
Title:
AMERITAS VARIABLE LIFE INSURANCE
COMPANY
By:
Name: Xxxxxxx X. Xxxxxxxx
Title: President and COO
13
Appendix A
Xxxxxxxxx Xxxxxx Advisers Corresponding Series of
Management Trust and its Series (Portfolios) Advisers Managers Trust (Series)
-------------------------------------------- --------------------------------
Balanced Portfolio AMT Balanced Investments
Government Income Portfolio AMT Government Income Investments
Growth Portfolio AMT Growth Investments
Limited Maturity Bond Portfolio AMT Limited Maturity Bond Investments
Liquid Asset Portfolio AMT Liquid Asset Investments
Partners Portfolio AMT Partners Investments
Appendix B
Separate Accounts
Ameritas Variable Separate Account VL
Ameritas Variable Separate Account VA
Selected Portfolios
Xxxxxxxxx Xxxxxx Advisers Management Trust Growth Portfolio
Xxxxxxxxx Xxxxxx Advisers Management Trust Limited Maturity Bond Portfolio
Xxxxxxxxx Xxxxxx Advisers Management Trust Partners Portfolio
PARTICIPATION AGREEMENT
Among
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS.
OPPENHEIMERFUNDS. INC.
and
AMERITAS VARIABLE LIFE INSURANCE COMPANY
THIS AGREEMENT (the "Agreement"), made and entered into as of
the th day of , 2002 by and among Ameritas Variable 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 and variable annuity contracts (collectively, the "Variable Insurance
Products") offered by insurance companies (hereinafter "Participating Insurance
Company");
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 Company 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);
1
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 2 attached hereto. as may be modified by
mutual consent from time to time);
WHEREAS. the Company have 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 intend to purchase shares in the Portfolios (the
Portfolios covered by this Agreement are specified in Schedule 3 attached hereto
as may be modified by mutual consent from time to time), on behalf of the
Accounts to fund the Contracts named in Schedule 2, 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 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 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 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 I 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 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.
2
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.
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 1.4 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 3 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.
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 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.
3
2.4. The Fund shall provide a copy of its current prospectus
for the portfolios named in Schedule 3 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 proxy material, 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 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 and shareholder reports prior to such
printing provided such materials have been provided within a reasonable period.
ARTICLE III. Fees and Expenses
3.1. The F und 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. If the Fund or the Adviser elects to have the Company
withdraw the Account's investment in the Fund for reasons other than the
existence of a material irreconcilable conflict between the interests of the
Contract owners of all separate accounts investing in the Fund, then the Fund or
the Advisor shall pay the Company's out of pocket costs of obtaining a
substitution order. All other 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 bear the expenses of typesetting,
printing and distributing the Fund's prospectus, proxy materials and reports to
owners of Contracts issued by the Company.
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 3
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
4
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
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 company 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 their 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 Company) that votes in favor of such
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.
5
4.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting instructions and that
decision 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; 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 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
1933,1934 and 1940 Acts. and the rules and regulations and rulings thereunder,
including such exemptions from those statutes. rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
6
to, the Mixed and Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE VI. Termination
6.1 This Agreement shall terminate with respect to some
or all Portfolios:
(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
c/o OppenheimerFunds, Inc.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Legal Department
If to the Adviser:
OppenheimerFunds. Inc.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
If to the Company:
Ameritas Variable Life Insurance Company
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
7
ARTICLE VIII. Miscellaneous
8.1. Subject to the requirements of legal process and
regulatory authority, each party hereto shall treat as confidential the names
and addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except as
permitted by this Agreement, shall not disclose, disseminate or utilize such
names and addresses and other confidential information without the express
written consent of the affected party until such time as it may come into the
public domain.
8.2. 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.
8.3. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall constitute one and the
same instrument.
8.4. 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.
8.5. 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 NASD and state
insurance regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating to
this Agreement or the transactions contemplated hereby.
8.6. 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.
8.7. It is understood by the parties that this Agreement
is not an exclusive arrangement in any respect.
8.8. 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.
8.9. This Agreement shall not be assigned by any party
hereto without the prior written consent of all the parties.
8.10. 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.
8
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.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
By:______________________________
Xxxxxxx X. Xxxxxxxx
Title: President and COO
Date:
XXXXXXXXXXX VARIABLE ACCOUNT FUNDS
By:
Print:
Title:
Date:
OPPENHEIMERFUNDS, INC.
By:
Print:
Title:
Date:
9
SCHEDULE l
Ameritas Variable Separate Account VL ("Separate Account VL")
Ameritas Variable Separate Account VA ("Separate Account VA")
10
SCHEDULE 2
Variable Contracts:
Allocator 2000
Allocator 2000 Annuity
Regent 2000
Executive Select
AVLIC Designer Annuity
11
SCHEDULE 3
Portfolios of Xxxxxxxxxxx Variable Account Funds:
OppenheimerFunds Capital Appreciation Fund/VA
OppenheimerFunds Aggressive Growth Fund/VA
OppenheimerFunds Main Street Growth & Income Fund/VA
OppenheimerFunds High Income Fund/VA
OppenheimerFunds Strategic Bond Fund/VA
12
PARTICIPATION AGREEMENT AMONG
DEUTSCHE ASSET MANAGEMENT VIT FUNDS AND
AMERITAS VARIABLE LIFE INSURANCE COMPANY
THIS AGREEMENT made as of the__________ day of________________ , 2002
by and among DEUTSCHE ASSET MANAGEMENT VIT FUNDS ("TRUST"), a Massachusetts
business trust, DEUTSCHE ASSET MANAGEMENT, INC. ("ADVISER"), a New York banking
corporation, and AMERITAS VARIABLE LIFE INSURANCE COMPANY ("AVLIC"), a life
insurance company organized under the laws of the Commonwealth of Virginia.
WHEREAS, TRUST is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the "40
Act"), as an open-end, diversified management investment company; and
WHEREAS, TRUST is comprised of several series funds (each a
"Portfolio"), with those Portfolios currently available being listed on Appendix
A hereto; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, TRUST may also offer its shares to certain qualified pension
and retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has received an order from the SEC, granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the `40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Portfolios of the TRUST to be sold to and held by Variable
Contract Separate Accounts of both affiliated and unaffiliated Participating
Insurance Companies and Qualified Plans ("Exemptive Order"); and
WHEREAS, AVLIC has established or will establish one or more Separate
Accounts to offer Variable Contracts and is desirous of having TRUST as one of
the underlying funding vehicles for such Variable Contracts; and
WHEREAS, ADVISER is a "bank" as defined in the Investment Advisers Act
of 1940, as amended (the " Advisers Act") and as such is excluded from the
definition of "Investment Adviser" and is not required to register as an
investment adviser pursuant to the Advisers Act; and
WHEREAS, ADVISER serves as the TRUST's investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, AVLIC intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
AVLIC at such shares' net asset value;
NOW, THEREFORE, in consideration of their mutual promises, AVLIC,
TRUST, and ADVISER agree as follows:
1
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the separate Accounts of AVLIC
shares of the selected portfolios as listed on Appendix B for investment of
purchase payments of Variable Contracts allocated to the designated Separate
Accounts as provided in TRUST's Registration Statement.
1.2 TRUST agrees to sell to AVLIC those shares of the selected
Portfolios of TRUST which AVLIC orders, executing such orders on a daily basis
at the net asset value next computed after receipt by TRUST or its designee of
the order for the shares of TRUST. For purposes of this Section 1.2, AVLIC shall
be the designee of TRUST for receipt of such orders from the designated separate
Account and receipt by such designee shall constitute receipt by TRUST; provided
that AVLIC receives the order by 4:00 p.m. New York time and TRUST receives
notice from AVLIC by telephone or facsimile (or by such other means as TRUST and
AVLIC may agree in writing) of such order by 8:00 a.m. New York time on the next
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which TRUST calculates its net asset value
pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem on AVLIC's request, any full or fractional
shares of TRUST held by AVLIC, executing such requests on a daily basis at the
net asset value next computed after receipt by TRUST or its designee of the
request for redemption, in accordance with the provisions of this Agreement and
TRUST's Registration statement. (In the event of a conflict between the
provisions of this Agreement and the Trust's Registration Statement, the
provisions of the Registration Statement shall govern.) For purposes of this
Section 1.3, AVLIC shall be the designee of TRUST for receipt of requests for
redemption from the designated Separate Account and receipt by such designee
shall constitute receipt by TRUST; provided that AVLIC receives the request for
redemption by 4:00 p.m. New York time and TRUST receives notice from AVLIC by
telephone or facsimile (or by such other means as TRUST and AVLIC may agree in
writing) of such request for redemption by 9:00 a.m. New York time on the next
Business Day.
1.4 TRUST shall furnish, as soon as it is announced by the applicable
Fund, and no later than each ex-dividend date, notice to AVLIC of any income
dividends or capital gain distributions payable on the shares of any Portfolio
of TRUST. AVLIC hereby elects to receive all such income dividends and capital
gain distributions as are payable on a Portfolio's shares in additional shares
of the Portfolio. TRUST shall notify AVLIC or its designee of the number of
shares so issued as payment of such dividends and distributions, and, as
applicable, ex-date, record date, payable date, distribution rate per share,
record date share balances, cash and invested payment amounts, and all other
information reasonably requested by AVLIC.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to AVLIC on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
In the event that adjustments are required to correct any error in the
computation of the net asset value of Portfolio shares, TRUST shall promptly
notify AVLIC after discovering the need for any adjustments which result in a
reimbursement of $150 or more to the Account for a Portfolio. Notification may
be made orally or via direct or indirect systems access. The letter shall be
written on TRUST letterhead, or the letterhead of TRUST'S administrator, and
must state for each day for which an error occurred the incorrect price, the
correct price, and to the extent communicated to the Portfolio's shareholder,
the reason for the price change. TRUST agrees that AVLIC may send this in
writing, or a derivation thereof (so long as the deviation is approved in
advance by TRUST, which approval shall not unreasonable be withheld) to Contract
owners who are affected by the price change.
2
1.6 If the Account received amounts in excess of the amounts to which
it would otherwise have been entitled prior to an adjustment for an error,
AVLIC, upon request by TRUST, will make a good faith attempt to collect such
excess amounts from the accounts of the Contract owners. In no event, however,
shall AVLIC be liable to TRUST for any such amounts.
1.7 If an adjustment is to be made in accordance with subsection 1.5
above to correct an error which has caused the Account to receive an amount less
that that to which it is entitled, TRUST shall make all necessary adjustments
(within the parameters specified in section 1.9) to the shares owned in the
Account and, to the extent of any underpayment, distribute to AVLIC the amount
of such underpayment for credit to the accounts of the Contract owners.
1.8 At the end of each Business Day, AVLIC shall use the information
described in Section 1.5 to calculate Separate Account unit values for the day.
Using these unit values, AVLIC shall process each such Business Day's Separate
Account transactions based on requests and premiums received by it by the close
of trading on the floor of the New York Stock Exchange (currently 4:00 p.m. New
York time) to determine the net dollar amount of TRUST shares which shall be
purchased or redeemed at that day's closing net asset value per share. The net
purchase or redemption orders so determined shall be transmitted to TRUST by
AVLIC by 8:00 a.m. New York Time on the Business Day next following AVLIC's
receipt of such requests and premiums in accordance with the terms of Sections
1.2 and 1.3 hereof.
1.9 If AVLIC's order requests the purchase of TRUST shares, AVLIC shall
pay for such purchase by wiring federal funds to TRUST or its designated
custodial account on the day the order is transmitted by AVLIC. If AVLIC's order
requests a net redemption resulting in a payment of redemption proceeds to
AVLIC, TRUST shall use its best efforts to wire the redemption proceeds to AVLIC
by the next Business Day, unless doing so would require TRUST to dispose of
Portfolio securities or otherwise incur additional costs. In any event, proceeds
shall be wired to AVLIC within the time period permitted by the `40 Act or the
rules, orders or regulations thereunder, and TRUST shall notify the person
designated in writing by AVLIC as the recipient for such notice of such delay by
3:00 p.m. New York Time on the same Business Day that AVLIC transmits the
redemption order to TRUST. If AVLIC's order requests the application of
redemption proceeds from the redemption of shares to the purchase of shares of
another Fund advised by ADVISER, TRUST shall so apply such proceeds on the same
Business Day that AVLIC transmits such order to TRUST.
1.10 TRUST agrees that all shares of the Portfolios of TRUST will be
sold only to Participating Insurance Companies which have agreed to participate
in TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the
TRUST's Portfolios will not be sold directly to the general public.
1.11 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
TRUST if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the TRUST
(the "Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Portfolios.
1.12 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to AVLIC or the Separate Accounts.
Shares ordered from Portfolio will be recorded in appropriate book entry titles
for the Separate Accounts.
3
1.13 TRUST agrees to provide AVLIC a statement of TRUST's assets as
soon as practicable and in any event within 30 days after the end of each
calendar quarter.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 AVLIC represents and warrants that it is an insurance company duly
organized and in good standing under the laws of the Commonwealth of Virginia
and that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that The Advisors Group, the
principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "34 Act").
2.2 AVLIC represents and warrants that it has registered or, prior to
any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the `40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the variable Contracts, unless an exemption from
registration is available.
2.3 AVLIC represents and warrants that the Variable Contracts will be
registered under the Securities Act of 1933 (the "33 Act") unless an exemption
from registration is available prior to any issuance or sale of the Variable
Contracts, and that the Variable Contracts will be issued and sold in compliance
in all material respects with all applicable federal and state laws (including
all applicable blue sky laws) and further that the sale of the Variable
Contracts shall comply in all material respects with applicable state insurance
law suitability requirements.
2.4 AVLIC represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the `33 Act and sold in
accordance with all applicable federal laws, and TRUST shall be registered under
the `40 Act prior to and at the time of any issuance or sale of such shares.
TRUST, subject to Section 1.9 above, shall amend its registration statement
under the `33Act and the `40 Act from time to time as required in order to
effect the continuous offering of its shares. TRUST shall register and qualify
its shares for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by TRUST.
2.6 TRUST represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify AVLIC immediately upon having a reasonable
basis for believing any Portfolio has ceased to comply and will immediately take
all reasonable steps to adequately diversify the Portfolio to achieve
compliance.
2.7 TRUST represents and warrants that each Portfolio invested in by
the Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify AVLIC immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
4
2.8 ADVISER represents and warrants that it shall perform its
obligations hereunder in compliance in all material respects with any applicable
state and federal laws.
Article III,. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 TRUST or its designee shall provide AVLIC, free of charge, with as
many copies of the current prospectus (or prospectuses), statements of
additional information, annual and semi-annual reports and proxy statements for
the shares of the Portfolios as AVLIC may reasonably request for distribution to
existing Variable Contract owners whose Variable Contracts are funded by such
shares. TRUST or its designee shall provide AVLIC, at AVLIC's expense, with as
many copies of the current prospectus (or prospectuses) for the shares as AVLIC
may reasonably request for distribution to prospective purchasers of Variable
Contracts. If requested by AVLIC, TRUST or its designee shall provide such
documentation (including a "camera ready" copy of the current prospectus (or
prospectuses) as set in type or, at the request of AVLIC, as a diskette in the
form sent to the financial printer) and other assistance as is reasonably
necessary in order for the parties hereto once a year (or more frequently if the
prospectus (or prospectuses) for the shares is supplemented or amended) to have
the prospectus for the Variable Contracts and the prospectus (or prospectuses),
for the TRUST shares printed together in one document. The expenses of such
printing will be apportioned between AVLIC and TRUST in proportion to the number
of pages of the Variable Contract and TRUST prospectus, taking account of other
relevant factors affecting the expense of printing, such as covers, columns,
graphs and charts; TRUST shall bear the cost of printing the TRUST prospectus
portion of such document for distribution only to owners of existing Variable
Contracts funded by the TRUST shares and AVLIC shall bear the expense of
printing the portion of such documents relating to the Separate Account;
provided, however, AVLIC shall bear all printing expenses of such combined
documents where used for distribution to prospective purchasers or to owners of
existing Variable Contracts not funded by the shares. In the event that AVLIC
requests that TRUST or its designee provide TRUST's prospectus in a "camera
ready" or diskette format, TRUST shall be responsible for providing the
prospectus (or prospectuses) in the format in which it is accustomed to
formatting prospectuses and shall bear the expense of providing the prospectus
(or prospectuses) in such format (e.g. typesetting expenses), and AVLIC shall
bear the expense of adjusting or changing the format to conform with any of its
prospectuses.
3.3 TRUST will provide AVLIC with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. AVLIC
will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
5
Article IV .SALES MATERIALS
4.1 AVLIC will furnish, or will cause to be furnished, to TRUST and
ADVISER, each piece of sales literature or other promotional material in which
TRUST or ADVISER is named, at least fifteen (15) Business Days prior to its
intended use. No such material will be used if TRUST or ADVISER objects to its
use in writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and ADVISER will furnish, or will cause to be furnished, to
AVLIC, each piece of sales literature or other promotional material in which
AVLIC or its separate Accounts are named, at least fifteen (15) Business Days
prior to its intended use. No such material will be used if AVLIC objects to its
use in writing within ten (10) Business Days after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of AVLIC or concerning AVLIC, the Separate
Accounts, or the Variable Contracts issued by AVLIC, other than the information
or representations contained in a registration statement or prospectus for such
Variable Contracts, as such registration statement and prospectus may be amended
or supplemented from time to time, or in reports of the Separate Accounts or
reports prepared for distribution to owners of such Variable Contracts, or in
sales literature or other promotional material approved by AVLIC or its
designee, except with the written permission of AVLIC.
4.4 AVLIC and its affiliates and agents shall not give any information
or make any representations on behalf of TRUST or concerning TRUST other than
the information or representations contained in a registration statement or
prospectus for TRUST, as such registration statement and prospectus may be
amended or supplemented from time to time, or in sales literature or other
promotional material approved by TRUST or its designee, except with the written
permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, 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 (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
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 National Association of Securities Dealers, Inc.
("NASD") rules, the `40 Act, the `33 Act or rules thereunder.
Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that TRUST has received an order from the
SEC granting relief from various provisions of the `40 Act and the rules
thereunder to the extent necessary to permit TRUST shares to be sold to and held
by Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. The Exemptive Order
requires TRUST and each participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Section 5. The
TRUST will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings as are
imposed on AVLIC hereby.
6
5.2 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of all
separate accounts and with participants of Qualified Plans investing in TRUST.
An irreconcilable material conflict may arise for a variety of reasons, which
may include: (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 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 TRUST are being managed; (e) a difference in voting instructions
given by Variable Contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Variable Contract owners and (g)
if applicable, a decision by a Qualified Plan to disregard the voting
instructions of plan participants.
5.3 AVLIC will report any potential or existing conflicts of which it
becomes aware to the Board. AVLIC will be responsible for assisting the Board in
carrying out its duties in this regard by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
The responsibility includes, but is not limited to, an obligation by the AVLIC
to inform the Board whenever it has determined to disregard Variable Contract
owner voting instructions. These responsibilities of AVLIC will be carried out
with a view only to the interests of the Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested
Trustees, determines that a material irreconcilable conflict exists affecting
AVLIC, AVLIC, at its expense and to the extent reasonably practicable (as
determined by a majority of the Board's disinterested Trustees), will take any
steps necessary to remedy or eliminate the irreconcilable material conflict,
including; (a) withdrawing the assets allocable to some or all of the Separate
Accounts from TRUST or any Portfolio thereof and reinvesting those assets in a
different investment medium, which may include another portfolio of TRUST, or
another investment company; (b) submitting the question as to whether such
segregation should be implemented to a vote of all affected variable Contract
owners and as appropriate, segregating the assets of any appropriate group
(i.e., variable annuity or variable life insurance Contract owners of one or
more Participating Insurance Companies) that votes in favor of such segregation,
or offering to the affected Variable Contract owners the option of making such a
change; and (c) establishing a new registered management investment company (or
series thereof) or managed separate account. If a material irreconcilable
conflict arises because of AVLIC's decision to disregard Variable Contract owner
voting instructions, and that decision represents a minority position or would
preclude a majority vote, AVLIC may be required, at the election of TRUST, to
withdraw the separate Account's investment in TRUST, and no charge or penalty
will be imposed as a result of such withdrawal. The responsibility to take such
remedial action shall be carried out with a view only to the interests of the
Variable Contract owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
TRUST or ADVISER (or any other investment adviser of TRUST) be required to
establish a new funding medium for any Variable Contract. Further, AVLIC shall
not be required by this Section 5.4 to establish a new funding medium for any
Variable contracts if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to AVLIC.
7
5.6 No less than annually, AVLIC shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
Article VI. VOTING
6.1 AVLIC will provide pass-through voting privileges to all Variable
Contract owners so long as the SEC continues to interpret the `40 Act as
requiring pass-through voting privileges for Variable Contract owners.
Accordingly, AVLIC, where applicable, will vote shares of the Portfolio held in
its Separate Accounts in a manner consistent with voting instructions timely
received from its Variable Contract owners. AVLIC will be responsible for
assuring that each of its Separate Accounts that participates in TRUST
calculates voting privileges in a manner consistent with other Participating
Insurance Companies. AVLIC will vote shares for which it has not received timely
voting instructions, as well as shares it owns, in the same proportion as its
votes those shares for which it has received voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the `40
Act or the rules thereunder with respect to mixed and shared funding on terms
and conditions materially different from any exemptions granted in the Exemptive
Order, then TRUST, and/or the participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
Article VII. INDEMNIFICATION
7.1 Indemnification by AVLIC. AVLIC agrees to indemnify and hold
harmless TRUST, ADVISER and each of their Trustees, directors, principals,
officers, employees and agents and each person, if any, who controls TRUST or
ADVISER within the meaning of Section 15 of the `33 Act (Collectively, the
"Indemnified Parties") against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of AVLIC, which
consent shall not be unreasonably withheld) or litigation or threatened
litigation (including 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 are related to the sale or
acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Variable Contracts or contained in the
Variable Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished in writing to AVLIC by or on behalf of TRUST for
use in the registration statement or prospectus for the Variable
Contracts or in the Variable Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with the
sale of the Variable Contracts or TRUST shares; or
(b) arise out of or result from (i) statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature of TRUST not supplied by
AVLIC, or persons under its control) or (ii) wrongful conduct of AVLIC
or
8
persons under its control, with respect to the sale or distribution
of the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature of TRUST or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished in writing to TRUST by or on behalf of AVLIC; or
(d) arise as a result of any failure by AVLIC to provide substantially
the services and furnish the materials under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by AVLIC in this Agreement or arise
out of or result from any other material breach of this Agreement by
AVLIC.
7.2 AVLIC shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified party to the extent that such losses, claims,
damages, liabilities or litigation are attributable to such Indemnified party's
willful misfeasance, bad faith, or gross negligence in the performance of such
Indemnified party's duties or by reason of such indemnified party's reckless
disregard of obligations or duties under this Agreement.
7.3 AVLIC shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified party unless such Indemnified
party shall have notified AVLIC in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify AVLIC of any such claim shall not relieve AVLIC
from any liability which it may have to the Indemnified party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against an Indemnified party, AVLIC shall be
entitled to participate at its own expense in the defense of such action. AVLIC
also shall be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from AVLIC to such party of
AVLIC's election to assume the defense thereof, the Indemnified party shall bear
the fees and expenses of any additional counsel retained by it, and AVLIC will
not be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.4 Indemnification by TRUST. TRUST agrees to indemnify and hold
harmless AVLIC and each of its directors, officers, employees, and agents and
each person, if any, who controls AVLIC within the meaning of Section 15 of the
`33 Act (collectively, the "Indemnified Parties") against any and all losses,
claims, damages, liabilities (including amounts paid in settlement with the
written consent of TRUST which consent shall not be unreasonably withheld) or
litigation or threatened litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of TRUST's shares or the variable Contracts
and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of TRUST (or any amendment
or supplement to any of the foregoing), or arise out of or are based
upon the
9
omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified party if such statement or omission or
such alleged statement or omission was made in reliance upon and in
conformity with information furnished in writing to ADVISER or TRUST by
or on behalf of AVLIC for use in the registration statement or
prospectus for TRUST or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Variable Contracts or TRUST shares; or
(b) arise out of or result from (i) statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature for the Variable Contracts
not supplied by ADVISER or TRUST or persons under its control) or (ii)
gross negligence or wrongful conduct or willful misfeasance of TRUST or
persons under its control, with respect to the sale or distribution of
the Variable Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or
sales literature covering the Variable 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 statements therein not misleading, if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in writing
to AVLIC for inclusion therein by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to provide
substantially the services and furnish the materials under the terms of
this Agreement; or (ii) a failure by a Portfolio(s) invested in by the
Separate Account to comply with the diversification requirements of
Section 817(h) of the Code; or (iii) a failure by a Portfolio(s)
invested in by the Separate Account to qualify as a "regulated
investment company" under Subchapter M of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by TRUST in this Agreement or arise
out of or result from any other material breach of this Agreement by
TRUST .
7.5 TRUST shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party to the extent that such losses, claims,
damages, liabilities or litigation are attributable to such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the performance of such
Indemnified party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement.
7.6 TRUST shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified party unless such Indemnified
Party shall have notified TRUST in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified party shall have received notice of such service on any designated
agent), but failure to notify TRUST of any such claim shall not relieve TRUST
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified parties, TRUST shall
be entitled to participate at its own expense in the defense thereof. TRUST also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from TRUST to such party of TRUST's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and TRUST will not
be liable to such party under this Agreement for any legal or
10
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
Article VIII. TERM: TERMINATION
8.1 This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of AVLIC or TRUST at any time from the date hereof
upon 180 days' notice, unless a shorter time is agreed to by the
parties;
(b) At the option of AVLIC, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as
determined by AVLIC. Prompt notice of election to terminate shall be
furnished by AVLIC, said termination to be effective ten days after
receipt of notice unless TRUST makes available a sufficient number of
shares to reasonably meet the requirements of the Variable Contracts
within said ten-day period;
(c) At the option of AVLIC, upon the institution of formal proceedings
against TRUST by the SEC, the NASD, or any other regulatory body, the
expected or anticipated ruling, judgment or outcome of which would, in
AVLIC's reasonable judgment, materially impair TRUST's ability to meet
and perform TRUST's obligations and duties hereunder. prompt notice of
election to terminate shall be furnished by AVLIC with said termination
to be effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal proceedings
against AVLIC and/or its broker-dealer affiliates by the SEC, the NASD,
or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in TRUST's reasonable judgment,
materially impair AVLIC's ability to meet and perform its obligations
and duties hereunder. prompt notice of election to terminate shall be
furnished by TRUST with said termination to be effective upon receipt
of notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes
the use of such shares as the underlying investment medium of Variable
Contracts issued or to be issued by AVLIC. Termination shall be
effective upon such occurrence without notice; (f) At the option of
TRUST if the Variable Contracts cease to qualify as annuity contracts
or life insurance contracts, as applicable, under the Code, or if TRUST
reasonably believes that the Variable Contracts may fail to so qualify.
Termination shall be effective upon receipt of notice by AVLIC;
(f) At the option of AVLIC, upon TRUST's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of AVLIC within ten days after written notice of such
breach is delivered to TRUST;
(g) At the option of TRUST, upon AVLIC's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of TRUST within ten days after written notice of such
breach is delivered to AVLIC;
11
(h) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal
and/or state law. Termination shall be effective immediately upon such
occurrence without notice;
In the event this Agreement is assigned without the prior written
consent of AVLIC, TRUST, and ADVISER, termination shall be effective immediately
upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to
Section 8.2 hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or AVLIC, whichever shall have legal authority
to do so, shall be permitted to reallocate investments in TRUST, redeem
investments in TRUST and/or invest in TRUST upon the payment of additional
premiums under the Existing Contracts. In the event of a termination of this
Agreement pursuant to Section 8.2 hereof, TRUST and ADVISER, as promptly as is
practicable under the circumstances, shall notify AVLIC whether TRUST elects to
continue to make TRUST shares available after such termination. If TRUST shares
continue to be made available after such termination, the provisions of this
Agreement shall remain in effect and thereafter either TRUST or AVLIC may
terminate the Agreement, as so continued pursuant to this Section 8.3, upon
sixty (60) days' prior written notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, AVLIC shall
not redeem the shares attributable to the Variable Contracts (as opposed to the
shares attributable to AVLIC'S assets held in the Separate Accounts), and AVLIC
shall not prevent Variable Contract owners from allocating payments to a
Portfolio that was otherwise available under the Variable Contracts until thirty
(30) days after AVLIC shall have notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or 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.
If to TRUST:
Deutsche Asset Management VIT Funds
c/o PFPC Global Fund Services
0000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, XX 00000-0000
Attn: Xxx Xxxxxxxx, Legal Department
and
c/o Deutsche Asset Management Mutual Fund Services
Xxx Xxxxx Xxxxxx, Xxxx Xxxx 0-00-0
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx
12
If to ADVISER:
Deutsche Asset Management, Inc.
000 Xxxxxxx Xxxxxx, Mail Stop 2355
Xxx Xxxx, XX 00000
Attn: Mutual Fund Marketing
If to AVLIC:
Ameritas Variable Life Insurance Company
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
Attn: General Counsel
Article X. MISCELLANEOUS
10.1 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.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 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.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of New York. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Portfolio nor the Trustees or officers of TRUST or
any Portfolio shall be personally liable hereunder. No Portfolio shall be liable
for the liabilities of any other Portfolio. All persons dealing with TRUST or a
Portfolio must look solely to the property of TRUST or that Portfolio,
respectively, for enforcement of any claims against TRUST or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with AVLIC so that it is as if each of the Portfolios
had signed a separate Agreement with AVLIC and that a single document is being
signed simply to facilitate the execution and administration of the Agreement.
10.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
10.7 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.
13
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
10.9 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST,
ADVISER and the AVLIC.
10.10 No failure or delay by a party in exercising any right or remedy
under this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Fund Participation Agreement as of the date and year
first above written.
DEUTSCHE ASSET MANAGEMENT VIT FUNDS
By:
Name:
Title:
DEUTSCHE ASSET MANAGEMENT, INC.
By:
Name:
Title:
AMERITAS VARIABLE LIFE INSURANCE COMPANY
By:
Name: Xxxxxxx X. Xxxxxxxx
Title: President and COO
14
Appendix A
to participation Agreement by and among Deutsche Asset Management VIT Funds,
Deutsche Asset Management, Inc., and Ameritas Variable Life Insurance Company
List of Portfolios:
Deutsche Asset Management VIT Funds - Small Cap Index Fund
Deutsche Asset Management VIT Funds - Equity 500 Index Fund
Deutsche Asset Management VIT Funds - EAFE Equity Index Fund
Appendix B
to Participation Agreement by and among Deutsche Asset Management VIT Funds,
Deutsche Asset Management, Inc., and Ameritas Variable Life Insurance Company.
List of Variable Separate Accounts:
Ameritas Variable Separate Account VA
("Separate Account VA")
Ameritas Variable Separate Account VL
("Separate Account VL")
Participation Agreement
as of ______, 2002
Franklin Xxxxxxxxx Variable Insurance Products Trust
Franklin Xxxxxxxxx Distributors, Inc.
Ameritas Variable Life Insurance Company
CONTENTS
Paragraph Subject Matter
1. Parties and Purpose
2. Representations and Warranties
3. Purchase and Redemption of Trust Portfolio Shares
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
5. Voting
6. Sales Material, Information and Trademarks
7. Indemnification
8. Notices
9. Termination
10. Miscellaneous
Schedules to this Agreement
A. The Company
B. Accounts of the Company
C. Available Portfolios and Classes of Shares of the Trust;
Investment Advisers
D. Contracts of the Company
E. Other Portfolios Available under the Contracts
F. Rule 12b-l Plans of the Trust
G. Addresses for Notices
H. Shared Funding Order
1. Parties and Purpose
This agreement (the " Agreement") is between Franklin Xxxxxxxxx Variable
Insurance Products Trust, an open-end management investment company organized as
a business trust under Massachusetts law (the "Trust"), Franklin Xxxxxxxxx
Distributors, Inc., a California corporation which is the principal underwriter
for the Trust (the "Underwriter," and together with the Trust, "we" or "us") and
the insurance company identified on Schedule A ("you"), on your own behalf and
on behalf of each segregated asset account maintained by you that is listed on
Schedule B, as that schedule may be amended from time to time ("Account" or
"Accounts").
The purpose of this Agreement is to entitle you, on behalf of the
Accounts, to purchase the shares, and classes of shares, of portfolios of the
Trust ("Portfolios") that are identified on Schedule C, solely for the purpose
of funding benefits of your variable life insurance policies or variable annuity
contracts ("Contracts") that are identified on Schedule D. This Agreement does
not authorize any other purchases or redemptions of shares of the Trust;
1
2. Representations and Warranties
(a) Representations and Warranties by You
You represent and warrant that:
1. You are an insurance company duly organized and in good
standing under the laws of your state of incorporation.
2. All of your directors, officers, employees, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall be at all times covered by a blanket fidelity bond or similar
coverage for the benefit of the Trust, in an amount not less than $5 million.
Such bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company. You agree to make all reasonable efforts
to see that this bond or another bond containing such provisions is always in
effect, and you agree to notify us in the event that such coverage no longer
applies.
3. Each Account is a duly organized, validly existing segregated
asset account under applicable insurance law and interests in each Account are
offered exclusively through the purchase of or transfer into a "variable
contract" within the meaning of such terms under Section 817 of the Internal
Revenue Code of 1986, as amended ("Code") and the regulations thereunder . You
will use your best efforts to continue to meet such definitional requirements,
and will notify us immediately upon having a reasonable basis for believing that
such requirements have ceased to be met or that they might not be met in the
future.
4. Each Account either: (i) has been registered or, prior to any
issuance or sale of the Contracts, will be registered as a unit investment trust
under the Investment Company Act of 1940 (" 1940 Act"); or (ii) has not been so
registered in proper reliance upon an exemption from registration under Section
3(c) of the 1940 Act; if the Account is exempt from registration as an
investment company under Section 3(c) of the 1940 Act, you will make every
effort to maintain such exemption and will notify us immediately upon having a
reasonable basis for believing that such exemption no longer applies or might
not apply in the future.
5. The Contracts or interests in the Accounts: (i) are or, prior
to any issuance or sale will be, registered as securities under the Securities
Act of 1933, as amended (the "1933 Act"); or (ii) are not registered because
they are properly exempt from registration under Section 3(a)(2) of the 1933 Act
or will be offered exclusively in transactions that are properly exempt from
registration under Section 4(2) or Regulation D of the 1933 Act, in which case
you will make every effort to maintain such exemption and will notify us
immediately upon having a reasonable basis for believing that such exemption no
longer applies or might not apply in the future.
6. The Contracts: (i) will be sold by broker-dealers, or their
registered representatives, who are registered with the Securities and Exchange
Commission (" SEC" ) under the Securities and Exchange Act of 1934, as amended
(the" 1934 Act") and who are members in good standing of the National
Association of Securities Dealers, Inc. (the "NASD" ); (ii) will be issued and
sold in compliance in all material respects with all applicable federal and
state laws; and (iii) will be sold in compliance in all material respects with
state insurance suitability requirements and NASD suitability guidelines.
7. The Contracts currently are and will be treated as annuity
contracts or life insurance contracts under applicable provisions of the Code
and you will use your best efforts to maintain such treatment; you will notify
us immediately upon having a reasonable basis for believing that any of the
Contracts have ceased to be so treated or that they might not be so treated in
the future.
2
8. The fees and charges deducted under each Contract, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by you.
9. You will use shares of the Trust only for the purpose of
funding benefits of the Contracts through the Accounts.
10. Contracts will not be sold outside of the United States.
11. With respect to any Accounts which are exempt from
registration under the 1940 Act in reliance on 3(c)(1) or Section 3(c)(7)
thereof:
a. the principal underwriter for each such Account and any sub
accounts thereof is a registered broker-dealer with the SEC
under the 1934 Act;
b. the shares of the Portfolios of the Trust are and will
continue to be the only investment securities held by the
corresponding subaccounts; and
c. with regard to each Portfolio, you, on behalf of the
corresponding subaccount; will:
(i) vote such shares held by it in the same proportion as
the vote of all other holders of such shares; and
(ii) refrain from substituting shares of another security
for such shares unless the SEC has approved such
substitution in the manner provided in Section 26 of
the 1940 Act.
(b) Representations and Warranties by the Trust
The Trust represents and warrants that:
1. It is duly organized and in good standing under the laws of
the State of Massachusetts.
2. All of its directors, officers, employees and others
dealing with the money and/or securities of a Portfolio are and shall be at all
times covered by a blanket fidelity bond or similar coverage for the benefit of
the Trust in an amount not less that the minimum coverage required by Rule 17g-1
or other regulations under the 1940 Act. Such bond shall include coverage for
larceny and embezzlement and be issued by a reputable bonding company.
3. It is registered as an open-end management investment company
under the 1940 Act.
4. Each class of shares of the Portfolios of the Trust is
registered under the 1933 Act.
5. It will amend its registration statement under the 1933 Act
and the 1940 Act from time to time as required in order to effect the continuous
offering of its shares.
6. It will comply, in all material respects, with the 1933 and
1940 Acts and the rules and regulations thereunder .
3
7. It is currently qualified as a "regulated investment
company" under Subchapter M of the Code, it will make every effort to maintain
such qualification, and will notify you 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.
8. The investments of each Portfolio will comply with the
diversification requirements for variable annuity, endowment or life insurance
contracts set forth in Section 817(h) of the Code, and the rules and regulations
thereunder, including without limitation Treasury Regulation 1.817 -5. Upon
having a reasonable basis for believing any Portfolio has ceased to comply and
will not be able to comply within the grace period afforded by Regulation
1.817-5, the Trust will notify you immediately and will take all reasonable
steps to adequately diversify the Portfolio to achieve compliance.
9. It currently intends for one or more classes of shares (each,
a "Class") to make payments to finance its distribution expenses, including
service fees, pursuant to a plan "Plan") adopted under rule 12b-1 under the 1940
Act ("Rule 12b-1"), although it may determine to discontinue such practice in
the future. To the extent that any Class of the Trust finances its distribution
expenses pursuant to a Plan adopted under rule 12b-1, the Trust undertakes to
comply with any then current SEC interpretations concerning rule 12b-1 or any
successor provisions.
(c) Representations and Warranties by the Underwriter
The Underwriter represents and warrants that:
1. It is registered as a broker dealer with the SEC under the
1934 Act, and is a member in good standing of the NASD.
2. Each investment adviser listed on Schedule C (each, an
"Adviser") is duly registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and any applicable state securities law.
(d) Warranty and Agreement by Both You and Us
We received an order from the SEC dated November 16, 1993 (file no.
812-8546), which was amended by a notice and an order we received on September
17, 1999 and October 13, 1999, respectively (file no. 812-11698) (collectively,
the "Shared Funding Order," attached to this Agreement as Schedule H). The
Shared Funding Order grants exemptions from certain provisions of the 1940 Act
and the regulations thereunder to the extent necessary to permit shares of the
Trust to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance companies
and qualified pension and retirement plans outside the separate account context.
You and we both warrant and agree that both you and we will comply with the
"Applicants' Conditions" prescribed in the Shared Funding Order as though such
conditions were set forth verbatim in this Agreement, including, without
limitation, the provisions regarding potential conflicts of interest between the
separate accounts which invest in the Trust and regarding contract owner voting
privileges.
3. Purchase and Redemption of Trust Portfolio Shares
(a) We will make shares of the Portfolios available to the Accounts for
the benefit of the Contracts. The shares will be available for purchase at the
net asset value per share next computed after we ( or our agent) receive a
purchase order, as established in accordance with the provisions of the then
current prospectus of the Trust. Notwithstanding the foregoing, the Trust's
Board of Trustees ("Trustees") may refuse to sell shares of any Portfolio to any
person, or may suspend or terminate the offering of shares of any
4
Portfolio if such action is required by law or by regulatory authorities having
jurisdiction or if, in the sole discretion of the Trustees, they deem such
action to be in the best interests of the shareholders of such Portfolio.
Without limiting the foregoing, the Trustees have determined that there is a
significant risk that the Trust and its shareholders may be adversely affected
by investors whose purchase and redemption activity follows a market timing
pattern, and have authorized the Trust, the Underwriter and the Trust's transfer
agent to adopt procedures and take other action (including, without limitation,
rejecting specific purchase orders) as they deem necessary to reduce, discourage
or eliminate market timing activity. You agree to cooperate with us to assist us
in implementing the Trust's restrictions on purchase and redemption activity
that follows a market timing pattern.
(b) We agree that shares of the Trust will be sold only to life insurance
companies which have entered into fund participation agreements with the Trust
("Participating Insurance Companies") and their separate accounts or to
qualified pension and retirement plans in accordance with the terms of the
Shared Funding Order. No shares of any Portfolio will be sold to the general
public.
(c) You agree that all net amounts available under the Contracts shall be
invested in the Trust or in your general account. Net amounts available under
the Contracts may also be invested in an investment company other than the Trust
if: (i) 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; or (ii) you give us forty-five ( 45)
days written notice of your intention to make such other investment company
available as a funding vehicle for the Contracts; or (iii) such other investment
company is available as a funding vehicle for the Contracts at the date of this
Agreement and you so inform us prior to our signing this Agreement (a list of
such investment companies appears on Schedule E to this Agreement); or (iv) we
consent in writing to the use of such other investment company.
(d) You shall be the designee for us for receipt of purchase orders and
requests for redemption resulting from investment in and payments under the
Contracts ("Instructions"). The Business Day on which such Instructions are
received in proper form by you and time stamped by the close of trading will be
the date as of which Portfolio shares shall be deemed purchased, exchanged, or
redeemed as a result of such Instructions. Instructions received in proper form
by you and time stamped after the close of trading on any given Business Day
shall be treated as if received on the next following Business Day. You warrant
that all orders, Instructions and confirmations received by you which will be
transmitted to us for processing on a Business Day will have been received and
time stamped prior to the Close of Trading on that Business Day. Instructions we
receive after 9 a.m. Eastern Time shall be processed on the next Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the SEC and its current prospectus.
(e) We shall calculate the net asset value per share of each Portfolio on
each Business Day, and shall communicate these net asset values to you or your
designated agent on a daily basis as soon as reasonably practical after the
calculation is completed (normally by 6:30 p.m. Eastern time).
(f) You shall submit payment for the purchase of shares of a Portfolio on
behalf of an Account no later than the close of business on the next Business
Day after we receive the purchase order. Payment shall be made in federal funds
transmitted by wire to the Trust or to its designated custodian.
(g) We will redeem any full or fractional shares of any Portfolio, when
requested by you on behalf of an Account, at the net asset value next computed
after receipt by us ( or our agent) of the request for redemption, as
established in accordance with the provisions of the then current prospectus of
the Trust. We shall make payment for such shares in the manner we establish from
time to time, but in no event shall payment be delayed for a greater period than
is permitted by the 1940 Act. Payments for the purchase or
5
redemption of shares by you may be netted against one another on any Business
Day for the purpose of determining the amount of any wire transfer on that
Business Day.
(h) Issuance and transfer of the Portfolio shares will be by book entry
only. Stock certificates will not be issued to you or the Accounts. Portfolio
shares purchased from the Trust will be recorded in the appropriate title for
each Account or the appropriate subaccount of each Account.
(i) We shall furnish, on or before the ex-dividend date, notice to you of
any income dividends or capital gain distributions payable on the shares of any
Portfolio. You hereby elect to receive all such income dividends and capital
gain distributions as are payable on shares of a Portfolio in additional shares
of that Portfolio, and you reserve the right to change this election in the
future. We will notify you of the number of shares so issued as payment of such
dividends and distributions.
4. Fees, Expenses, Prospectuses, Proxy Materials and Reports
(a) We shall pay no fee or other compensation to you under this Agreement
except as provided on Schedule F.
(b) We shall prepare and be responsible for filing with the SEC, and any
state regulators requiring such filing, all shareholder reports, notices, proxy
materials ( or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Trust.
We shall bear the costs of preparation and filing of the documents listed in the
preceding sentence, registration and qualification of the Trust's shares of the
Portfolios.
(c) We shall use reasonable efforts to provide you, on a timely basis, with
such information about the Trust, the Portfolios and each Adviser, in such form
as you may reasonably require, as you shall reasonably request in connection
with the preparation of disclosure documents and annual and semi-annual reports
pertaining to the Contracts.
(d) At your request, we shall provide you with camera ready copy, in a form
suitable for printing, of portions of the Trust's current prospectus, annual
report, semi-annual report and other shareholder communications, including any
amendments or supplements to any of the foregoing, pertaining specifically to
the Portfolios. We shall delete information relating to series of the Trust
other than the Portfolios to the extent practicable. We shall provide you with a
copy of the Trust's current statement of additional information, including any
amendments or supplements, in a form suitable for you to duplicate. The expenses
of furnishing such documents shall be borne by you. You shall bear the costs of
distributing prospectuses and statements of additional information to Contract
owners.
(e) We shall provide you, at our expense, with copies of any
Trust-sponsored proxy materials in such quantity as you shall reasonably require
for distribution to Contract owners who are invested in a designated subaccount.
You shall bear the costs of distributing proxy materials (or similar materials
such as voting solicitation instructions) to Contract owners.
(f) You assume sole responsibility for ensuring that the Trust's
prospectuses, shareholder reports and communications, and proxy materials are
delivered to Contract owners in accordance with applicable federal and state
securities laws.
6
5. Voting
(a) All Participating Insurance Companies shall have the obligations and
responsibilities regarding pass-through voting and conflicts of interest
corresponding to those contained in the Shared Funding Order.
(b) If and to the extent required by law, you shall: (i) solicit voting
instructions from Contract owners; (ii) vote the Trust shares in accordance with
the instructions received from Contract owners; and (iii) vote Trust shares for
which no instructions have been received in the same proportion as Trust shares
of such Portfolio for which instructions have been received; so long as and to
the extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. You reserve the
right to vote Trust shares held in any Account in your own right, to the extent
permitted by law.
(c) So long as, and to the extent that, the SEC interprets the 1940 Act to
require pass-through voting privileges for Contract owners, you shall provide
pass-through voting privileges to Contract owners whose Contract values are
invested, through the Accounts, in shares of one or more Portfolios of the
Trust. We shall require all Participating Insurance Companies to calculate
voting privileges in the same manner and you shall be responsible for assuring
that the Accounts calculate voting privileges in the manner established by us.
With respect to each Account, you will vote shares of each Portfolio of the
Trust held by an Account and for which no timely voting instructions from
Contract owners are received in the same proportion as those shares held by that
Account for which voting instructions are received. You and your agents will in
no way recommend or oppose or interfere with the solicitation of proxies for
Portfolio shares held to fund the Contracts without our prior written consent,
which consent may be withheld in our sole discretion.
6. Sales Material, Information and Trademarks
(a) For purposes of this Section 6, "Sales literature or other Promotional
material" includes, but is not limited to, portions of the following that use
any logo or other trademark related to the Trust or Underwriter or refer to the
Trust or affiliates of the Trust: 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, electronic communication 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 or
any other advertisement, sales literature or published article or electronic
communication), educational or training materials or other communications
distributed or made generally available to some or all agents or employees in
any media, and disclosure documents, shareholder reports and proxy materials.
(b) You shall furnish, or cause to be furnished to us or our designee, at
least one complete copy of each registration statement, prospectus, statement of
additional information, private placement memorandum, retirement plan disclosure
information or other disclosure documents or similar information, as applicable
(collectively "disclosure documents"), as well as any report, solicitation for
voting instructions, Sales literature or other Promotional materials, and all
amendments to any of the above that relate to the Contracts or the Accounts
prior to its first use. You shall furnish, or shall cause to be furnished, to us
or our designee each piece of Sales literature or other Promotional material in
which the Trust or an Adviser is named, at least fifteen (15) Business Days
prior to its proposed use. No such material shall be used unless we or our
designee approve such material and its proposed use.
(c) You and your agents shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust,
the Underwriter or an Adviser, other than information or representations
contained in and accurately derived from the registration statement or
7
prospectus for the Trust shares (as such registration statement and prospectus
may be amended or supplemented from time to time), annual and semi-annual
reports of the Trust, Trust-sponsored proxy statements, or in Sales literature
or other Promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
(d) We shall not give any information or make any representations or
statements on behalf of you or concerning you, the Accounts or the Contracts
other than information or representations contained in and accurately derived
from disclosure documents for the Contracts (as such disclosure documents may be
amended or supplemented from time to time), or in materials approved by you for
distribution, including Sales literature or other Promotional materials, except
as required by legal process or regulatory authorities or with your written
permission. We may use the names of you, the Accounts and the Contracts in our
sales literature and disclosure documents.
(e) Except as provided in Section 6(b ), you shall not use any designation
comprised in whole or part of the names or marks "Franklin" or "Xxxxxxxxx" or
any logo or other trademark relating to the Trust or the Underwriter without
prior written consent, and upon termination of this Agreement for any reason,
you shall cease all use of any such name or xxxx as soon as reasonably
practicable.
7 . Indemnification
(a) Indemnification By You
1. You agree to indemnify and hold harmless the Underwriter, the
Trust and each of its Trustees, officers, employees and agents and each person,
if any, who controls the Trust within the meaning of Section 15 of the 1933 Act
( collectively, the "Indemnified Parties" and individually the "Indemnified
Party" for purposes of this Section 7) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with your written
consent, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses"), to which the Indemnified
Parties may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of
shares of the Trust or the Contracts and
a. arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact contained
in a disclosure document for the Contracts or in the Contracts
themselves or in sales literature generated or approved by you on
behalf of the Contracts or Accounts ( or any amendment or supplement to
any of the foregoing) (collectively, "Company Documents" for the
purposes of this Section 7), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity 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 was accurately
derived from written information furnished to you by or on behalf of
the Trust for use in Company Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
b. arise out of or result from statements or
representations ( other than statements or representations contained in
and accurately derived from Trust Documents as defined below in Section
7(b)) or wrongful conduct of you or persons under your control, with
respect to the sale or acquisition of the Contracts or Trust shares; or
8
c. arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in Trust
Documents as defined below in Section 7(b) or the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading if such
statement or omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on behalf of you;
or
d. arise out of or result from any failure by you to
provide the services or furnish the materials required under the terms
of this Agreement
e. arise out of or result from any material breach
of any representation and/or warranty made by you in this Agreement or
arise out of or result from any other material breach of this Agreement
by you; or
f. arise out of or result from a Contract failing to
be considered a life insurance policy or an annuity Contract, whichever
is appropriate, under applicable provisions of the Code thereby
depriving the Trust of its compliance with Section 817(h) of the Code.
2. You shall not be liable under this indemnification provision
with respect to any Losses to which an Indemnified Party would otherwise be
subject by reason of such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and duties
under this Agreement or to the Trust or Underwriter, whichever is applicable.
You shall also not be liable under this indemnification provision with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified you in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been served upon such Indemnified Party ( or after such Indemnified Party
shall have received notice of such service on any designated agent), but failure
to notify you of any such claim shall not relieve you from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any such
action is brought against the Indemnified Parties, you shall be entitled to
participate, at your own expense, in the defense of such action. Unless the
Indemnified Party releases you from any further obligations under this Section
7(a), you also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from you to such
party of your election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
you 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.
3. The Indemnified Parties will promptly notify you of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust.
(b) Indemnification By The Underwriter
1. The Underwriter agrees to indemnify and hold harmless you,
and each of your directors and officers and each person, if any, who controls
you within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" and individually an "Indemnified Party" for purposes of
this Section 7(b)) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the
Underwriter, which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any alleged loss,
claim, damage, liability or expense and reasonable legal counsel fees incurred
in connection therewith) (collectively, "Losses") to which the
9
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such Losses are related to the sale or acquisition of the
shares of the Trust or the Contracts and:
a. 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 sales literature of the
Trust ( or any amendment or supplement to any of the foregoing)
(collectively, the "Trust Documents") or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to indemnify shall
not apply as to any Indemnified Party if such statement or omission of
such alleged statement or omission was made in reliance upon and in
conformity with information furnished to us by or on behalf of you for
use in the Registration Statement or prospectus for the Trust or in
sales literature ( or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
b. arise out of or as a result of statements or
representations (other than statements or representations contained in
the disclosure documents or sales literature for the Contracts not
supplied by the Underwriter or persons under its control) or wrongful
conduct of the Trust, Adviser or Underwriter or persons under their
control, with respect to the sale or distribution of the Contracts or
Trust shares; or
c. arise out of any untrue statement or alleged
untrue statement of a material fact contained in a disclosure document
or sales literature covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if such
statement or omission was made in reliance upon information furnished
to you by or on behalf of the Trust; or
d. arise as a result of any failure by us to provide
the services and furnish the materials under the terms of this
Agreement (including a failure, whether unintentional or in good faith
or otherwise, to comply with the qualification representation specified
above in Section 2(b )(7) and the diversification requirements
specified above in Section 2(b )(8); or
e. arise out of or result from any material breach of
any representation and/or warranty made by the Underwriter in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Underwriter; as limited by and in accordance with
the provisions of Sections 7(b )(2) and 7(b )(3) hereof.
2. The Underwriter shall not be liable under this indemnification
provision with respect to any Losses to which an Indemnified Party would
otherwise be subject by reason of such Indemnified Party's willful misfeasance,
bad faith, or gross negligence in the performance of such Indemnified Party's
duties or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to you or the Accounts, whichever
is applicable.
3. The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party ( or after such Indemnified party shall have received notice
of such service on any designated agent), but failure to notify
10
the Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Underwriter will be
entitled to participate, at its own expense, in the defense thereof. Unless the
Indemnified Party releases the Underwriter from any further obligations under
this Section 7(b), the Underwriter also shall be entitled to assume the defense
thereof, with counsel satisfactory to the party named in the action. After
notice from the Underwriter to such party of the Underwriter's election to
assume the defense thereof, the Indemnified Party shall bear the expenses of any
additional counsel retained by it, and the Underwriter will not be liable to
such party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
4. You agree promptly to notify the Underwriter of the
commencement of any litigation or proceedings against you or the Indemnified
Parties in connection with the issuance or sale of the Contracts or the
operation of each Account.
(c) Indemnification By The Trust
1. The Trust agrees to indemnify and hold harmless you, and
each of your directors and officers and each person, if any, who controls you
within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified
Parties" for purposes of this Section 7(c)) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with the written
consent of the Trust, which consent shall not be unreasonably withheld) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses ( or actions in respect
thereof) or settlements result from the gross negligence, bad faith or willful
misconduct of the Board or any member thereof, are related to the operations of
the Trust, and arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or arise out
of or result from any other material breach of this Agreement by the Trust; as
limited by and in accordance with the provisions of Sections 7(c)(2) and 7(c)(3)
hereof. It is understood and expressly stipulated that neither the holders of
shares of the Trust nor any Trustee, officer, agent or employee of the Trust
shall be personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation hereunder, but
the Trust only shall be liable.
2. The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against any Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
you, the Trust, the Underwriter or each Account, whichever is applicable.
3. The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claims shall have been served upon such
Indemnified Party (or after such Indemnified party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Trust will be entitled to participate, at
its own expense, in the defense thereof. Unless the Indemnified Party releases
the Trust from any further obligations under this Section 7(c), the Trust also
shall be entitled to assume the defense thereof, with counsel satisfactory to
11
the party named in the action. After notice from the Trust to such party of the
Trust'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 Trust
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.
4. You agree promptly to notify the Trust of the commencement
of any litigation or proceedings against you or the Indemnified Parties in
connection with this Agreement, the issuance or sale of the Contracts, with
respect to the operation of the Account, or the sale or acquisition of shares of
the Trust.
8. 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 in Schedule G below or
at such other address as such party may from time to time specify in writing to
the other party.
9. Termination
(a) This Agreement may be terminated by any party in its entirety or with
respect to one, some or all Portfolios for any reason by sixty (60) days advance
written notice delivered to the other parties, unless a shorter time is agreed
to in writing by the parties, and shall terminate immediately in the event of
its assignment, as that term is used in the 1940 Act.
(b) This Agreement may be terminated immediately by us upon written notice
to you if:
1. you notify the Trust or the Underwriter that the exemption
from registration under Section 3(c) of the 1940 Act no longer applies, or might
not apply in the future, to the unregistered Accounts, or that the exemption
from registration under Section 4(2) or Regulation D promulgated under the 1933
Act no longer applies or might not apply in the future, to interests under the
unregistered Contracts; or
2. either one or both of the Trust or the Underwriter
respectively, shall determine, in their sole judgment exercised in good faith,
that you have suffered a material adverse change in your business, operations,
financial condition or prospects since the date of this Agreement or are the
subject of material adverse publicity; or
3. you give us the written notice specified above in Section 3(c)
and at the same time you give us such notice there was no notice of termination
outstanding under any other provision of this Agreement; provided, however, that
any termination under this Section 9(b )(3) shall be effective forty-five (45)
pays after the notice specified in Section 3(c) was given; or
4. upon your assignment of this Agreement without our prior
written approval.
(c) If this Agreement is terminated for any reason, except as required by
the Shared Funding Order or pursuant to Section 9(b )( 1 ), above, we shall, at
your option, continue to make available additional shares of any Portfolio and
redeem shares of any Portfolio pursuant to all of the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement. If this Agreement is terminated as required by the Shared
Funding Order, its provisions shall govern.
(d) The provisions of Sections 2 (Representations and Warranties ) and 7
(Indemnification) shall survive the termination of this Agreement. All other
applicable provisions of this Agreement shall
12
survive the termination of this Agreement, as long as shares of the Trust are
held on behalf of Contract owners in accordance with Section 9(c), except that
we shall have no further obligation to sell Trust shares with respect to
Contracts issued after termination.
(e) You shall not redeem Trust shares attributable to the Contracts (as
opposed to Trust shares attributable to your assets held in the Account) except:
(i) as necessary to implement Contract owner initiated or approved transactions;
(ii) as required by state and/or federal laws or regulations or judicial or
other legal precedent of general application (hereinafter referred to as a
"Legally Required Redemption"); or (iii) as permitted by an order of the SEC
pursuant to Section 26(b) of the 1940 Act. Upon request, you shall promptly
furnish to us the opinion of your counsel (which counsel shall be reasonably
satisfactory to us) to the effect that any redemption pursuant to clause (ii)
above is a Legally Required Redemption. Furthermore, except in cases where
permitted under the terms of the Contracts, you shall not prevent Contract
owners from allocating payments to a Portfolio that was otherwise available
under the Contracts without first giving us ninety (90) days notice of your
intention to do so.
10. Miscellaneous
(a) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions of this
Agreement or otherwise affect their construction or effect.
(b) This Agreement may be executed simultaneously in two or more
counterparts, all of which taken together shall constitute one and the same
instrument.
(c) 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.
(d) This Agreement shall be construed and its provisions interpreted under
and in accordance with the laws of the State of California. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder, to any orders of the SEC on behalf of the Trust granting
it exemptive relief, and to the conditions of such orders. We shall promptly
forward copies of any such orders to you.
(e) The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
(f) Each party to this Agreement shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the SEC,
the NASD, and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
(g) Each party to this Agreement shall treat as confidential all
information reasonably identified as confidential in writing by any other party
to this Agreement, and, except as permitted by this Agreement or as required by
legal process or regulatory authorities, shall not disclose, disseminate or use
such names and addresses and other confidential information until such time as
they may come into the public domain, without the express written consent of the
affected party. Without limiting the foregoing, no party to this Agreement shall
disclose any information that such party has been advised is proprietary, except
such information that such party is required to . disclose by any appropriate
governmental authority (including, without limitation, the SEC, the NASD, and
state securities and insurance regulators).
13
(h) 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 to this Agreement are entitled to under
state and federal laws.
(i) The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect, except as provided above in Section 3(c).
(j) Neither this Agreement nor any rights or obligations created by it may
be assigned by any party without the prior written approval of the other
parties.
(k) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
IN WITNESS WHEREOF, each of the parties have caused their duly
authorized officers to execute this Agreement.
The Company: Ameritas Variable Life Insurance Company
By:
Name: Xxxxxxx X Xxxxxxxx
Title: President and COO
The Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
By:
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President. Assistant Secretary
The Underwriter: Franklin Xxxxxxxxx Distributors. Inc.
By:
Name: Xxxxxx X. Xxxxxx
Title: Vice President
14
Schedule A
The Company
Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
A life insurance company organized as a corporation under Nebraska law.
15
Schedule B
Accounts of the Company
1. Name: Ameritas Variable Separate Account VL ("Separate Account VL")
Date Established:
SEC Registration Number:
2. Name: Ameritas Variable Separate Account VA ("Separate Account VA")
Date Established:
SEC Registration Number:
16
Schedule C
Available Portfolios and Classes of Shares of the Trust; Investment Advisers
Franklin Xxxxxxxxx Variable Insurance Products Trust Investment Adviser
---------------------------------------------------- ------------------
Templeton Asset Strategy Fund Xxxxxxxxx Investment Counsel, Inc.
Xxxxxxxxx International Securities Fund Xxxxxxxxx Investment Counsel, Inc.
17
Schedule D
Contracts of the Company
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
Contract 1 Contract 2 Contract 3 Contract 4 Contract 5
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
Contract/Product Allocator 2000 Allocator 2000 Regent 2000 Executive Select AVLIC Designer
Name Annuity Annuity
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
Registered (Y/N)
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
SEC Registration Number
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
Representative Form
Numbers
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
Separate Account Separate Account Separate Account Separate Account VL Separate Account Separate
Name/Date VL VA VL Account VA
Established
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
SEC Registration Number
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
Portfolios and Templeton Asset Templeton Asset Templeton Asset Templeton Asset Templeton Asset
Classes-Adviser Strategy Fund, Strategy Fund, Strategy Fund, Strategy Fund, Strategy Fund,
Class Class Class Class Class
2 - Templeton 2 - Templeton 2 - Templeton 2 - Templeton 2 - Xxxxxxxxx
Investment Investment Investment Investment Investment
Counsel, Inc. Counsel, Inc. Counsel, Inc. Counsel, Inc. Counsel, Inc.
Templeton Templeton Templeton Templeton Xxxxxxxxx
International International International International International
Securities Fund, Securities Fund, Securities Fund, Securities Fund, Securities
Class 2 - Class 2 - Class 2 - Class 2 - Fund, Class 2 -
Templeton Templeton Templeton Templeton Xxxxxxxxx
Investment Investment Investment Investment Investment
Counsel, Inc. Counsel, Inc. Counsel, Inc. Counsel, Inc. Counsel, Inc.
------------------------- ------------------- ------------------ -------------------- ------------------ -----------------
18
Schedule E
Other Portfolios Available under the Contracts
The Xxxxx American Fund
Deutsche Asset Management VIT Funds
Xxxxxxx Variable Series, Inc. Xxxxxxx Portfolios
Fidelity Variable Insurance Products: Service Class 2
Xxxxxxxxx Xxxxxx Advisors Management Trust
Xxxxxxxxxxx Variable Account Funds
Xxx Xxx Worldwide Insurance Trust
19
Schedule F
Rule 12b-l Plans
Compensation Schedule
Each Portfolio named below shall pay the following amounts pursuant to the terms
and conditions referenced below under its Class 2 Rule 12b-1 Distribution Plan,
stated as a percentage per year of Class 2's average daily net assets
represented by shares of Class 2.
Portfolio Name Maximum Annual Payment Rate
Xxxxxxxxx International Securities Fund 0.25%
Templeton Asset Strategy Fund 0.25%
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust Portfolio
shares ("Eligible Shares") which are subject to a Rule 12b-1 plan adopted under
the 1940 Act (the "Plan"), the Company may participate in the Plan.
To the extent the Company or its affiliates, agents or designees
(collectively "you") provide administrative and other services which assist in
the promotion and distribution of Eligible Shares or variable contracts offering
Eligible Shares, the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. " Administrative and other services" may
include, but are not limited to, furnishing personal services to owners of
Contracts which may invest in Eligible Shares ("Contract Owners"), answering
routine inquiries regarding a Portfolio, coordinating responses to Contract
Owner inquiries regarding the Portfolios, maintaining such accounts or providing
such other enhanced services as a Trust Portfolio or Contract may require, or
providing other services eligible for service fees as defined under NASD rules.
Your acceptance of such compensation is your acknowledgment that eligible
services have been rendered. All Rule 12b-1 fees, shall be based on the value of
Eligible Shares owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the Compensation Schedule
stated above. The aggregate annual fees paid pursuant to each Plan shall not
exceed the amounts stated as the "annual maximums" in the Portfolio's
prospectus, unless an increase is approved by shareholders as provided in the
Plan. These maximums shall be a specified percent of the value of a Portfolio's
net assets attributable to Eligible Shares owned by the Company on behalf of its
Accounts ( determined in the same manner as the Portfolio uses to compute its
net assets as set forth in its effective Prospectus). The Rule 12b-1 fee will be
paid to you within thirty (30) days after the end of the three-month periods
ending in January, April, July and November .
You shall furnish us with such information as shall reasonably be
requested by the Trust's Boards of Trustees ("Trustees") with respect to the
Rule 12b-1 fees paid to you pursuant to the Plans. We shall furnish to the
Trustees, for their review on a quarterly basis, a written report of the amounts
expended under the Plans and the purposes for which such expenditures were made.
The Plans and provisions of any agreement relating to such Plans must
be approved annually by a vote of the Trustees, including the Trustees who are
not interested persons of the Trust and who have no
20
financial interest in the Plans or any related agreement ("Disinterested
Trustees"). Each Plan may be terminated at any time by the vote of a majority of
the Disinterested Trustees, or by a vote of a majority of the outstanding shares
as provided in the Plan, on sixty (60) days' written notice, without payment of
any penalty. The Plans may also be terminated by any act that terminates the
Underwriting Agreement between the Underwriter and the Trust, and/or the
management or administration agreement between Franklin Advisers, Inc. and its
affiliates and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting and nominating
any new Disinterested Trustees. Under Rule 12b-l, the Trustees have a duty to
request and evaluate, and persons who are party to any agreement related to a
Plan have a duty to furnish, such information as may reasonably be necessary to
an informed determination of whether the Plan or any agreement should be
implemented or continued. Under Rule 12b-1, the Trust is permitted to implement
or continue Plans or the provisions of any agreement relating to such Plans from
year-to-year only if, based on certain legal considerations, the Trustees are
able to conclude that the Plans will benefit each affected Trust Portfolio and
class. Absent such yearly determination, the Plans must be terminated as set
forth above. In the event of the termination of the Plans for any reason, the
provisions of this Schedule F relating to the Plans will also terminate. You
agree that your selling agreements with persons or entities through whom you
intend to distribute Contracts will provide that compensation paid to such
persons or entities may be reduced if a Portfolio' s Plan is no longer effective
or is no longer applicable to such Portfolio or class of shares available under
the Contracts.
Any obligation assumed by the Trust pursuant to this Agreement shall be
limited in all cases to the assets of the Trust and no person shall seek
satisfaction thereof from shareholders of the Trust. You agree to waive payment
of any amounts payable to you by Underwriter under a Plan until such time as the
Underwriter has received such fee from the Trust.
The provisions of the Plans shall control over the provisions of the
Participation Agreement, including this Schedule F, in the event of any
inconsistency.
You agree to provide complete disclosure as required by all applicable
statutes, rules and regulations of all rule 12b-1 fees received from us in the
prospectus of the Contracts.
21
Schedule G
Addresses for Notices
To the Company: Ameritas Variable Life Insurance Company
5900 "O" Street
Lincoln, Nebraska 68510
Attention: General Counsel
To the Trust: Franklin Xxxxxxxxx Variable Insurance Products Trust
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Assistant Vice
President, Assistant Secretary
To the Underwriter: Franklin Xxxxxxxxx Distributors, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Vice President
22
Schedule H
Shared Funding Order
23
SECURITIES AND EXCHANGE COMM1SSION
[Rel. No. IC- 24079 ; File No 812-11698]
Order Granting Exemptions; Templeton Variable Products Series Fund, et al.
October 13, 1999
Templeton Variable Products Series Fund ("Templeton Trust"), Franklin
Xxxxxxxxx Variable Insurance Products Trust ("VlP Trust"), Xxxxxxxxx Funds
Annuity Company ("TF AC") or any successor to TFAC, and any future open-end
investment company for which TFAC or any affiliate is the administrator,
sub-administrator, investment manager, adviser, principal underwriter, or
sponsor ("Future Funds") filed an application on July 14, 1999, and an amendment
on September 17, 1999 seeking an amended order of the Commission pursuant to
Section 6 (c) of the Investment Company Act of 1940 ("1940 Act") exempting them
from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15). The prior order (Rel. No. IC-19879)
granted exemptive relief to permit shares of the Xxxxxxxxx Trust to be sold to
and held by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies. The proposed relief
would amend the prior order to add as parties to that order the VIP Trust and
any Future Funds and to permit shares of the Templeton Trust, the VIP Trust, and
Future Funds to be issued to and held by qualified pension and retirement plans
outside the separate account context.
A notice of the filing of the application was issued on September 17,
1999 (Rel. No. IC-24018). The notice gave interested persons an opportunity to
request a hearing and stated that an order granting the application would be
issued unless a hearing should be ordered. No request for a hearing has been
filed, and the Commission has not ordered a hearing.
The matter has been considered, and it is found that granting the
requested exemptions is appropriate in the public interest and consistent with
the protection of investors and the purposes intended by the policy and
provisions of the 1940 Act.
24
Accordingly,
IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the
requested exemptions from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act,
and Rules 6e- 2(b)(15) and 6e-3(T)(b)(15) thereunder, be, and hereby are,
granted, effective forthwith.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Xxxxxxxx X. Xxxx
Secretary
/s/ Xxxxxxxx X. XxXxxxxxx
-------------------------
By: Xxxxxxxx X. XxXxxxxxx
Deputy Secretary
25
SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC- 240 18 ; File No.812-11698]
Templeton Variable Products Series Fund, et al.
September 17, 1999
Agency: Securities and Exchange Commission (the "Commission" or "SEC")
Action: Notice of application for an amended order of exemption pursuant to
Section 6(c) of the Investment Company Act of 1940 (the " 1940 Act") from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.
Summary of Application: Templeton Variable Products Series Fund (the "Templeton
Trust"), Franklin Xxxxxxxxx Variable Insurance Products Trust (formerly Franklin
Valuemark Funds) (the "VIP Trust," and together with the Templeton Trust, the
"Funds"), Xxxxxxxxx Funds Annuity Company ("TFAC") or any successor to TFAC, and
any future open-end investment company for which TFAC or any affiliate is the
administrator, sub-administrator, investment manager, adviser, principal
underwriter, or sponsor ("Future Funds") seek an amended order of the Commission
to (1) add as parties to that order the VIP Trust and any Future Funds and (2)
permit shares of the Funds and Future Funds to be issued to and held by
qualified pension and retirement plans outside the separate account context.
Applicants: Templeton Variable Products Series Fund, Franklin Xxxxxxxxx Variable
Insurance Products Trust, Xxxxxxxxx Funds Annuity Company or any successor to
TFAC, and any future open-end investment company for which TF AC or any
affiliate is the administrator sub-administrator, investment manager, adviser,
principal underwriter, or sponsor (collectively, the "Applicants").
Filing Date: The application was filed on July 14, 1999, and amended and
restated on September 17, 1999.
Hearing or Notification of Hearing: An order granting the application will be
issued unless the Commission orders a hearing. Interested persons may request a
hearing by writing to the Secretary of the Commission and serving Applicants
with a copy of the request, personally or by mail. Hearing requests should be
received by the Commission by 5:30 p.m. , on October 12, 1999, and should be
accompanied by proof of
1
service on the Applicants in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the writer's
interest, the reason for the request, and the issues contested. Persons who wish
to be notified of a hearing may request notification by writing to the Secretary
of the Commission.
Addresses: Secretary, Securities and Exchange Commission, 000 Xxxxx Xxxxxx, XX ,
Xxxxxxxxxx, X.X. 00000-0000. Applicants: Templeton Variable Products Series Fund
and Franklin Xxxxxxxxx Variable Insurance Products Trust, 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attn: Xxxxx X. Xxxxxxxx, Esq.
For Further Information Contact: Xxxxx X. XxXxxxx, Senior Counsel, or Xxxxx X.
Xxxxx, Branch Chief, Office of Insurance Products, Division of Investment
Management, at (000) 000-0000.
Supplementary Information: The following is a summary of the application.
The complete application is available for a fee from the SEC's Public Reference
Branch, 000 Xxxxx Xxxxxx, X. X., Xxxxxxxxxx, X.X. 00000-0000 (tel. (202)
000-0000).
Applicants' Representations
1. Each of the Funds is registered under the 1940 Act as an open-end
management investment company and was organized as a Massachusetts business
trust. The Templeton Trust currently consists of eight separate series, and the
VIP Trust consists of twenty-five separate series. Each Fund's Declaration of
Trust permits the Trustees to create additional series of shares at any time.
The Funds currently serve as the underlying investment medium for variable
annuity contracts and variable life insurance policies issued by various
insurance companies. The Funds have entered into investment management
agreements with certain investment managers ("Investment Managers") directly or
indirectly owned by Franklin Resources, Inc. ("Resources"), a publicly owned
company engaged in the financial services industry through its subsidiaries.
2. TFAC is an indirect, wholly owned subsidiary of Resources. TFAC is
the sole insurance company in the Franklin Xxxxxxxxx organization, and
specializes in the writing of variable annuity contracts. The Templeton Trust
has entered into a Fund Administration Agreement with Franklin Xxxxxxxxx
Services, Inc. ("FT Services"), which replaced TFAC in 1998 as administrator,
and FT Services subcontracts
2
certain services to TFAC. FT Services also serves as administrator to all series
of the YIP Trust. TFAC and FT Services provide certain administrative facilities
and services for the YIP and Templeton Trusts
3. On November 16, 1993, the Commission issued an order granting
exemptive relief to permit shares of the Xxxxxxxxx Trust to be sold to and held
by variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies (Investment Company Act
Release No.19879, File No.812-8546) (the "Original Order"). Applicants
incorporate by reference into the application the Application for the Original
Order and each amendment thereto, the Notice of Application for the Original
Order and the Original Order, to the extent necessary, to supplement the
representations made in the application in support of the requested relief.
Applicants represent that all of the facts asserted in the Application for the
Original Order and any amendments thereto remain true and accurate in all
material respects to the extent that such facts are relevant to any relief on
which Applicants continue to rely. The Original Order allows the Templeton Trust
to offer its shares to insurance companies as the investment vehicle for their
separate accounts supporting variable annuity contracts and variable life
insurance contracts (collectively, the "Variable Contracts"). Applicants state
that the Original Order does not (i) include the YIP Trust or Future Funds as
parties, nor (ii) expressly address the sale of shares of the Funds or any
Future Funds to qualified pension and retirement plans outside the separate
account context including, without limitation, those trusts, plans, accounts,
contracts or annuities described in Sections 401(a), 403(a), 403(b), 408(b),
408(k), 414(d), 457(b), 501(c)(18) of the Internal Revenue Code of 1986, as
amended (the "Code"), and any other trust, plan, contract, account or annuity
that is determined to be within the scope of Treasury Regulation
1.817.5(t)(3)(iii)("Qualified Plans").
4. Separate accounts owning shares of the Funds and their insurance
company depositors are referred to in the application as "Participating Separate
Accounts" and "Participating Insurance Companies," respectively. The use of a
common management investment company as the underlying investment medium for
both variable annuity and variable life insurance separate accounts of a single
insurance company (or of two or more affiliated insurance companies) is referred
to as "mixed funding." The use of a common
3
management investment company as the underlying investment medium for variable
annuity and/or variable life insurance separate accounts of unaffiliated
insurance companies is referred to as "shared funding."
Applicants' Legal Analysis:
1. Applicants request that the Commission issue an amended order
pursuant to Section 6(c) of the 1940 Act, adding the YIP Trust and Future Funds
to the Original Order and exempting scheduled premium variable life insurance
separate accounts and flexible premium variable life insurance separate accounts
of Participating Insurance Companies (and to the extent necessary any principal
underwriter and depositor of such an account) and the Applicants from Sections
9(a) 13(a), 15(a) and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) (and any comparable rule) thereunder, respectively, to the extent
necessary to permit shares of the Funds and any Future Funds to be sold to and
held by Qualified Plans. Applicants submit that the exemptions requested are
appropriate in the public interest, consistent with the protection of investors,
and consistent with the purposes fairly intended by the policy and provisions of
the 1940 Act.
2. The Original Order does not include the YIP Trust or Future Funds as
parties nor expressly address the sale of shares of the Funds or any Future
Funds to Qualified Plans. Applicants propose that the YIP Trust and Future Funds
be added as parties to the Original Order and the Funds and any Future Funds be
permitted to offer and sell their shares to Qualified Plans .
3. Section 6(c) of the 1940 Act provides, in part that the Commission,
by order upon application, may conditionally or unconditionally exempt any
person, security or transaction, or any class or classes of persons, securities
or transactions from any provisions of the 1940 Act or the rules or regulations
thereunder if and to the extent that such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the 1940 Act.
4. In connection with the funding of scheduled premium variable life
insurance contracts issued through a separate account registered under the 1940
Act as a unit investment trust ("UIT"), Rule 6e-2(b)(15) provides partial
exemptions from various provisions of the 1940 Act, including the following:
4
(1) Section 9(a), which makes it unlawful for certain individuals to act in the
capacity of employee, officer, or director for a UIT, by limiting the
application of the eligibility restrictions in Section 9(a) to affiliated
persons directly participating in the management of a registered management
investment company; and (2) Sections 13(a), 15(a) and 15(b) of the 1940 Act to
the extent that those sections might be deemed to require "pass-through" voting
with respect to an underlying fund's shares, by allowing an insurance company to
disregard the voting instructions of contractowners in certain circumstances.
5. These exemptions are available, however, only where the management
investment company underlying the separate account (the "underlying fund")
offers its shares "exclusively to variable life insurance separate accounts of
the life insurer, or of any affiliated life insurance company." Therefore, Rule
6e-2 does not permit either mixed funding or shared funding because the relief
granted by Rule 6e-2(b)(15) is not available with respect to a scheduled premium
variable life insurance separate account that owns shares of an underlying fund
that also offers its shares to a variable annuity or a flexible premium variable
life insurance separate account of the same company or of any affiliated life
insurance company. Rule 6e-2(b)(15) also does not permit the sale of shares of
the underlying fund to Qualified Plans.
6. In connection with flexible premium variable life insurance
contracts issued through a separate account registered under the 1940 Act as a
UIT, Rule 6e-3(T)(b)(15) also provides partial exemptions from Sections 9(a),
13(a), 15(a) and 15(b) of the 1940 Act. These exemptions, however, are available
only where the separate account's underlying fund offers its shares "exclusively
to separate accounts of the life insurer, or of any affiliated life insurance
company, offering either scheduled contracts or flexible contracts, or both; or
which also offer their shares to variable annuity separate accounts of the life
insurer or of an affiliated life insurance company." Therefore, Rule 6e-3(T)
permits mixed funding but does not permit shared funding and also does not
permit the sale of shares of the underlying fund to Qualified Plans. As noted
above, the Original Order granted the Templeton Trust exemptive relief to permit
mixed and shared funding, but did not expressly address the sale of its shares
to Qualified Plans.
7. Applicants note that if the Funds were to sell their shares only to
Qualified Plans, exemptive relief under Rule 6e-2 and Rule 6e-3(T) would not be
necessary. Applicants state that the relief provided for
5
under Rule 6e-2(b)(15) and Rule 6e-3(T)(b)(15) does not relate to qualified
pension and retirement plans or to a registered investment company's ability to
sell its shares to such plans.
8. Applicants state that changes in the federal tax law have created
the opportunity for each or the Funds to increase its asset base through the
sale of its shares to Qualified Plans. Applicants state that Section 8l7(h) of
the Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
diversification standards on the assets underlying Variable Contracts. Treasury
Regulations generally require that, to meet the diversification requirements,
all of the beneficial interests in the underlying investment company must be
held by the segregated asset accounts of one or more life insurance companies.
Notwithstanding this, Applicants note that the Treasury Regulations also contain
an exception to this requirement that permits trustees of a Qualified Plan to
hold shares of an investment company, the shares of which are also held by
insurance company segregated asset accounts, without adversely affecting the
status of the investment company as an adequately diversified underlying
investment of Variable Contracts issued through such segregated asset accounts
(Treas. Reg. 1.817-5(t)(3)(iii))
9. Applicants state that the promulgation of Rules 6e-2(b)(15) and
6e-3(1)(b)(15) under the 1940 Act preceded the issuance of these Treasury
Regulations. Thus, Applicants assert that the sale of shares of the same
investment company to both separate accounts and Qualified Plans was not
contemplated at the time of the adoption of Rules 6e-2(b)(15) and
6e-3(T)(b)(15).
10. Section 9(a) provides that it is unlawful for any company to serve
as investment adviser or principal underwriter of any registered open-end
investment company if an affiliated person of that company is subject to a
disqualification enumerated in Sections 9(a)(1) or (2). Rules 6e-2(b)(15) and
6e-3(T)(b)(15) provide exemptions from Section 9(a) under certain circumstances,
subject to the limitations on mixed and shared funding. These exemptions limit
the application or the eligibility restrictions to affiliated individuals or
companies that directly participate in the management of the underlying
portfolio investment company.
11. Applicants state that the relief granted in Rules 6e-2(b)(15) and
6e-3(T)(b)(15) from the requirements of Section 9 limits, in effect, the amount
of monitoring of an insurer's personnel that would otherwise be necessary to
ensure compliance with Section 9 to that which is appropriate in light of the
policy
6
and purposes of Section 9. Applicants submit that those Rules recognize that it
is not necessary for the protection of investors or the purposes fairly intended
by the policy and provisions of the 1940 Act to apply the provisions of Section
9(a) to the many individuals involved in an insurance company complex, most of
whom typically will have no involvement in matters pertaining to investment
companies funding the separate accounts.
12. Applicants to the Original Order previously requested and received
relief from Section 9(a) and Rules 6e-2(b)(15) and 6e-3(I)(b)(15) to the extent
necessary to permit mixed and shared funding. Applicants maintain that the
relief previously granted from Section 9(a) will in no way be affected by the
proposed sale of shares of the Funds to Qualified Plans. Those individuals who
participate in the management or administration of the Funds will remain the
same regardless of which Qualified Plans use such Funds. Applicants maintain
that more broadly applying the requirements of Section 9(a) because of
investment by Qualified Plans would not serve any regulatory purpose. Moreover,
Qualified Plans, unlike separate accounts, are not themselves investment
companies and therefore are not subject to Section 9 of the 1940 Act.
13. Applicants state that Rules 6e-2(b)(15)(iii) and
6c-3(T)(b)(15)(III) provide exemptions from the pass-through voting requirement
with respect to several significant matters, assuming the limitations on mixed
and shared funding are observed. Rules 6e-2(b)(15)(iii)(A) and
6e-3(T)(b)(15)(iii)(A) provide that the insurance company may disregard the
voting instructions of its contractowners with respect to the investments of an
underlying fund or any contract between a fund and its investment adviser, when
required to do so by an insurance regulatory authority (subject to the
provisions of paragraphs (b)(5)(i) and (b)(7)(ii)(A) of the Rules). Rules
6e-2(b)(15)(iii)(B) and 6e-3(f)(b)(15)(iii)(A)(2) provide that the insurance
company may disregard contractowners' voting instructions if the contractowners
initiate any change in such company's investment policies, principal
underwriter, or any investment adviser (provided that disregarding such voting
instructions is reasonable and subject to the other provisions of paragraphs
(b)(5)(ii) and (b)(7)(ii)(B) and (C) of the Rules).
7
14. Applicants assert that Qualified Plans, which are not registered as
investment companies under the 1940 Act, have no requirement to pass-through the
voting rights to plan participants. Applicants state that applicable law
expressly reserves voting rights to certain specified persons. Under Section
403(a) of the Employment Retirement Income Security Act ("ERISA"), shares of a
fund sold to a Qualified Plan must be held by the trustees of the Qualified
Plan. Section 403(a) also provides that the trustee(s) must have exclusive
authority and discretion to manage and control the Qualified Plan with two
exceptions: (1) when the Qualified Plan expressly provides that the trustee(s)
are subject to the direction of a named fiduciary who is not a trustee in which
case the trustees are subject to proper directions made in accordance with the
terms of the Qualified Plan and not contrary to ERISA; and (2) when the
authority to manage, acquire or dispose of assets of the Qualified Plan is
delegated to one or more investment managers pursuant to Section 402(c)(3) of
ERISA. Unless one of the two above exceptions stated in Section 403(a) applies,
Qualified Plan trustees have the exclusive authority and responsibility for
voting proxies. Where a named fiduciary to a Qualified Plan appoints an
investment manager, the investment manager has the responsibility to vote the
shares held unless the right to vote such shares is reserved to the trustees or
the named fiduciary. Where a Qualified Plan does not provide participants with
the right to give voting instructions, Applicants do not see any potential for
material irreconcilable conflicts of interest between or among variable contract
holders and Qualified Plan investors with respect to voting of the respective
Fund's shares. Accordingly, Applicants state that, unlike the case with
insurance company separate accounts, the issue of the resolution of material
irreconcilable conflicts with respect to voting is not present with respect to
such Qualified Plans since the Qualified Plans are not entitled to pass-through
voting privileges.
15. Even if a Qualified Plan were to hold a controlling interest in one
of the Funds, Applicants believe that such control would not disadvantage other
investors in such Fund to any greater extent than is the case when any
Institutional shareholder holds a majority of the voting securities of any
open-end management investment company. In this regard, Applicants submit that
investment in a Fund by a Qualified Plan will not create any of the voting
complications occasioned by mixed funding or shared
8
funding. Unlike mixed or shared funding, Qualified Plan investor voting rights
cannot be frustrated by veto rights of insurers or state regulators.
16. Applicants state that some of the Qualified Plans however, may
provide for the trustee(s), an investment adviser (or advisers), or another
named fiduciary to exercise voting rights in accordance with instructions from
participants. Where a Qualified Plan provides participants with the right to
give voting instructions, Applicants see no reason to believe that participants
in Qualified Plans generally or those in a particular Qualified Plan, either as
a single group or in combination with participants in other Qualified Plans,
would vote in a manner that would disadvantage Variable Contract holders. In
sum, Applicants maintain that the purchase of shares of the Funds by Qualified
Plans that provide voting rights does not present any complications not
otherwise occasioned by mixed or shared funding.
17. Applicants do not believe that the sale of the shares of the Funds
to Qualified Plans will increase the potential for material irreconcilable
conflicts of interest between or among different types of investors. In
particular, Applicants see very little potential for such conflicts beyond that
which would otherwise exist between variable annuity and variable life insurance
contractowners.
18. As noted above, Section 817(h) of the Code imposes certain
diversification standards on the underlying assets of variable contracts held in
an underlying mutual fund. The Code provides that a variable contract shall not
be treated as an annuity contract or life insurance, as applicable, for any
period (and any subsequent period) for which the investments are not, in
accordance with regulations prescribed by the Treasury Department, adequately
diversified.
19. Treasury Department Regulations issued under Section 817(h) provide
that, in order to meet the statutory diversification requirements, all of the
beneficial interests in the investment company must be held by the segregated
asset accounts of one or more insurance companies. However, the Regulations
contain certain exceptions to this requirement, one of which allows shares in an
underlying mutual fund to be held by the trustees of a qualified pension or
retirement plan without adversely affecting the ability of shares in the
underlying fund also to be held by separate accounts of insurance companies in
connection with their variable contracts (Treas. Reg. 1.817-5(t)(3)(iii). Thus,
Applicants believe that the Treasury
9
Regulations specifically permit "qualified pension or retirement plans" and
separate accounts to invest in the same underlying fund. For this reason,
Applicants have concluded that neither the Code nor the Treasury Regulations or
revenue rulings thereunder presents any inherent conflict of interest.
20. Applicants note that while there are differences in the manner in
which distributions from Variable Contracts and Qualified Plans are taxed, these
differences will have no impact on the Funds. When distributions are to be made,
and a Separate Account or Qualified Plan is unable to net purchase payments to
make the distributions, the Separate Account and Qualified Plan will redeem
shares of the Funds at their respective net asset value in conformity with Rule
22c-1 under the 1940 Act (without the imposition of any sales charge) to provide
proceeds to meet distribution needs. A Qualified Plan will make distributions in
accordance with the terms of the Qualified Plan.
21. Applicants maintain that it is possible to provide an equitable
means of giving voting rights to Participating Separate Account contractowners
and to Qualified Plans. In connection with any meeting of shareholders, the
Funds will inform each shareholder, including each Participating Insurance
Company and Qualified plan of information necessary for the meeting, including
their respective share of ownership in the relevant fund. Each Participating
Insurance Company will then solicit voting instructions in accordance with Rules
6e-2 and 6e-3(T), as applicable, and its participation agreement with the
relevant Fund Shares held by Qualified Plans will be voted in accordance with
applicable law. The voting rights provided to Qualified Plans with respect to
shares of the Funds would be no different from the voting rights that are
provided to Qualified Plans with respect to shares of funds sold to the general
public.
22. Applicants have concluded that even if there should arise issues
with respect to a state insurance commissioner's veto powers over investment
objectives where the interests of contractowners and the interests of Qua1ified
Plans are in conflict, the issues can be almost immediately resolved since the
trustees of (or participants in) the Qualified Plans can, on their own, redeem
the shares out of the Funds. Applicants note that state insurance commissioners
have been given the veto power in recognition of the fact that insurance
companies usually cannot simply redeem their separate accounts out of one fund
and invest in another. Generally, time-consuming, complex transactions must be
undertaken to accomplish such
10
redemptions and transfers. Conversely, the trustees of Qualified Plans or the
participants in participant-directed Qualified Plans can make the decision
quickly and redeem their interest in the Funds and reinvest in another funding
vehicle without the same regulatory impediments faced by separate accounts or,
as is the case with most Qualified Plans, even hold cash pending suitable
investment.
23. Applicants also state that they do not see any greater potential
for material irreconcilable conflicts arising between the interests of
participants under Qualified Plans and contractowners of Participating Separate
Accounts from possible future changes in the federal tax laws than that which
already exist between variable annuity contractowners and variable life
insurance contractowners .
24. Applicants state that the sale of shares of the Funds to Qualified
Plans in addition to separate accounts of Participating Insurance Companies will
result in an increased amount of assets available for investment by the Funds.
This may benefit variable contractowners by promoting economies of scale, by
permitting increased safety of investments through greater diversification, and
by making the addition of new portfolios more feasible.
25. Applicants assert that, regardless of the type of shareholders in
each Fund, each Fund's Investment Manager is or would be contractually and
otherwise obligated to manage the Fund solely and exclusively in accordance with
that Fund's investment objectives, policies and restrictions as well as any
guidelines established by the Board of Trustees of such Fund (the "Board"). The
Investment Manager works with a pool of money and (except in a few instances
where this may be required in order to comply with state insurance laws) does
not take into account the identity of the shareholders. Thus, each Fund will be
managed in the same manner as any other mutual fund. Applicants therefore see no
significant legal impediment to permitting the sale of shares of the Funds to
Qualified Plans.
26. Applicants state that the Commission has permitted the amendment of
a substantially similar original order for the purpose of adding a party to the
original order and has permitted open-end management investment companies to
offer their shares directly to Qualified Plans in addition to separate accounts
of affiliated or unaffiliated insurance companies which issue either or both
variable annuity contracts or variable life insurance contracts. Applicants
state that the amended order sought in the
11
application is identical to precedent with respect to the conditions App1icants
propose should be imposed on Qualified Plans in connection with investment in
the Funds.
Applicants' Conditions:
If the requested amended order is granted, Applicants consent to the
following conditions:
1. A majority of the Board of each Fund shall consist of persons who
are not "interested persons" thereof, as defined by Section 2(a)(19) of the 1940
Act, and the rules thereunder and as modified by any applicable orders of the
Commission, except that if this condition is not met by reason of the death,
disqualification or bona fide resignation of any Board Member or Members, then
the operation of this condition shall be suspended: (a) for a period of 45 days
if the vacancy or vacancies may be filled by the remaining Board Members; (b)
for a period of 60 days if a vote of shareholders is required to fill the
vacancy or vacancies; or (c) for such longer period as the Commission may
prescribe by order upon application.
2. The Board will monitor their respective Fund for the existence of
any material irreconcilable conflict among the interests of the Variable
Contract owners of all Separate Accounts investing in the Funds and of the
Qualified Plan participants investing in the Funds. The Board will determine
what action, if any, shall be taken in response to such conflicts. A material
irreconcilable 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 interpretive 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 the Funds are being managed; (e) a difference in
voting instructions given by variable annuity contract owners, variable life
insurance contract owners, and trustees of Qualified Plans; (f) a decision by an
insurer to disregard the voting instructions of Variable Contract owners; or (g)
if applicable, a decision by a Qualified Plan to disregard the voting
instructions of Qualified Plan participants.
3. Participating Insurance Companies, the Investment Managers, and any
Qualified Plan that executes a fund participation agreement upon becoming an
owner of 10 percent or more of the assets of an
12
Fund (a "Participating Qualified Plan"), will report any potential or existing
conflicts of which it becomes aware to the Board of any relevant Fund.
Participating Insurance Companies, the Investment Managers and the Participating
Qualified Plans will be responsible for assisting the Board in carrying out its
responsibilities under these conditions by providing the Board with all
information reasonably necessary for the Board to consider any issues raised.
This responsibility includes, but is not limited to, an obligation by each
Participating Insurance Company to inform the Board whenever voting instructions
of Contract owners are disregarded and, if pass-through voting is applicable, an
obligation by each Participating Qualified Plan to inform the Board whenever it
has determined to disregard Qualified Plan participant voting instructions. The
responsibility to report such information and conflicts, and to assist the
Board, will be contractual obligations of all Participating Insurance Companies
investing in the Funds under their agreements governing participation in the
Funds, and such agreements shall provide that these responsibilities will be
carried out with a view only to the interests of the Variable Contract owners.
The responsibility to report such information and conflicts, and to assist the
Board, will be contractual obligations of all Participating Qualified Plans
under their agreements governing participation in the Funds, and such agreements
will provide that their responsibilities will be carried out with a view only to
the interests of Qualified Plan participants.
4. If it is determined by a majority of the Board of a Fund, or by a
majority of the disinterested Board Members, that a material irreconcilable
conflict exists, the relevant Participating Insurance Companies and
Participating Qualified Plans will, at their own expense and to the extent
reasonably practicable as determined by a majority of the disinterested Board
Members, take whatever steps are necessary to remedy or eliminate the material
irreconcilable conflict, which steps could include: (a) in the case of
Participating Insurance Companies, withdrawing the assets allocable to some or
all of the Separate Accounts from the Fund or any portfolio thereof and
reinvesting such assets in a different investment medium, including another
portfolio of an Fund or another Fund, or submitting the question as to whether
such segregation should be implemented to a vote of all affected Variable
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity contract owners or
13
variable life insurance contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
Variable Contract owners the option of making such a change; (b) in the case of
Participating Qualified Plans, withdrawing the assets allocable to some or all
of the Qualified Plans from the Fund and reinvesting such assets in a different
investment medium; and (c) establishing a new registered management investment
company or managed Separate Account. If a material irreconcilable conflict
arises because of a decision by a Participating Insurance Company to disregard
Variable Contract owner voting instructions, and that decision represents a
minority position or would preclude a majority vote, then the insurer may be
required, at the Fund's election, to withdraw the insurer's Separate Account
investment in such Fund, and no charge or penalty will be imposed as a result of
such withdrawal. If a material irreconcilable conflict arises because of a
Participating Qualified Plan's decision to disregard Qualified Plan participant
voting instructions, if applicable, and that decision represents minority
position or would preclude a majority vote, the Participating Qualified Plan may
be required, at the Fund's election, to withdraw its investment in such Fund,
and no charge or penalty will be imposed as a result of such withdrawal. The
responsibility to take remedial action in the event of a determination by a
Board of a material irreconcilable conflict and to bear the cost of such
remedial action will be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds, and these responsibilities will be carried out with
a view only to the interest of Variable Contract owners and Qualified Plan
participants.
5. For purposes of Condition 4, a majority of the disinterested Board
Members of the applicable Board will determine whether or not any proposed
action adequately remedies any material irreconcilable conflict, but in no event
will the relevant Fund or the Investment Managers be required to establish a new
funding medium for any Contract. No Participating Insurance Company shall be
required by Condition 4 to establish a new funding medium for any Variable
Contract if any offer to do so has been declined by vote of a majority of the
Variable Contract owners materially and adversely affected by the material
irreconcilable conflict. Further, no Participating Qualified Plan shall be
required by Condition 4 to establish a new funding medium for any Participating
Qualified Plan if (a) a majority of Qualified Plan
14
participants materially and adversely affected by the irreconcilable material
conflict vote to decline such offer, or (b) pursuant to governing Qualified Plan
documents and applicable law, the Participating Qualified Plan makes such
decision without a Qualified Plan participant vote.
6. The determination of the Board of the existence of a material
irreconcilable conflict and its implications will be made known in writing
promptly to all Participating Insurance Companies and Participating Qualified
Plans.
7. Participating Insurance Companies will provide pass-through voting
privileges to Variable Contract owners who invest in registered Separate
Accounts so long as and to the extent that the Commission continues to interpret
the 1940 Act as requiring pass-through voting privileges for Variable Contract
owners. As to Variable Contracts issued by unregistered Separate Accounts,
pass-through voting privileges will be extended to participants to the extent
granted by issuing insurance companies. Each Participating Insurance Company
will also vote shares of the Funds held in its Separate Accounts for which no
voting instructions from Contract owners are timely received, as well as shares
of the Funds which the Participating Insurance Company itself owns, in the same
proportion as those shares of the Funds for which voting instructions from
contract owners are timely received. Participating Insurance Companies will be
responsible for assuring that each of their registered Separate Accounts
participating in the Funds calculates voting privileges in a manner consistent
with other Participating Insurance Companies. The obligation to calculate voting
privileges in a manner consistent with all other registered Separate Accounts
investing in the Funds will be a contractual obligation of all Participating
Insurance Companies under their agreements governing their participation in the
Funds. Each Participating Qualified Plan will vote as required by applicable law
and governing Qualified Plan documents.
8. All reports of potential or existing conflicts received by the Board
of a Fund and all action by such Board with regard to determining the existence
of a conflict, notifying Participating Insurance Companies and Participating
Qualified Plans of a conflict, and determining whether any proposed action
adequately remedies a conflict, will be properly recorded in the minutes of the
meetings of such Board or
15
other appropriate records, and such minutes or other records shall be made
available to the Commission upon request.
9. Each Fund will notify all Participating Insurance Companies that
separate disclosure in their respective Separate Account prospectuses may be
appropriate to advise accounts regarding the potential risks of mixed and shared
funding. Each Fund shall disclose in its prospectus that (a) the Fund is
intended to be a funding vehicle for variable annuity and variable life
insurance contracts offered by various insurance companies and for qualified
pension and retirement plans; (b) due to differences of tax treatment and other
considerations, the interests of various Contract owners participating in the
Fund and/or the interests of Qualified Plans investing in the Fund may at some
time be in conflict; and (c) the Board of such Fund will monitor events in order
to identify the existence of any material irreconcilable conflicts and to
determine what action, if any, should be taken in response to any such conflict.
10. Each Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders (which, for these purposes, will be the persons having a
voting interest in the shares of the Funds), and, in particular, the Funds will
either provide for annual shareholder meetings (except insofar as the Commission
may interpret Section 16 of the 1940 Act not to require such meetings) or comply
with Section 16(c) of the 1940 Act, although the Funds are not the type of trust
described in Section 16(c) of the 1940 Act, as well as with Section 16(a) of the
1940 Act and, if and when applicable, Section 16(b) of the 1940 Act. Further,
each Fund will act in accordance with the Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of Board
Members and with whatever rules the Commission may promulgate with respect
thereto.
11. If and to the extent Rules 6e-2 or 6e-3(T) under the 1940 Act is
amended, or proposed Rule 6e-3 under the 1940 Act is adopted, to provide
exemptive relief from any provision of the 1940 Act or the rules promulgated
thereunder, with respect to mixed or shared funding on terms and conditions
materially different from any exemptions granted in the order requested in the
application, then the Funds and/or Participating Insurance Companies and
Participating Qualified Plans, as appropriate, shall take such steps as
16
may be necessary to comply with such Rules 6e-2 and 6e-3(T), as amended, or
proposed Rule 6e-3, as adopted, to the extent that such Rules are applicable.
12. The Participating Insurance Companies and Participating Qualified
Plans and/or the Investment Managers, at least annually, will submit to the
Board such reports, materials or data as the Board may reasonably request so
that the Board may fully carry out obligations imposed upon it by the conditions
contained in the application. Such reports, materials and data will be submitted
more frequently if deemed appropriate by the Board. The obligations of the
Participating Insurance Companies and Participating Qualified Plans to provide
these reports, materials and data to the Board, when the Board so reasonably
requests, shall be a contractual obligation of all Participating Insurance
Companies and Participating Qualified Plans under their agreements governing
participation in the Funds.
13. If a Qualified Plan should ever become a holder of ten percent or
more of the assets of a Fund, such Qualified Plan will execute a participation
agreement with the Fund that includes the conditions set forth herein to the
extent applicable. A Qualified Plan will execute an application containing an
acknowledgment of this condition upon such Qualified Plan's initial purchase of
the shares of any Fund.
Conclusion:
Applicants assert that, for the reasons summarized above, the requested
exemptions are appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Xxxxxxxx X. Xxxx
Secretary
/s/ Xxxxxxxx X. XxXxxxxxx
-------------------------
By: Xxxxxxxx X. XxXxxxxxx
Deputy Secretary
FUND PARTICIPATION AGREEMENT
Ameritas Variable Life Insurance Company ("Insurance Company") and Xxx Xxx
Worldwide Insurance Trust ("Trust") hereby agree this ____ day of
______________, 2002 that Xxx Xxx Worldwide Hard Assets Fund shall be made
available to serve as an underlying investment medium for individual Variable
Life Insurance and Annuity Contracts ("Contracts") to be offered by Insurance
Company subject to the following provisions:
1. Insurance Company represents that it has established the Ameritas Variable
Separate Account VA and Ameritas Variable Separate Account VL (the
"Variable Accounts"), separate accounts under Nebraska law, and has
registered each as a unit investment trust under the Investment Company Act
of 1940 (" 1940 Act") to serve as an investment vehicle for the applicable
Contracts. The Contracts provide for the allocation of net amounts received
by Insurance Company to separate series of the Variable Account for
investment in the shares of specified investment companies selected among
those companies available through the Variable Account to act as underlying
investment media. Selection of particular investment company is made by the
Contract owner who may change such selection from time to time in
accordance with the terms of the applicable Contract.
2. The Trust has received an order from the Commission dated September 19,
1990, (File No. 812-7451) granting participating insurance companies and
their separate accounts exemptions from the provisions of sections 9(a),
13(a), 15(a) and 15(b) of 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
Portfolios of the Trust to be sold to and held by variable annuity and
variable life insurance, separate accounts of life insurance companies.
3. The Trust or the Adviser will provide closing net asset value, dividend and
capital gain information at the close of trading each business day to
Insurance Company or its designated Agent. Insurance Company will use this
data to calculate unit values, which will in turn be used to process that
same business day's Variable Account unit value. The Variable Account
processing will be done the same evening, and orders will be placed the
morning of the following business day. Orders will be sent directly to the
Trust or its specified agent, and payment for purchases will be wired to a
custodial account designated by the Trust or the Adviser, so as to coincide
with the order for Trust shares. The Trust will execute the orders at the
net asset value as determined as of the close of trading on the prior day.
Dividends and capital gains distributions shall be reinvested in additional
shares at the ex-date net asset value.
4. All expenses incident to the performance by the Trust under this Agreement
shall be paid by the Trust "The Trust" shall pay the cost of registration
of Trust shares with the Securities and Exchange Commission ("SEC") The
Trust shall distribute, to the Variable Account, proxy material, periodic
Trust reports to shareholders and other material the Trust may require to
be sent to Contract owners. The Trust shall pay the cost of qualifying
Trust shares in states where required. The Trust will provide Insurance
Company with a reasonable quantity of the Trust's Prospectus and the
reports to be used in contemplation of this Agreement. The Trust will
provide Insurance Company with a copy of the Statement of Additional
Information suitable for duplication.
5. Insurance Company and its agents shall make no representation concerning
the Trust or Trust shares except those contained in the then current
prospectuses of the Trust and in current printed sales literature of the
Trust.
1
6. Administrative services to Contract owners shall be the responsibility of
Insurance Company, and shall not be the responsibility of the Trust or the
Adviser.
7. The Trust shall comply with Sections 817(h) and 851 of the Internal Revenue
Code of 1986, if applicable, and the regulations thereunder, and the
applicable provisions of the 1940 Act relating to the diversification
requirements for variable annuity, endowment, and life insurance contracts.
Upon request, the Trust shall provide Insurance Company with a letter from
the appropriate Trust officer certifying the Trust's compliance with the
diversification requirements and qualification as a regulated investment
company.
8. Insurance Company agrees to inform the Board of Trustees of the Trust of
the existence of, or any potential for; any material irreconcilable
conflict of interest between the interests of the Contract owners of the
Variable Account investing in the Trust and/or any other separate account
or any other insurance company investing in the Trust. A material
irreconcilable conflict may arise for a variety of reasons, including:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, 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 by variable annuity or
life insurance contract owners of different life insurance companies
utilizing the Trust;
(f) a decision by Insurance Company to disregard the voting instructions
of contract owners.
Insurance Company will be responsible for assisting the Board of
Trustees of the Trust in carrying out its responsibilities by providing
the Board with all information reasonably necessary for the Board to
consider any issue raised, including information as to a decision by
Insurance Company to disregard voting instructions of Contract owners.
It is agreed that if it is determined by a majority of the members of
the Board of Trustees of the Trust or a majority of its disinterested
Trustees that a material irreconcilable conflict exists affecting
Insurance Company, Insurance Company shall, at its own expense, take
whatever steps are necessary to remedy or eliminate the irreconcilable
material conflict, which steps may include, but are not limited to,
(a) withdrawing the assets allocable to some or all of the separate
accounts from the Trust or any Portfolio and reinvesting such
assets in a different investment medium, including another
Portfolio of the Trust or submitting the questions of whether
such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of
any particular group (i.e., annuity Contract owners, life
insurance Contract owners or qualified Contract owners) that
votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change;
2
(b) establishing a new registered management investment company or
managed separate account.
If a material irreconcilable conflict arises because of Insurance Company's
decision to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, Insurance
Company may be required, at the Trust's election, to withdraw the Variable
Account's investment in the Trust. No charge or penalty will be imposed against
the Variable Account as a result of such withdrawal. Insurance Company agrees
that any remedial action taken by it in resolving any material conflicts of
interest will be carried out with a view only to the interests of Contract
owners. For purposes hereof, a majority of the disinterested members of the
Board of Trustees of the Trust shall determine whether any proposed action
adequately remedies any material irreconcilable conflict. In no event will the
Trust be required to establish a new funding medium for any Contracts. Insurance
company shall not be required by the terms hereof to establish a new funding
medium for any Contracts if an offer to do so has been declined by vote of a
majority of affected Contract owners. The Trust will undertake to promptly make
known to Insurance Company the Board of Trustees' determination of the existence
of a material irreconcilable conflict and its implications.
9. This Agreement shall terminate as to the sale and issuance of new
contracts:
(a) at the option of any party upon 60 days advance written notice to the
other parties, unless a shorter time is agreed to by the parties;
(b) at the option of the Trust or the Trust Distributor ("Distributor") if
the Contracts issued by Insurance Company cease to qualify as annuity
contracts or life insurance contracts, as applicable, under the Code
or if the Contracts are not registered, issued or sold in accordance
with applicable state and/or federal law; or
(c) at the option of any party upon a determination by a majority of the
Trustees of the Trust or a majority of its disinterested Trustees,
that a material irreconcilable conflict exists; or
(d) at the option of Insurance Company upon institution of formal
proceedings against the Trust or the Distributor by the NASD, the SEC,
or any state securities or insurance department or any other
regulatory body regarding the Trust's or the Distributor's duties
under this Agreement or related to the sale of Portfolio shares or the
operation of the Portfolio; or
(e) at the option of Insurance Company if the Trust or a Portfolio fails
to meet the diversification requirements specified in Section 3.2{e)
hereof; or
(f) at the option of Insurance Company if shares of the Series are not
reasonably available to meet the requirements of the Variable
Contracts issued by Insurance Company; as determined by Insurance
Company, and upon prompt notice by Insurance Company to the other
parties; or
(g) at the option of Insurance Company in the event any of the shares of
the Portfolio are not registered, issued or sold in accordance with
applicable state and/or federal law, or such law precludes the use of
such shares as the underlying investment media of the Variable
Contracts issued or to be issued by Insurance Company; or
(h) at the option of Insurance Company, if the Portfolio fails to qualify
as a Regulated Investment Company under Subchapter M of the Code; or
(i) at the option of the Distributor if it shall determine in its sole
judgment exercised in good faith, that Insurance Company and/or its
affiliated companies has suffered a material adverse change in its
business, operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse publicity.
3
10. Termination as the result of any cause listed in the preceding paragraph
shall not affect the Trust's obligation to furnish Trust shares in respect
of dividends and capital gain distributions on existing shares for
Contracts then force for which the shares of the Trust serve or may serve
as an underlying medium, unless such further sale of Trust shares is
proscribed by law or the SEC or other regulatory body. The Trust shall not
be obligated to furnish Trust shares for purchases after termination. The
Trust reserves the right to reject any purchase order.
11. Each notice required by this Agreement shall be given by wire and confirmed
in writing to:
Van Eck Worldwide Insurance Trust Ameritas Variable Life Insurance Company
00 Xxxx Xxxxxx 5900 "O" Street
New York, New York 10016 Xxxxxxx, Xxxxxxxx 00000
Attention: President Attention: General Counsel
Xxx Xxx Associates Corp. Xxxx Xxxxxxx
00 Xxxx Xxxxxx Xxxxxxxxxx, Xxxxxx and Xxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Attn: President Xxxxxxxxxx, XX 00000-0000
12. Advertising and sales literature with respect to the Trust prepared by
Insurance Company or its agents for use in marketing its contracts will be
submitted to the Trust for review before such material is submitted to the
SEC or NASD for review.
13. Insurance Company will distribute all proxy material furnished by the Trust
and will vote Trust shares in accordance with instructions received from
the Contract owners of such Trust shares. Insurance Company shall vote the
Trust shares for which no instructions have been received in the same
proportion as Trust shares for which said instructions have been received
from Contract owners. Insurance Company and its agents will in no way
recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Trust shares held for such Contract owners.
14. Insurance Company shall designate certain persons and entities which shall
have the requisite licenses to solicit applications for the sale of
Contracts. No representation is made as to the number of amount of
contracts that are to be sold by Insurance Company. Insurance Company shall
make reasonable efforts to market the Contracts and shall comply with all
applicable federal and state laws in connection therewith.
15. Issuance and transfer of the Trust's Portfolios shares will be by book
entry only. Stock certificates will not be issued to the Insurance Company
or the Accounts. Portfolio shares purchased from the Trust will be recorded
in the appropriate title for each Account or the appropriate subaccount of
each account.
The Trust shall furnish, on or before the ex-dividend date notice to the
Insurance Company of any income dividends or capital gain distributions
payable on the shares of any Portfolio of the Trust. The Company hereby
elects to receive all such income dividends and capital gain distributions
as are payable on a Portfolio's shares in additional shares of that
Portfolio. The Trust shall notify the
4
Insurance Company of the number of shares so issued as payment of such
dividends and distributions.
16. Indemnification by the Insurance Company. The Company agrees to indemnify
and hold harmless the Advisor, the Trust and each of its Trustees,
officers, employees and agents and each person, if any, who controls the
Trust within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Insurance Company, which consent shall not
be unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or
expense and reasonable legal counsel fees incurred in connection therewith)
(collectively , "Losses"), to which the Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of the
Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in a registration statement
or prospectus for the Contracts or in the Contracts themselves or in
sales literature generated or approved by the Insurance Company on
behalf of the Contracts or Accounts (or any amendment or supplement to
any of the foregoing) or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, provided that this indemnity 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 was accurately
derived from written information furnished to the Insurance Company by
or on behalf of the trust for use in Insurance Company Documents or
otherwise for use in connection with the sale of the Contracts of
Trust shares; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Trust Documents) or wrongful conduct of the Insurance Company or
persons under its control, with respect to the sale or acquisition of
the Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Trust Documents or the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading if such statement or omission was made in reliance upon and
accurately derived from written information furnished to the Trust by
or on behalf of the Insurance Company; or (iv) arise out of or result
from any failure by the Insurance Company to provide the services or
furnish the materials required under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Insurance Company in this
Agreement or arise out of or result from any other material breach of
this Agreement by the Insurance Company; or
(d) arise out or result from the provision by the Insurance Company to the
Trust of insufficient or incorrect information regarding the
purchasing or sale of shares of any Portfolio, or the failure of the
Company to provide such information on a timely basis.
17. Indemnification by the Trust The Trust agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees, and
agents and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act against Losses, to which the
5
Indemnified Parties may become subject under any statute or regulation, or
at common law or otherwise, insofar as such Losses are related to the sale
or. acquisition of the Contracts or Trust shares and:
(a) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the registration
statement or prospectus for the Trust (or any amendment or supplement
thereto), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity 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 was accurately
derived from written information furnished to the Advisor or the Trust
by or on behalf of the Insurance Company for use in Trust Documents or
otherwise for use in connection with the sale of the Contracts or
Trust shares and; or
(b) arise out of or result from statements or representations (other than
statements or representations contained in and accurately derived from
Insurance Company Documents) or wrongful conduct of the Trust or
persons under its control, with respect to the sale or acquisition of
the Contracts or Portfolio shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Insurance Company Documents
or the omission or alleged omission to state therein or necessary to
make the statements therein not misleading if such statement or
omission was made in reliance upon and accurately derived from written
information furnished to the Insurance Company by or on behalf of the
Trust; or
(d) arise out of or result from any failure by the advisor or the Trust to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any representation
and/or warranty made by the Advisor or the Trust in this Agreement or
arise out of a result from any other material breach of this Agreement
by the Advisor or the Trust.
18. None of the Insurance Company, the Trust or the Advisor shall be liable
under the indemnification provisions of Sections 16 and 17 with respect to
any Losses incurred or assessed against an Indemnified Party that arise
from such Indemnified Party's willful misfeasance, bad faith or negligence
in the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement. Nothing herein shall entitle an indemnified party to punitive or
special, (excluding attorney fees and court costs as provided in Sections
16 and 17) consequential or exemplary damages or damages of like kind or
nature and with respect to an incorrect calculation on reporting or
untimely reporting of net asset value, dividend or capital gain
distribution rate, all liability, loss and damages shall be limited to the
amount required to correct the value of the Account as if there had been no
incorrect calculation or reporting or untimely reporting of net asset
value, dividend or capital gain rate.
19. None of the Insurance Company, the Trust or the Advisor shall be liable
under the indemnification provisions with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have notified the
other party in writing within a reasonable time after the summons, or other
first written notification, giving information of the nature of the claim
shall have been served upon or otherwise received by such Indemnified Party
(or after such
6
Indemnified Party shall have received notice of service upon or other
notification to any designated agent), but failure to notify the party
against whom indemnification is sought of any such claim shall not relieve
that party from any liability which it may have to the Indemnified Party in
the absence of Sections 16 and 17.
20. In case any such action is brought against an Indemnified Party, the
indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled
to assume the defense thereof, with counsel reasonably satisfactory to the
party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such defense, 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 the Indemnified
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.
21. This Agreement may be executed in two or more counterparts, each of which
taken together shall constitute one and the same instrument.
22. 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.
23. This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Virginia. It shall
also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the Commission
granting exemptive relief therefrom and the conditions of such orders.
Copies of any such orders shall be promptly forwarded by the Trust to the
Company.
24. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the 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.
25. 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 .
26. This Agreement shall not be exclusive in any respect.
27. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other
party.
28. No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by both
parties.
29. Each party hereto shall, except as required by law or otherwise permitted
by this Agreement, 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 shall not disclose
such confidential information without the written consent of the affected
party unless such information has become publicly available or is required
to be disclosed by, law, rule, regulation or court order.
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30. The Term "Xxx Xxx Worldwide Insurance Trust" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the
Trust dated January 7, 1986 as the same may subsequently thereto have been,
or subsequently hereto be amended. It is expressly agreed that the
obligations of the Trust hereunder shall not be binding upon any Trustees,
shareholders, nominees, officers, agents or employees or the Trust,
personally, but bind only the assets and property of the Trust, as provided
in the Master Trust Agreement of the Trust. The execution and delivery of
this Agreement have been authorized by the Trustees and the Trust, acting
as such, and neither such authorization by such officer shall be deemed to
have been made by any of them personally, but shall bind only the assets
and property of the Trust as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first set forth above.
AMERITAS VARIABLE LIFE INSURANCE COMPANY
By:
Name: Xxxxxxx X. Xxxxxxxx
Title: President and COO
XXX XXX WORLDWIDE INSURANCE TRUST
By:
Name:
Title:
XXX XXX ASSOCIATES CORPORATION
By:
Name:
Title:
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