Exhibit No. 8(b)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made as of April 1, 1987, by and between American
Republic Insurance Company ("American Republic"), American Republic Variable
Annuity Account ("Separate Account"), a Separate Account established by American
Republic pursuant to the Iowa Insurance Code, and PaineWebber Series Trust
("Fund"), an open-end diversified management investment company organized by
PaineWebber under the laws of the Commonwealth of Massachusetts.
WHEREAS, the Account is registered as a unit investment trust under the
Investment Company Act of 1940 for the purpose of issuing variable annuity
contracts ("Contracts") and desires to use the Fund as the underlying investment
vehicle for such Contracts;
WHEREAS, the income, gains and losses, whether or not realized, from
assets allocated to the Separate Account are, in accordance with the applicable
Contracts, to be credited to or charged against the Separate Account without
regard to other income, gains or losses of American Republic or of any other
separate account established or to be established by American Republic;
WHEREAS, the Separate Account is currently subdivided into six
Divisions under which income, gains and losses, whether or not realized, from
assets allocated to each such Division are, in accordance with the applicable
Contracts, to be credited to or charged against such Division without regard to
income, gains or losses of other Divisions or of American Republic;
WHEREAS, the Fund has been established as a Massachusetts business
trust, by Declaration of Trust dated November 21, 1986;
WHEREAS, the Fund is a diversified open-end management investment
company registered under the Investment Company Act of 1940 and established for
the purpose of serving as the underlying investment vehicle for the Separate
Account;
WHEREAS, the Fund is currently subdivided into six Portfolios under
which income, gains and losses, whether or not realized, from assets allocated
to each such Portfolio are, in accordance with the Declaration of Trust, to be
credited to or charged against such Portfolio without regard to income, gains or
losses of other Portfolios of the Fund;
WHEREAS, the investment objectives of the Fund's Portfolios correspond
to the Divisions of the Separate Account; and
WHEREAS, the Fund desires to make the shares of its Portfolios
available to serve as the underlying investment vehicles for the Divisions of
the Separate Account;
IN CONSIDERATION OF - the foregoing, the parties agree as follows:
1. The Contracts will provide for the allocation of net amounts
among the Divisions of the Separate Account for investment in
the shares of the Fund's Portfolios corresponding to such
Divisions. The selection of one or more of the Separate
Account Divisions is to be made by the parties purchasing the
Contracts (the "Contract Owners") and such selection may be
changed in accordance with the terms of the Contracts.
2. If and to the extent required by law, the Separate Account
will:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract Owners; and
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(iii) vote Fund shares for which no instructions, have been
received in the same proportion as Fund shares of such
Portfolio for which instructions have been received; so
long as and to the extent that the Securities and
Exchange Commission continues to interpret the
Investment Company Act of 1940 to require pass-through
voting privileges for variable contract owners.
3. The Fund's shares will be made available to serve as the
underlying investment vehicle for the Separate Account;
provided, however, that the Board of Trustees of the Fund (the
"Trustees") may refuse to sell shares of any Portfolio of the
Fund 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
discretion of the Trustees acting in good faith-and in light
of their fiduciary duties under applicable federal and state
laws, necessary in the best interests of the shareholders of
such Portfolio. The Fund will comply with all applicable
federal and state laws and regulations.
4. Shares of the Fund will be purchased by the Separate Account
in accordance with the provisions of the then-current
registration statement of the Fund. Shares of the Fund's
Portfolios will be ordered in such quantities and at such
times as determined by the Separate Account to be necessary to
meet its requirements. Payments for shares purchased by the
Separate Account will be made in federal funds transmitted to
the Fund by wire on the next business day after the order is
placed.
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5. Transfer of the Fund's shares will be by book entry only. No
share certificates will be issued to the Separate Account or
its Divisions. The Separate Account will maintain adequate
records with respect to the number of shares held by each
Division on behalf of each Contract Owner.
6. The Fund's Portfolios will declare all dividends or
distributions in accordance with the then-current registration
statement of the Fund. All of such dividends and distributions
will be automatically reinvested in additional shares of the
Portfolios, and the Fund will promptly notify the Separate
Account of the number of additional shares so acquired.
7. The Trustees of the Fund 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 and variable life
insurance Contract Owners; or (f) a decision by an insurer to
disregard the voting instructions of Contract Owners. The
Trustees will promptly inform American Republic if it
determines that an irreconcilable material conflict arises and
the implications thereof.
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8. American Republic will report any potential or existing
conflicts of which it is aware to the Trustees. American
Republic will assist the Trustees in carrying out their
responsibilities under any exemptive order by providing the
Trustees with all information reasonably necessary for them to
consider any issues raised, including whether Contract Owner
voting instructions are being disregarded.
9. If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material
irreconcilable conflict exists, American Republic will, 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 and including: (1) withdrawing the assets allocable to
the Separate Account 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 of whether such segregation should
be implemented to a vote of all affected Contract Owners and,
as appropriate, segregating the assets of any appropriate
group (i.e., annuity Contract owners, life insurance Contract
Owners or variable contract owners of one or more
participating insurance companies) that votes in favor of such
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 separate account.
American Republic will bear the expense of resolving any
irreconcilable conflict arising out of participation in the
Fund by its Variable Products but will not be required to bear
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the expense of resolving any irreconcilable conflicts arising
out of participation in the Fund by its Variable Products and
similar products offered by other unaffiliated insurance
companies.
10. If a material irreconcilable conflict arises because of a
decision by American Republic to disregard Contract Owner
voting instructions and that decision represents a minority
position or would preclude a majority vote, American Republic
may be required, at the Fund's election, to withdraw the
Separate Account's investment in the Fund and terminate this
Agreement; provided, however, that such withdrawal and
termination shall be limited to the extent required to cure
such conflict as determined by a majority of the disinterested
Trustees. 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 that
six month period Equities and the Fund will continue to accept
and implement orders by American Republic for the purchase
(and redemption) of shares of the Fund.
11. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to
American Republic conflicts with the majority of other state
regulators, then American Republic will withdraw the Separate
Account's investment in the Fund and terminate this Agreement
within six months after the Trustees inform American Republic
in writing that they have determined that such decision has
created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited
to the extent required to cure such conflict as determined by
a majority of the disinterested Trustees. Until the end of the
foregoing six month period, the Fund shall continue to accept
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and execute orders by American Republic for the purchase (and
redemption) of shares of the Fund unless prohibited by law or
regulatory authority.
12. For purposes of Sections 9-11 above, a majority of the
disinterested Trustees will 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 Separate Account. In
the event that the Trustees determine that any proposed action
does not adequately remedy any irreconcilable material
conflict, then American Republic will withdraw the Separate
Account's investment in the Fund and terminate this Agreement
within six (6) months after the Trustees inform American
Republic in writing of the foregoing determination; provided,
however that such withdrawal and termination shall be limited
to the extent required to cure such conflict as determined by
a majority of the disinterested Trustees.
13. This Agreement shall be construed in accordance with the laws
of the State of New York; provided, however, that Section 14
below will be construed in accordance with the laws of the
Commonwealth of Massachusetts.
14. The parties hereby acknowledge their understanding that a copy
of the Declaration of Trust of the Fund is on file with the
Secretary of the Commonwealth of Massachusetts and that this
Agreement is executed on behalf of the Fund, and not on behalf
of the Trustees, officers or shareholders of the Fund
individually, and that the obligations under this Agreement
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are not binding upon the Trustees, officers, or shareholders
of the Fund individually, but are binding only upon the assets
and property of the Fund.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 1st day of April, 1987.
AMERICAN REPUBLIC INSURANCE COMPANY
By: /s/ Xxxxxx Xxxxxx
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Associate Vice President and Associate Counsel
(Name of Officer, Title)
Attest: /s/ Xxxxxx Xxxxxxxx
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AMERICAN REPUBLIC INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
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(Name of Officer, Title)
Attest: /s/ Xxxxxx Xxxxxxxx
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PAINEWEBBER SERIES TRUST
By: /s/ Xxxxxx X. X'Xxxxxxx
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Vice President and Secretary
(Name of Officer; Title)
Attest: /s/ Xxxx X. Xxxxx
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