EXHIBIT 8(b)
Participation Agreement
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of April, 2011 (the
"Agreement") by and among Ameritas Life Insurance Corp. ("Ameritas Life") and
The Union Central Life Insurance Company ("Union Central Life"), each organized
under the laws of the State of Nebraska, First Ameritas Life Insurance Corp. of
New York ("First Ameritas Life"), organized under the laws of the State of New
York (Ameritas Life, Union Central Life, and First Ameritas Life, each and
collectively, hereinafter shall be referred to as the "Company"), on behalf of
itself and each separate account of the Company (with the responsibilities and
obligations hereunder being pertinent to each Company solely with respect to the
separate account(s) established by the respective Company) named in Schedule A
to this Agreement, as may be amended from time to time (each account referred to
as the "Account" and collectively as the "Accounts"); Financial Investors
Variable Insurance Trust, an open-end management investment company organized
under the laws of the State of Delaware (the "Fund"); ALPS Advisors, Inc., a
corporation organized under the laws of the State of Colorado and investment
adviser to the Fund (the "Adviser"); and ALPS Distributors, Inc., a corporation
organized under the laws of the State of Colorado and principal
underwriter/distributor of the Fund (the "Distributor").
WHEREAS, the Fund engages in business as an open-end management investment
company and was established for the purpose of serving as the investment vehicle
for separate accounts established for variable life insurance policies and
variable annuity contracts to be offered by insurance companies that have
entered into participation agreements substantially similar to this Agreement
(the "Participating Insurance Companies"); and
WHEREAS, beneficial interests in the Fund are divided into several series of
shares, each representing the interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Company has established the Accounts to serve as investment
vehicles for certain individual variable life insurance policies and variable
annuity contracts and to provide investment options for group variable annuity
contracts offered through employer-sponsored retirement plans (hereinafter such
policies and contracts are collectively referred to as the "Contracts"), as set
forth on Schedule A; and
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WHEREAS, the Accounts are duly organized, validly existing segregated asset
accounts, established by resolutions of the Board of Directors of each Company
as required under the insurance laws of each Company's domiciliary state, to set
aside and invest assets attributable to the Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and regulations,
the Company intends to purchase shares of the Portfolios named in Schedule B, as
such schedule may be amended from time to time (the "Designated Portfolios") on
behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Adviser and the Distributor agree as follows:
ARTICLE I - SALE OF FUND SHARES
1.1 The Fund agrees to sell to the Company those shares of the Designated
Portfolios that each Account orders, executing such orders on a daily basis
at the net asset value ("NAV") (and with no sales charges) next computed
after receipt and acceptance by the Fund or its designee of the order for
the shares of the Fund. In accordance with Rule 22c-1 of the Investment
Company Act of 1940 ("1940 Act") and for purposes of this Section 1.1, the
Company will be the designee of the Fund for receipt of such orders from
each Account and receipt by such designee will constitute receipt by the
Fund; provided that the Fund receives notice of such order by 11:00 a.m.
Eastern Time on the next following business day. "Business Day" will 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
Securities and Exchange Commission (the "Commission" or the "SEC"). The
Fund may net the notice of redemptions it receives from the Company under
Section 1.3 of this Agreement against the notice of purchases it receives
from the Company under this Section 1.1.
1.2 The Company will pay for Fund shares on the next Business Day after an
order to purchase Fund shares is made in accordance with Section 1.1.
Payment will be made in federal funds transmitted by wire. Upon receipt by
the Fund of the payment, such funds shall cease to be the responsibility of
the Company and shall become the responsibility of the Fund.
1.3 The Fund agrees to redeem for cash, upon the Company's request, any full
or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the NAV next computed after receipt and
acceptance by the Fund or its agent of the request for redemption. For
purposes of this Section 1.3, the Company will be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by
such designee will constitute receipt by the Fund; provided the
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Fund receives notice of such requests for redemption by 11:00 a.m. Eastern
Time on the next following Business Day. Payment will be made in federal
funds transmitted by wire to the Company's account as designated by the
Company in writing from time to time, on the same Business Day the Fund
receives notice of the redemption order from the Company. After consulting
with the Company, the Fund reserves the right to delay payment of
redemption proceeds, but in no event may such payment be delayed longer
than the period permitted under Section 22(e) of the 0000 Xxx. The Fund
will not bear any responsibility whatsoever for the proper disbursement or
crediting of redemption proceeds; the Company alone will be responsible for
such action. If notification of redemption is received after 11:00 Eastern
Time, payment for redeemed shares will be made on the next Business Day.
The Fund may net the notice of purchases it receives from the Company under
Section 1.1 of this Agreement against the notice of redemptions it receives
from the Company under this Section 1.3.
1.4 The Fund agrees to make shares of the Designated Portfolios available
continuously for purchase at the applicable NAV per share by the Company
and its separate accounts on those days on which the Fund calculates its
Designated Portfolio NAV pursuant to rules of the Commission; provided,
however, that the Board of Trustees of the Fund (the "Fund Board") 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 Fund Board, acting in good faith and in light of
its fiduciary duties under federal and any applicable state laws, necessary
in the best interests of the shareholders of such Portfolio.
1.5 The Fund agrees that shares of the Fund will be sold only to Participating
Insurance Companies and their separate accounts, qualified pension and
retirement plans or such other persons as are permitted under Section
817(h)(4) of the Internal Revenue Code of 1986, as amended, (the "Code"),
and regulations promulgated thereunder, the sale to which will not impair
the tax treatment currently afforded the Contracts. No shares of any
Portfolio will be sold directly to the general public.
1.6 The Company agrees to purchase and redeem the shares of the Designated
Portfolios offered by the then current prospectus of the Fund in accordance
with the provisions of such prospectus.
1.7 Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or to any Account.
Purchase and redemption orders for Fund shares will be recorded in an
appropriate title for each Account or the appropriate sub-account of each
Account.
1.8 The Fund will furnish same day notice (by facsimile) to the Company of the
declaration of any income, dividends or capital gain distributions payable
on each Designated Portfolio's shares. The Company hereby elects to receive
all such dividends and distributions as are payable on the
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Portfolio shares in the form of additional shares of that Portfolio at the
ex-dividend date NAVs. The Company reserves the right to revoke this
election and to receive all such dividends and distributions in cash. The
Fund will notify the Company of the number of shares so issued as payment
of such dividends and distributions.
1.9 The Fund will make the NAV per share for each Designated Portfolio
available to the Company via electronic means on a daily basis as soon as
reasonably practical after the NAV per share is calculated and will use its
best efforts to make such NAV per share available by 7:00 p.m. Eastern Time
each Business Day. If the Fund provides the Company materially incorrect
NAV per share information (as determined under SEC guidelines), the Company
shall be entitled to an adjustment to the number of shares purchased or
redeemed to reflect the correct NAV per share and, in the event any such
materially incorrect NAV per share is the result of the gross negligence of
the Fund, reimbursement of any reasonable out-of-pocket expenses incurred
by the Company in adjusting the NAV per share. Any material error in the
calculation or reporting of NAV per share, dividend or capital gain
information shall be reported promptly to the Company upon discovery by the
Fund.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or will be
registered under the Securities Act of 1933 (the "1933 Act"), or are exempt
from registration thereunder, and that the Contracts will be issued and
sold in compliance with all applicable federal and state laws. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account for individual Contracts as a separate
account under Section 44-310.06 of the Statutes of the State of Nebraska
and that each such Account is or will be registered as a unit investment
trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the individual Contracts, and that it
will maintain such registration for so long as any individual Contracts are
outstanding, as applicable. The Company will amend the registration
statements under the 1933 Act for the Contracts and the registration
statements under the 1940 Act for the individual Contract Accounts from
time to time as required in order to effect the continuous offering of the
individual Contracts or as may otherwise be required by applicable law. The
Company further represents and warrants that each Account for group
variable annuity Contracts has been legally and validly established as a
separate account under applicable state law and is exempt from registration
under the 1940 Act. The Company will register and qualify the Contracts for
sale in accordance with the
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securities laws of the various states, if required by applicable law, only
if and to the extent deemed necessary by the Company.
2.2 The Company represents that the Contracts are currently and at the time of
issuance will be treated as annuity contracts and/or life insurance
policies (as applicable) under applicable provisions of the Code, and
further represents that it will make every effort to maintain such
treatment and that it will notify the Fund and the Adviser immediately upon
having a reasonable basis for believing that any such Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.3 The Company represents and warrants that it will not purchase shares of
the Designated Portfolio(s) with assets derived from tax-qualified
retirement plans except, indirectly, through Contracts purchased in
connection with such plans.
2.4 The Company represents that it shall act as a limited agent of the Fund
for the limited purpose of processing orders relating to Contract
transactions and such orders will be processed in accordance with Section
22(c) and Rule 22c-1 under the 1940 Act on each Business Day and receipt by
the Company shall constitute receipt by the Fund; provided that Fund
receives notice of such orders by 11:00 a.m. Eastern Time on the next
Business Day or such later time as computed in accordance with Section 1.
The Company further represents and warrants that it will not submit any
order for shares or engage in any practice, nor will it allow any person
acting on its behalf to submit any orders for shares or engage in any
practice, that would violate or cause a violation of applicable law or
regulation including, without limitation, Section 22 of the 1940 Act and
the rules thereunder.
2.5 The Fund represents and warrants that shares of the Designated
Portfolio(s) sold pursuant to this Agreement will be registered under the
1933 Act and duly authorized for issuance in accordance with applicable
federal law and that the Fund is and will remain registered as an open-end
management investment company under the 1940 Act for as long as such shares
of the Designated Portfolio(s) are sold. The Fund will amend the
registration statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Fund will register and qualify the shares of the Designated
Portfolio(s) for sale in accordance with the laws of the various states
only if and to the extent deemed necessary by the Fund.
2.6 The Fund represents that it will use its best efforts to comply with any
applicable state insurance laws or regulations as they may apply to the
investment objectives, policies and restrictions of the Portfolios, as they
may apply to the Fund, to the extent specifically requested in writing by
the Company. If the Fund cannot comply with such state insurance laws or
regulations, it will so notify the Company in writing. The Fund makes no
other representation as to whether any aspect of its
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operations (including, but not limited to, fees and expenses, and
investment policies) complies with the insurance laws or regulations of any
state. The Company represents that it will use its best efforts to notify
the Fund of any restrictions imposed by state insurance laws of which it is
or becomes aware that may become applicable to the Fund as a result of the
Accounts' investments therein. The Fund and the Adviser agree that they
will furnish the information required by state insurance laws to assist the
Company in obtaining the authority needed to issue the Contracts in various
states.
2.7 The Fund represents that its Board of Trustees ("Board"), a majority of
whom are not "interested persons" of the Fund, have approved of the Fund's
Class II Rule 12b-1 Plan to finance distribution expenses and that any
changes to the Fund's Class II Rule 12b-1 Plans will be approved by a
similarly constituted Board.
2.8 The Fund represents that it is lawfully organized and validly existing
under the laws of the State of Delaware and that it does and will comply in
all material respects with applicable provisions of the 0000 Xxx.
2.9 The Fund represents and warrants that all of its trustees, officers,
employees, investment advisers, and other individuals/entities having
access to the funds and/or securities of the Fund are and continue to be at
all times covered by a blanket fidelity bond or similar coverage for the
benefit of the Fund in an amount not less than the minimal coverage as
required currently by Rule 17g-(1) of the 1940 Act or related provisions as
may be promulgated from time to time. The aforesaid bond includes coverage
for larceny and embezzlement and is issued by a reputable bonding company.
2.10 The Adviser represents and warrants that it is duly registered as an
investment adviser under the Investment Advisers Act of 1940, as amended,
and will remain duly registered under all applicable federal and state
securities laws and that it will perform its obligations for the Fund in
accordance in all material respects with the laws of the State of Delaware
and any applicable state and federal securities laws.
2.11 The Distributor represents and warrants that it is registered as a
broker-dealer under the Securities and Exchange Act of 1934, as amended
(the "1934 Act") and will remain duly registered under all applicable
federal and state securities laws, and is a member in good standing of the
Financial Industry Regulatory Authority ("FINRA") and serves as principal
underwriter/distributor of the Funds and that it will perform its
obligations for the Fund in accordance in all material respects with the
laws of the State of Colorado and any applicable state and federal
securities laws.
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ARTICLE III - FUND COMPLIANCE
3.1 The Fund and the Adviser acknowledge that any failure (whether intentional
or in good faith or otherwise) to comply with the requirements of
Subchapter M of the Code or the diversification requirements of Section
817(h) of the Code may result in the Contracts not being treated as
variable contracts for federal income tax purposes, which would have
adverse tax consequences for Contract owners and could also adversely
affect the Company's corporate tax liability. The Fund and the Adviser
further acknowledge that any such failure may result in costs and expenses
being incurred by the Company in obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Fund, as well as fees and expenses of legal
counsel and other advisors to the Company and any federal income taxes,
interest or tax penalties incurred by the Company in connection with any
such failure.
3.2 The Fund represents and warrants that it is currently qualified as a
Regulated Investment Company under Subchapter M of the Code, and that it
will maintain such qualification (under Subchapter M or any successor or
similar provision) and that it will notify the Company immediately upon
having a reasonable basis for believing that it has ceased to so qualify or
that it might not so qualify in the future.
3.3 The Fund represents that it will at all times invest money from the
contracts in such a manner as to ensure that the Contracts will be treated
as variable contracts under the Code and the regulations issued thereunder;
including, but not limited to, that the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, as amended from
time to time, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts, and with Section 817(d) of
the Code, relating to the definition of a variable contract, and any
amendments or other modifications to such Section or Regulation. The Fund
will notify the Company immediately upon having a reasonable basis for
believing that the Fund or a Portfolio thereunder has ceased to comply with
the diversification requirements or that the Fund or Portfolio might not
comply with the diversification requirements in the future. In the event of
a breach of this representation by the Fund, it will take all reasonable
steps to adequately diversify the Fund so as to achieve compliance within
the grace period afforded by Treasury Regulation 1.817-5.
3.4 The Adviser agrees to provide the Company with a certificate or statement
indicating compliance by each Portfolio of the Fund with Section 817(h) of
the Code, such certificate or statement to be sent to the Company no later
than thirty (30) days following the end of each calendar quarter.
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ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS/VOTING
4.1 The Fund will provide the Company with a current Fund prospectus and any
supplements thereto for the Designated Portfolio(s) set in type at the
Fund's expense. The Fund will provide, at the Fund's expense, said
prospectus for Contract owners at the time of Contract fulfillment and
confirmation and for existing Contract owners. The Company will provide, at
the Company's expense, the prospectus and other shareholder reports for
prospective Contract owners and will distribute the prospectus and other
shareholder reports to said prospective Contract owners.
4.2 The Fund's prospectus will state that the Statement of Additional
Information (the "SAI") for the Fund is available from the Company. The
Fund will provide, at the Fund's expense, as many copies of said SAI as
necessary for distribution, to any existing Contract owner who requests
such SAI or whenever state or federal law requires that such SAI be
provided. The Fund will provide the copies of said SAI to the Company or to
its mailing agent. If requested by the Company, in lieu thereof, the Fund
will provide the current SAI set in type at the Fund's expense. The Company
will distribute the SAI as requested or required to the Contract owners at
the Company's expense.
4.3 The Fund, at its expense, will provide the Company or its mailing agent
with copies of its proxy material, if any, reports to shareholders/Contract
owners and other permissible communications to shareholders/Contract owners
in such quantity as the Company will reasonably require. The Company,
through its third party provider, will distribute this proxy material,
reports and other communications to existing Contract owners, as required
by law, and will xxxx the Fund for the reasonable cost of such
distribution.
4.4 If and to the extent required by law, the Company will:
(a) solicit voting instructions from Contract owners;
(b) vote the shares of the Designated Portfolios held in the Account in
accordance with instructions received from Contract owners; and
(c) vote shares of the Designated Portfolios held in the Account for
which no timely instructions have been received, in the same
proportion as shares of such Designated Portfolio for which
instructions have been received from the Company's Contract owners, so
long as and to the extent that the Commission continues to interpret
the 1940 Act to require pass-through voting privileges for Contract
owners.
The Company reserves the right to vote Fund shares held in any segregated
asset account in its own right, to the extent permitted by law. The Company
will be responsible for assuring that the Accounts participating in the
Fund calculate voting privileges in a manner consistent with all legal
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requirements, including the Proxy Voting Procedures set forth in Schedule C
and the Mixed and Shared Funding Exemptive Order as described in Section
7.1.
4.5 The Fund will comply with all provisions of the 1940 Act requiring voting
by shareholders, and in particular, the Fund either will provide for annual
meetings (except insofar as the Commission may interpret Section 16 of the
1940 Act not to require such meetings) or, as the Fund currently intends,
to comply with Section 16(c) of the 1940 Act (although the Fund is not one
of the trusts described in Section 16(c) of the 0000 Xxx) as well as with
Section 16(a) and, if and when applicable, Section 16(b). Further, the Fund
will act in accordance with the Commission's interpretation of the
requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with
respect thereto.
ARTICLE V - SALES MATERIAL AND OTHER PROMOTIONAL MATERIAL
5.1 For purposes of this Article V, the phrase "sales literature and other
promotional material" includes, but is not limited to, advertisements (such
as material published, or designed for use in, a newspaper, magazine, or
other periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures, or other public media,
(i.e., on-line networks such as the Internet or other electronic
messages)), any written communication distributed or made generally
available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, educational
or training materials or other communications distributed or made generally
available to some or all agents or employees, registration statements,
prospectuses, SAIs, shareholder reports, and proxy materials and any
amendments or supplements to, or reprints or excerpts of, any of the above
and any other material constituting sales literature or advertising under
FINRA rules, the 1933 Act or the 0000 Xxx.
5.2 The Company will furnish, or will cause to be furnished, to the Fund or
the Adviser, each piece of sales literature and other promotional material
in which the Fund or the Adviser is named, at least ten (10) Business Days
prior to its use. No such material will be used if the Distributor, on
behalf of the Fund, reasonably objects to such use within five (5) Business
Days after receipt of such material.
5.3 The Company will 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 sales literature and other promotional material provided by
the Distributor, except with permission of the Fund or the Adviser. The
Fund and the Adviser agree to respond to any request for approval on a
prompt and timely basis.
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5.4 The Distributor or the Adviser will furnish, or will cause to be
furnished, to the Company or its designee, each piece of sales literature
and other promotional material in which the Company or its separate account
is named, at least ten (10) Business Days prior to its use. No such
material will be used if the Company reasonably objects to such use within
five (5) Business Days after receipt of such material.
5.5 The Fund, Distributor and the Adviser will not give any information or
make any representations or statements on behalf of the Company or
concerning the Company, each Account, or the Contracts other than the
information or representations contained in sales literature and other
promotional material provided by the Company, except with permission of the
Company. The Company agrees to respond to any request for approval on a
prompt and timely basis.
5.6 The Distributor will provide to the Company at least one complete copy of
all sales literature and other promotional material, applications for
exemptions, requests for no-action letters, and all amendments to any of
the above, that relate to the Fund or its shares, within a reasonable time
after the filing of each such document with the Commission or FINRA.
5.7 The Company will provide to the Distributor at least one complete copy of
all solicitations for voting instructions, sales literature and other
promotional material, applications for exemptions, requests for no action
letters, and all amendments to any of the above, that relate to the
Contracts or each Account, contemporaneously with the filing of each such
document with the Commission or FINRA (except that with respect to
post-effective amendments to such prospectuses and SAIs and sales
literature and promotional material, only those prospectuses and SAIs and
sales literature and other promotional material that relate to or refer to
the Fund will be provided). In addition, the Company will provide to the
Fund at least one complete copy of (i) a registration statement that
relates to the Contracts or each Account, containing representative and
relevant disclosure concerning the Fund; and (ii) any post-effective
amendments to any registration statements relating to the Contracts or such
Account that refer to or relate to the Fund. The Company's obligations to
provide material described in this Section 5.7 are satisfied when it
provides notice to the Fund of applicable electronic filings submitted to
and accepted by the Commission through the XXXXX system.
5.8 The Fund, the Adviser and the Distributor hereby consent to the Company's
use of the names of the Fund, Adviser and/or the Distributor as well as the
names of the Portfolios set forth in Schedule B of this Agreement, in
connection with marketing the Contracts, subject to the terms of Sections
5.1 of this Agreement. The Company acknowledges and agrees that the Adviser
and Distributor and/or their affiliates own all right, title and interest
in and to the name and covenants and agrees not, at
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any time, to challenge the rights of Adviser and Distributor and/or their
affiliates to such name or design, or the validity or distinctiveness
thereof. The Fund, the Adviser and the Distributor hereby consent to the
use of any trademark, trade name, service xxxx or logo used by the Fund,
the Adviser and the Distributor, subject to the Fund's, the Adviser's
and/or the Distributor's approval of such use and in accordance with
reasonable requirements of the 1940 Act, the Adviser or the Distributor.
Such consent will terminate with the termination of this Agreement. The
Adviser, Distributor or the Fund may withdraw this consent as to any
particular use of any such name or identifying marks at any time (i) upon
the Adviser's, Distributor's or Fund's reasonable determination that such
use would have a material adverse effect on the reputation or marketing
efforts of the Adviser, the Distributor or the Fund or (ii) if no
investment company, or series or class of shares of any investment company
advised by Adviser or distributed by Distributor continues to be offered
through Contracts issued by the Company; provided however, that Adviser or
Distributor may, in either's individual discretion, continue to use
materials prepared or printed prior to the withdrawal of such
authorization. The Company agrees and acknowledges that all use of any
designation comprised in whole or in part of the name, trademark, trade
name, service xxxx and logo under this Agreement shall inure to the benefit
of the Fund, Adviser and/or the Distributor.
5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt and
implement procedures reasonably designed to ensure that information
concerning the Company, the Fund, the Adviser or the Distributor,
respectively, and their respective affiliated companies, that is intended
for use only by investment professionals selling the Contracts is properly
marked as not for use with the general public and that such information is
only so used.
ARTICLES VI - FEES, COSTS AND EXPENSES
6.1 The Fund will pay no fee or other compensation to the Company under this
Agreement except that: (1) for Class I and Class II shares of the Fund, the
Adviser may make payments to the Company or any distributor for the
Contracts in an amount agreed to between the Adviser and the Company and as
set forth under Schedule D; and (2) for Class II shares only, the
Distributor may, on behalf of the Fund, make payments as set forth in
Schedule D to the Company out of the Fund's own assets pursuant to Rule
12b-1 under the 1940 Act in recognition of the distribution related
activities provided by the Company on behalf of the Fund to Contract owners
who allocate assets to the Class II Portfolios, and/or in recognition of
the economies provided to the Fund as a result of accounting and
recordkeeping services provided to Contract owners by the Company utilizing
an omnibus relationship.
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6.2 All expenses incident to performance by the Fund of this Agreement will be
paid by the Fund to the extent permitted by law. The Fund will bear the
expenses for the cost of registration and qualification of the Fund's
shares, including without limitation, the preparation of and filing all
applicable forms with the SEC; and payment of all applicable registration
or filing fees with respect to shares of the Fund; preparation and filing
of the Fund's prospectus, SAI and registration statement, proxy materials
and reports; typesetting the Fund's prospectus; typesetting and printing
proxy materials and reports to Contract owners (including the costs of
printing a Fund prospectus that constitutes an annual report); the
preparation of all statements and notices required by any federal or state
law; all taxes on the issuance or transfer of the Fund's shares; any
expenses permitted to be paid or assumed by the Fund pursuant to a plan, if
any, under Rule 12b-1 under the 1940 Act; and other costs associated with
preparation of prospectuses and SAIs for the Designated Portfolios in
electronic or typeset format, as well as any distribution expenses as set
forth in Article IV of this Agreement.
6.3 Except as otherwise provided in this Agreement, each party shall bear all
expenses incidental to the performance of its obligations under this
Agreement.
ARTICLE VII - MIXED & SHARED FUNDING RELIEF
7.1 The Fund represents and warrants that it has applied for and received an
order (File No. IC-27999) from the Commission granting Participating
Insurance Companies and variable annuity separate accounts and variable
life insurance separate accounts relief from the provisions of Sections
9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Fund to be sold to and held by variable annuity separate accounts and
variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and qualified pension and
retirement plans outside of the separate account context (the "Mixed and
Shared Funding Exemptive Order"). The parties to this Agreement agree that
the conditions or undertakings specified in the Mixed and Shared Funding
Exemptive Order, attached hereto as Schedule E, that may be imposed on the
Company, the Fund and/or the Adviser by virtue of the receipt of such order
from the Commission, will be incorporated herein by reference, and such
parties agree to comply with such conditions and undertakings to the extent
applicable to each such party.
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ARTICLE VIII - INDEMNIFICATION
8.1 Indemnification by the Company
(a) The Company agrees to indemnify and hold harmless the Fund, the
Adviser, the Distributor, and each person, if any, who controls or is
associated with the Fund, the Adviser, or the Distributor within the
meaning of such term under the federal securities laws and any
director, trustee, officer, employee or agent of the foregoing
(collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, expenses, damages,
liabilities (including amounts paid in settlement with the written
consent of the Company) or actions in respect thereof (including
reasonable legal and other expenses), to which the Indemnified Parties
may become subject under any statute, regulation, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements:
(1) arise out of any untrue statement or alleged untrue statement of
any material fact contained in the registration statement,
prospectus or SAI for the Contracts or contained in the Contracts
or sales literature or other promotional material for the
Contracts (or any amendment or supplement to any of the
foregoing), or arise out of the omission or alleged omission to
state therein a material fact required to be stated or necessary
to make such statements not misleading in light of the
circumstances in which they were made; provided that this
agreement to indemnify will not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of the Fund,
the Adviser, or the Distributor for use in the registration
statement, prospectus or SAI for the Contracts or in the
Contracts or sales literature or other promotional material (or
any amendment or supplement to any of the foregoing) or otherwise
for use in connection with the sale of the Contracts or Fund
shares; or
(2) arise out of or as a result of statements or representations by
or on behalf of the Company (other than statements or
representations contained in the Fund registration statement,
prospectus, SAI or sales literature or other promotional material
of the Fund, or any amendment or supplement to the foregoing, not
supplied by the Company or persons under its control) or wrongful
conduct of the Company or persons under its control, with respect
to the sale or distribution of the Contracts or Fund shares; or
13
(3) arise out of any untrue statement or alleged untrue statement of
a material fact contained in the Fund registration statement,
prospectus, SAI or sales literature or other promotional material
of the Fund (or any amendment or supplement to the foregoing) or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make such
statements not misleading in light of the circumstances in which
they were made, if such a statement or omission was made in
reliance upon and in conformity with information furnished to the
Fund by or on behalf of the Company or persons under its control;
or
(4) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(5) arise out of any material breach of any representation and/or
warranty made by the Company in this Agreement or arise out of
any other material breach by the Company of this Agreement;
except to the extent provided in Sections 8.1(b) and 8.4 hereof.
This indemnification will be in addition to any liability that
the Company otherwise may have.
(b) No party will be entitled to indemnification under Section 8.1(a) if
such loss, claim, damage, liability, expense action or settlement is
due to the willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by reason
of such party's reckless disregard of its obligations or duties under
this Agreement.
(c) The Indemnified Parties promptly will notify the Company of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or
sale of the Fund shares or the Contracts or the operation of the Fund.
8.2 Indemnification by the Adviser & Distributor
(a) The Adviser and Distributor agree to indemnify and hold harmless the
Company and each person, if any, who controls or is associated with
the Company within the meaning of such term under the federal
securities laws and any director, officer, employee or agent of the
foregoing (collectively, the "Indemnified Parties" for purposes of
this Section 8.2) against any and all losses, claims, expenses,
damages, liabilities (including amounts paid in settlement with the
written consent of the Adviser and Distributor) or actions in respect
thereof (including reasonable legal and other expenses) to which the
Indemnified Parties may become subject under any statute, regulation,
at common law or otherwise, insofar as
14
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements:
(1) arise out of or as a result of statements or representations by
or on behalf of the Adviser or Distributor (other than statements
or representations contained in the Contracts or in the Contract
registration statements, prospectuses or SAIs or sales literature
or other promotional material for the Contracts, or any amendment
or supplement to the foregoing, not supplied by the Adviser, the
Distributor, or persons under the control of the Adviser, the
Distributor, respectively) or wrongful conduct of the Adviser,
the Distributor, or persons under the control of the Adviser, the
Distributor, respectively, with respect to the sale or
distribution of the Contracts shares; or
(2) arise out of any untrue statement or alleged untrue statement of
a material fact contained in a registration statement,
prospectus, SAI or sales literature or other promotional material
covering the Contracts (or any amendment or supplement thereto),
or the omission or alleged omission to state therein a material
fact required to be stated or necessary to make such statement or
statements not misleading in light of the circumstances in which
they were made, if such statement or omission was made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of the Adviser, the Distributor, or
persons under any of their control; or
(3) arise as a result of any failure the Distributor or the Adviser
to provide the services and furnish the materials under the terms
of this Agreement; or
(4) arise out of or result from any material breach of any
representation and/or warranty made by the Adviser or the
Distributor in this Agreement, or arise out of or result from any
other material breach of this Agreement by the Adviser or the
Distributor (including a failure, whether intentional or in good
faith or otherwise, to comply with the requirements of Subchapter
M of the Code specified in Article III, Section 3.2 of this
Agreement and the diversification requirements specified in
Article III, Section 3.3 of this Agreement, as described more
fully in Section 8.5 below); except to the extent provided in
Sections 8.2(b) and 8.4 hereof. This indemnification will be in
addition to any liability that the Adviser or Distributor
otherwise may have.
(b) No party will be entitled to indemnification under Section 8.2(a) if
such loss, claim, damage, liability, expense, action or settlement is
due to the willful misfeasance, bad faith, or gross
15
negligence in the performance of such party's duties under this
Agreement, or by reason of such party's reckless disregard of its
obligations or duties under this Agreement.
(c) The Indemnified Parties will promptly notify the Adviser, and the
Distributor of the commencement of any litigation, proceedings,
complaints or actions by regulatory authorities against them in
connection with the issuance or sale of the Contracts or the operation
of the Accounts.
8.3 Indemnification by the Fund
(a) The Fund agrees to indemnify and hold harmless the Company and each
person, if any, who controls or is associated with the Company within
the meaning of such term under the federal securities laws and any
director, officer, employee or agent of the foregoing (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against
any and all losses, claims, expenses, damages, liabilities (including
amounts paid in settlement with the written consent of the Fund) or
action in respect thereof (including reasonable legal and other
expenses) to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements, are related to the operations of the
Fund and:
(1) arise out of any untrue statement or alleged untrue statement of
any material fact contained in the registration statement,
prospectus or SAI for the Fund or sales literature or other
promotional material of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of the omission or alleged
omission to state therein a material fact required to be stated
or necessary to make such statements not misleading in light of
the circumstances in which they were made; provided that this
agreement to indemnify will not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the Company
for use in the registration statement, prospectus or SAI for the
Fund or in sales literature or other promotional material of the
Fund (or any amendment or supplement thereto) or otherwise for
use in connection with the sale of Fund shares; or
(2) arise out of or as a result of statements or representations by
or on behalf of the Fund (other than statements or
representations contained in the Contracts or in the Contract
registration statements, prospectuses or SAIs or sales literature
or other
16
promotional material for the Contracts, or any amendment
or supplement to the foregoing, not supplied by the Fund or
persons under the control of the Fund) or wrongful conduct of the
Fund or persons under the control of the Fund, with respect to
the sale or distribution of Fund shares; or
(3) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this
Agreement; or
(4) arise out of any material breach of any representation and/or
warranty made by the Fund in this Agreement or arise out of any
other material breach of this Agreement by the Fund (including a
failure, whether intentional or in good faith or otherwise, to
comply with the requirements of Subchapter M of the Code
specified in Article III, Section 3.2 of this Agreement and the
diversification requirements specified in Article III, Section
3.3 of this Agreement as described more fully in Section 8.5
below); or
(5) arise out of the incorrect or untimely calculation or reporting
of daily net asset value per share or dividend or capital gain
distribution rate; except to the extent provided in Sections
8.3(b) and 8.4 hereof. This indemnification will be in addition
to any liability that the Fund otherwise may have.
(b) No party will be entitled to indemnification under Section 8.3(a) if
such loss, claim, damage, liability, expense action or settlement is
due to the willful misfeasance, bad faith, or gross negligence in the
performance of such party's duties under this Agreement, or by reason
of such party's reckless disregard of its obligations and duties under
this Agreement.
(c) The Indemnified Parties will promptly notify the Fund of the
commencement of any litigation, proceedings, complaints or actions by
regulatory authorities against them in connection with the issuance or
sale of the Contracts or the operation of the Account.
8.4 Indemnification Procedure
Any person obligated to provide indemnification under this Article VIII
("Indemnifying Party" for the purpose of this Section 8.4) will not be
liable under the indemnification provisions of this Article VIII with
respect to any claim made against a party entitled to indemnification under
this Article VIII ("Indemnified Party" for the purpose of this Section 8.4)
unless such Indemnified Party will have notified the Indemnifying Party in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim upon such Indemnified
Party (or after such party will have received notice of such service on any
designated agent), but failure to notify the Indemnifying Party of any such
claim will not relieve the Indemnifying Party from any
17
liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of the indemnification
provision of this Article VIII, except to the extent that the failure to
notify results in the failure of actual notice to the Indemnifying Party
and such Indemnifying Party is damaged solely as a result of failure to
give such notice. In case any such action is brought against the
Indemnified Party, the Indemnifying Party will be entitled to participate,
at its own expense, in the defense thereof. The Indemnifying Party also
will be entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the Indemnifying Party
to the Indemnified Party of the Indemnifying Party's election to assume the
defense thereof, the Indemnified Party will bear the fees and expenses of
any additional counsel retained by it, and the Indemnifying Party will not
be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation,
unless: (a) the Indemnifying Party and the Indemnified Party will have
mutually agreed to the retention of such counsel; or (b) the named parties
to any such proceeding (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. The Indemnifying Party will not
be liable for any settlement of any proceeding effected without its written
consent but if settled with such consent or if there is a final judgment
for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. A successor by law of the parties to this Agreement
will be entitled to the benefits of the indemnification contained in this
Article VIII. The indemnification provisions contained in this Article VIII
will survive any termination of this Agreement.
8.5 Indemnification for Failure to Comply with Diversification Requirements
The Fund, the Adviser and the Distributor acknowledge that any failure
(whether intentional or in good faith or otherwise) to comply with the
diversification requirements specified in Article III, Section 3.3 of this
Agreement may result in the Contracts not being treated as variable
contracts for federal income tax purposes, which would have adverse tax
consequences for Contract owners and could also adversely affect the
Company's corporate tax liability. Accordingly, without in any way limiting
the effect of Sections 8.2(a) and 8.3(a) hereof and without in any way
limiting or restricting any other remedies available to the Company, the
Fund, the Adviser and the Distributor will pay on a joint and several basis
all costs associated with or arising out of any failure, or any anticipated
or reasonably foreseeable failure, of the Fund or any Portfolio to comply
with Section 3.3 of this Agreement, including all costs associated with
correcting or responding to any such failure; such
18
costs may include, but are not limited to, the costs involved in creating,
organizing, and registering a new investment company as a funding medium
for the Contracts and/or the costs of obtaining whatever regulatory
authorizations are required to substitute shares of another investment
company for those of the failed Fund or Portfolio (including but not
limited to an order pursuant to Section 26(b) of the 1940 Act); fees and
expenses of legal counsel and other advisors to the Company and any federal
income taxes or tax penalties (or "toll charges" or exactments or amounts
paid in settlement) incurred by the Company in connection with any such
failure or anticipated or reasonably foreseeable failure. Such
indemnification and reimbursement obligation shall be in addition to any
other indemnification and reimbursement obligations of the Fund, the
Adviser and/or the Distributor under this Agreement.
ARTICLE IX - APPLICABLE LAW
9.1 This Agreement will be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of Colorado.
9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934
Act and the 1940 Act, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Commission may grant (including, but not limited to, the Mixed and Shared
Funding Exemptive Order) and the terms hereof will be interpreted and
construed in accordance therewith.
ARTICLE X - TERMINATION
10.1 This Agreement will terminate:
(a) at the option of any party, with or without cause, with respect to
one, some or all of the Portfolios, upon six (6) month's advance
written notice to the other parties or, if later, upon receipt of any
required exemptive relief or orders from the SEC, unless otherwise
agreed in a separate written agreement among the parties; or
(b) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if shares of the Portfolio are
not reasonably available to meet the requirements of the Contracts as
determined in good faith by the Company; or
(c) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance
with applicable state and/or federal law or such law precludes the use
of such
19
shares as the underlying investment media of the Contracts issued or
to be issued by Company; or
(d) at the option of the Fund, upon written notice to the other parties,
upon institution of formal proceedings against the Company by FINRA,
the Commission, or any state securities or insurance department or any
other regulatory body regarding the Company's duties under this
Agreement or related to the sale of the Contracts, the administration
of the Contracts, the operation of the Accounts, or the purchase of
the Fund shares, provided that the Fund determines in its sole
judgment, exercised in good faith, that any such proceeding would have
a material adverse effect on the Company's ability to perform its
obligations under this Agreement; or
(e) at the option of the Company, upon written notice to the other
parties, upon institution of formal proceedings against the Fund, the
Distributor, or the Adviser by FINRA, the Commission or any state
securities or insurance department or any other regulatory body,
provided that the Company determines in its sole judgment, exercised
in good faith, that any such proceeding would have a material adverse
effect on the Fund's, the Distributor's, or the Adviser's ability to
perform its obligations under this Agreement; or
(f) at the option of the Company, upon written notice to the other
parties, if the Fund ceases to qualify as a Regulated Investment
Company under Subchapter M of the Code, or under any successor or
similar provision, or if the Company reasonably and in good faith
believes that the Fund may fail to so qualify; or
(g) at the option of the Company, upon written notice to the other
parties, with respect to any Portfolio if the Fund fails to meet the
diversification requirements specified in Section 3.3 hereof or if the
Company reasonably and in good faith believes the Fund may fail to
meet such requirements; or
(h) at the option of any party to this Agreement, upon written notice to
the other parties, upon another party's material breach of any
provision of this Agreement; or
(i) at the option of the Company, if the Company determines in its sole
judgment exercised in good faith that either the Fund or the Adviser
has suffered a material adverse change in its business, operations or
financial condition since the date of this Agreement or is the subject
of material adverse publicity that is likely to have a material
adverse impact upon the business and operations of the Company, such
termination to be effective sixty (60) days' after receipt by the
other parties of written notice of the election to terminate; or
20
(j) at the option of the Fund or the Adviser, if the Fund or Adviser
respectively, determines in its sole judgment exercised in good faith
that the Company has suffered a material adverse change in its
business, operations or financial condition since the date of this
Agreement or is the subject of material adverse publicity that is
likely to have a material adverse impact upon the business and
operations of the Fund or the Adviser, such termination to be
effective sixty (60) days' after receipt by the other parties of
written notice of the election to terminate; or
(k) at the option of the Company or the Fund upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners
having an interest in the Accounts (or any sub-account) to substitute
the shares of another investment company for the corresponding
Portfolio's shares of the Fund in accordance with the terms of the
Contracts for which those Portfolio shares had been selected to serve
as the underlying portfolio. The Company will give sixty (60) days'
prior written notice to the Fund of the date of any proposed vote or
other action taken to replace the Fund's shares or of the filing of
any required application for regulatory approval(s); or
(l) at the option of the Company or the Fund upon a determination by a
majority of the Fund Board, or a majority of the disinterested Fund
Board members, that an irreconcilable material conflict exists among
the interests of: (1) all contract owners of variable insurance
products of all separate accounts; or (2) the interests of the
Participating Insurance Companies investing in the Fund as set forth
in Article VII of this Agreement; or
(m) in the event any of the Contracts are not issued or sold in
accordance with applicable federal and/or state law.
10.2 Notice Requirement
(a) No termination of this Agreement, except a termination under Section
10.1(m) of this Agreement, will be effective unless and until the
party terminating this Agreement gives prior written notice to all
other parties of its intent to terminate, which notice will set forth
the basis for the termination.
(b) In the event that any termination of this Agreement is based on any
failure to meet the conditions or undertakings specified in the Order
referenced in Article VII, such prior written notice will be given in
advance of the effective date of termination as required by such
provisions.
21
10.3 Effect of Termination
Notwithstanding any termination of this Agreement, the Fund, the Adviser
and the Distributor will, at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and
conditions of this Agreement, for all Contracts in effect on the effective
date of termination of this Agreement (hereinafter referred to as "Existing
Contracts"). Specifically, without limitation, the owners of the Existing
Contracts will be permitted to reallocate investments in the Designated
Portfolios (as in effect on such date), redeem investments in the
Designated Portfolios and/or invest in the Designated Portfolios upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.3 will not apply to any terminations
based on any failure to meet the conditions or undertakings specified in
the Order referenced in Article VII and the effect of such Article VII
terminations will be governed by Article VII of this Agreement.
10.4 Surviving Provisions
Notwithstanding any termination of this Agreement, each party's obligations
under Article VIII to indemnify other parties will survive and not be
affected by any termination of this Agreement. In addition, with respect to
Existing Contracts, all provisions of this Agreement also will survive and
not be affected by any termination of this Agreement.
ARTICLE XI - NOTICES
Any notice will be deemed duly 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 in writing to the other
parties.
If to the Company:
------------------
Ameritas Life Insurance Corp.
Attention: General Counsel
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
First Ameritas Life Insurance Corp. of New York
c/o Ameritas Life Insurance Corp.
Attention: General Counsel
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
The Union Central Life Insurance Company
c/o Ameritas Life Insurance Corp.
Attention: General Counsel
0000 "X" Xxxxxx
Xxxxxxx, XX 00000
22
If to the Fund:
---------------
Financial Investors Variable Insurance Trust
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: President
If to the Adviser:
------------------
ALPS Advisors, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: General Counsel
If to the Distributor:
----------------------
ALPS Distributors, Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: General Counsel
ARTICLE XII - MISCELLANEOUS
12.1 All persons dealing with the Fund must look solely to the property of the
Fund for the enforcement of any claims against the Fund as neither the
trustees, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Fund.
12.2 Each party herein represents that it is either a financial institution
subject to the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("USA
Patriot Act") and the Bank Secrecy Act (collectively, the "AML Acts") or it
shall perform under this Agreement and sell the Contracts as if it were
subject to the AML Acts, which require among other things, that financial
institutions adopt compliance programs to guard against money laundering,
and it is covered by a program that complies with the AML Acts and
applicable anti-money laundering ("AML") rules of self regulatory
organizations, such as NASD Rule 3011, in all relevant respects. The
Company agrees to cooperate with the Distributor to satisfy the
Distributor's due diligence policies, which may include annual AML
compliance certifications, periodic AML due diligence reviews and/or other
requests deemed necessary to ensure the Company's compliance with the AML
regulations.
12.3 In addition, the parties hereto agree that any Nonpublic Personal
Information, as the term is defined in SEC Regulation S-P ("Reg S-P"), that
may be disclosed by a party hereunder is disclosed for the specific purpose
of permitting the other party to perform the services set forth in this
Agreement. Each party agrees that, with respect to such information, it
will comply with Reg S-P and any other applicable regulations and that it
will not disclose any Nonpublic Personal Information received in
23
connection with this Agreement to any other party, except to the extent
required to carry out the services set forth in this Agreement or as
otherwise permitted by law.
12.4 The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
12.5 This Agreement may be executed simultaneously in two or more counterparts,
each of which taken together will constitute one and the same instrument.
12.6 If any provision of this Agreement will be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement will
not be affected thereby.
12.7 This Agreement will not be assigned by any party hereto without the prior
written consent of all the parties.
12.8 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 law.
12.9 The parties to this Agreement acknowledge and agree that this Agreement
shall not be exclusive in any respect.
12.10 Each party to this Agreement will cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Commission, FINRA and state insurance regulators) and will permit each
other and such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
12.11 Each party represents that the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or board action, as applicable, by
such party and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with
its terms.
12.12 The parties to this Agreement may amend the schedules to this Agreement in
writing from time to time to reflect changes in or relating to the
Contracts, the Accounts or the Portfolios of the Fund or other applicable
terms of this Agreement.
(Signature Page to follow)
24
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed in its name and behalf by its duly authorized representative as of the
date specified above.
AMERITAS LIFE INSURANCE CORP.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------------------------
Title: Senior Vice President, & Chief Financial Officer
----------------------------------------------------
FIRST AMERITAS LIFE INSURANCE CORP. OF NEW YORK
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------------------------
Title: Senior Vice President & Chief Financial Officer
----------------------------------------------------
THE UNION CENTRAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------------------------
Title: Senior Vice President and Chief Financial Officer
----------------------------------------------------
FINANCIAL INVESTORS VARIABLE INSURANCE TRUST
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Secretary
ALPS ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
ALPS DISTRIBUTORS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
25
PARTICIPATION AGREEMENT
SCHEDULE A
The following Separate Accounts and Contracts of the Companies are permitted, in
accordance with the provisions of this Agreement, to invest in Portfolios of the
Fund shown in Schedule B:
DEPOSITORS:
-----------
REGISTERED SEPARATE ACCOUNTS USING THE FUNDS
--------------------------------------------
Ameritas Life Insurance Corp.:
------------------------------
o Ameritas Variable Separate Account VA-2
o Ameritas Variable Separate Account V
o Ameritas Life Insurance Corp. Separate Account LLVA
o Ameritas Life Insurance Corp. Separate Account LLVL
o Ameritas Variable Separate Account VA
o Ameritas Variable Separate Account VL
First Ameritas Life Insurance Corp. of New York:
------------------------------------------------
o First Ameritas Variable Annuity Separate Account
o First Ameritas Variable Life Separate Account
The Union Central Life Insurance Company:
-----------------------------------------
o Carillon Account
o Carillon Life Account
CONTRACTS FUNDED BY THE REGISTERED SEPARATE ACCOUNTS
----------------------------------------------------
Individual variable annuity contracts and individual variable life insurance
policies issued by the Depositors listed above, funded by the registered
separate accounts listed above, and registered with the Securities and Exchange
Commission under the Securities Act of 1933.
UNREGISTERED SEPARATE ACCOUNTS USING THE FUNDS
----------------------------------------------
o Ameritas Life Insurance Corp. Separate Account D
o Ameritas Life Insurance Corp. Separate Account G
o First Ameritas Life Insurance Corp. Separate Account G
o Union Central Life Insurance Company Separate Account G
CONTRACTS FUNDED BY THE UNREGISTERED SEPARATE ACCOUNTS
------------------------------------------------------
Group variable annuity contracts issued by the Depositors listed above, funded
by the unregistered separate accounts listed above, as may be issued from time
to time.
26
PARTICIPATION AGREEMENT
SCHEDULE B
The Separate Account(s) shown on Schedule A may invest in the following
Portfolios of the Fund.
FINANCIAL INVESTORS VARIABLE INSURANCE TRUST
Ibbotson Aggressive Growth ETF Asset Allocation Portfolio - [Class I/Class II]
Ibbotson Growth ETF Asset Allocation Portfolio - [Class I/Class II]
Ibbotson Balanced ETF Asset Allocation Portfolio - [Class I/Class II]
Ibbotson Income and Growth ETF Asset Allocation Portfolio - [Class I/Class II]
Ibbotson Conservative ETF Asset Allocation Portfolio - [Class I/Class II]
27
PARTICIPATION AGREEMENT
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement.
The term "Service Provider" shall refer to the third party proxy service
provider, if any, assigned by the Fund to perform steps delineated below.
The Company agrees to reasonably cooperate with the Fund and any Service
Provider in the performance of proxy processing functions.
1. The proxy proposals are given to the Company by the Fund as early as
possible before the date set by the Fund for the shareholder meeting to
inform the Company of the Record, Mailing and Meeting dates. This will be
done verbally approximately two months before the shareholder meeting.
2. Promptly after the Record Date, the Company will perform a "tape run", or
other activity, which will generate the names, addresses and number of
units attributable to each contract owner/policyholder (the "Customer") as
of the Record Date. Allowance should be made for account adjustments made
after this date that could affect the status of the Customers' accounts as
of the Record Date.
Note: The number of proxy statements is determined by the activities
described in this Step #2. The Company will use its best efforts to provide
the number of Customers to the Fund, as soon as possible, but no later than
two weeks after the Record Date.
3. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Service Provider by the Fund. The Service Provider shall
produce and personalize the Voting Instruction Cards. The Fund or its
affiliate must approve the Card before it is printed. Allow approximately
2-4 business days for printing information on the Cards. Information
commonly found on the Cards includes:
o name (legal name as found on account registration)
o address
o Fund or account number
o coding to state number of units
o individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
4. During this time, the Fund will develop, produce and pay for the Notice of
Proxy and the Proxy Statement (one document). Printed and folded notices
and statements will be processed by the Fund or sent to a Service Provider
for insertion into envelopes (envelopes and return envelopes are provided
and paid for by the Fund). Contents of envelope sent to Customers by the
Service Provider will include:
28
o Voting Instruction Card(s)
o one proxy notice and statement (one document)
o return envelope (postage pre-paid by the Fund) addressed to the Fund
or its tabulation agent
o "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible
and that their vote is important. One copy will be supplied by the
Fund.)
o cover letter - optional, supplied by the Fund and reviewed and
approved in advance by the Company, if any
5. Specimen copies of the materials listed at Step #4, above, should be
received by the Company approximately 3-5 business days before mail date.
Individual in charge at Company reviews and approves correctness of the
Company name and Account information. Copy of this approval sent to the
Fund. If no response is received from the Company within 2 days of receipt,
approval may be presumed.
6. Package mailed by the Service Provider.
* The Fund must allow at least a 15-day solicitation time to the Company as
the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but NOT including,) the meeting, counting
backwards.
7. Collection and tabulation of Cards begins. Tabulation usually takes place
in another department or another vendor depending on process used.
Note: Postmarks are not generally needed. A need for postmark information
would be due to an insurance company's internal procedure and has not been
required by the Fund in the past.
8. The actual tabulation of votes is done in units that are then converted to
shares. (It is very important that the Fund receives the tabulations stated
in terms of a percentage and the number of SHARES.) The Fund must review
and approve tabulation format.
9. Final tabulation in shares is verbally given by the Service Provider to
the Fund on the morning of the meeting not later than 10:00 a.m. Eastern
time. The Fund may request an earlier deadline if reasonable and if
required to calculate the vote in time for the meeting.
10. A Certification of Mailing and Authorization to Vote Shares will be
required from the Service Provider as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
11. The Service Provider will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged or if
otherwise necessary for legal, regulatory, or accounting purposes, the Fund
will be permitted reasonable access to such Cards.
12. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
29
PARTICIPATION AGREEMENT
SCHEDULE D
In consideration of the services performed pursuant to this Agreement and as set
forth below the following fee/payment schedule shall apply.
----------------------------------------------------------------------
Name of Portfolio Share Class 12b-1
Trails
----------------------------------------------------------------------
Ibbotson Aggressive Growth ETF Asset Class I None
Allocation Portfolio Class II 0.25%
----------------------------------------------------------------------
Ibbotson Growth ETF Asset Allocation Portfolio Class I None
Class II 0.25%
----------------------------------------------------------------------
Ibbotson Balanced ETF Asset Allocation Class I None
Portfolio Class II 0.25%
----------------------------------------------------------------------
Ibbotson Income and Growth ETF Asset Class I None
Allocation Portfolio Class II 0.25%
----------------------------------------------------------------------
Ibbotson Conservative ETF Asset Allocation Class I None
Portfolio Class II 0.25%
----------------------------------------------------------------------
In accordance with each Fund's then current prospectus, all fees, if any, shall
be paid based on the average daily net asset value of outstanding shares held by
shareholders receiving services described in the Agreement. Such payments shall
be computed daily and paid monthly in arrears. The determination of average
daily net assets shall be made at the close of each Business Day.
--------------------------------------------------------------------
Total Assets Total Assets Revenue Sharing
Attributable to Attributable to Will be Paid at an
Shares of the Shares of the Annual Rate of
Designated Portfolios Designated Portfolios
Held by the Accounts Held by the Accounts
From To
--------------------------------------------------------------------
0.00 $ 249,999,999.99 0.100%
--------------------------------------------------------------------
$250,000,000.00 $ 999,999,999.99 0.150%
--------------------------------------------------------------------
$1,000,000,000.00 $ 2,249,999,999.99 0.175%
--------------------------------------------------------------------
$2,500,000,000.00 above 0.200%
--------------------------------------------------------------------
Such payments shall be computed daily and paid monthly in arrears. The
determination of total assets attributable to shares of the Designated
Portfolios held by the Accounts shall be made at the close of each Business Day.
30
PARTICIPATION AGREEMENT
SCHEDULE E
31
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-27965; File No. 812-13359]
Financial Investors Variable Insurance Trust et al., Notice of Application
September 4, 2007
Agency: Securities and Exchange Commission ("SEC" or the "Commission").
Action: Notice of application ("Application") for exemption, pursuant to Section
6(c) of the Investment Company Act of 1940, as amended (the "1940 Act"), from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Act and Rules
6e-2(b)(15) and 6e-3(T)(b)(15) thereunder.
Applicants: Ibbotson Conservative ETF Asset Allocation Portfolio, Ibbotson
Income and Growth ETF Asset Allocation Portfolio, Ibbotson Balanced ETF Asset
Allocation Portfolio, Ibbotson Growth ETF Asset Allocation Portfolio, Ibbotson
Aggressive Growth ETF Asset Allocation Portfolio (collectively, the "Existing
Funds"), each a series of Financial Investors Variable Insurance Trust (the
"Trust"), any other series established from time to time under the Trust
(collectively with the Existing Funds, the "Insurance Funds"), and any future
investment company that is designed to fund insurance products and for which
ALPS Advisers, Inc. (the "Investment Adviser"), any successor in interest
(collectively with the Investment Adviser, the "Investment Advisers"), or any
affiliates of the Investment Advisers may serve as investment manager,
investment adviser, subadviser, administrator, principal underwriter or sponsor
(funds advised by such Investment Advisers herein also referred to collectively
as the "Insurance Funds") (the Trust, the Existing Funds, the Insurance Funds,
the Investment Adviser, and the Investment Advisers, referred to collectively as
the "Applicants").
Summary of Application: The Applicants request an order exempting certain life
insurance companies on behalf of their separate accounts that currently invest
or may hereafter invest in the
Insurance Funds to the extent necessary to permit shares of the Existing Funds
(the "Shares") and the Insurance Funds to be sold to and held by: (i) separate
accounts funding variable annuity contracts and variable life insurance policies
(collectively "Variable Contracts") issued by both affiliated life insurance
companies and unaffiliated life insurance companies; (ii) trustees of qualified
group pension and group retirement plans outside of the separate account context
("Qualified Plans"); (iii) separate accounts that are not registered as
investment companies under the 1940 Act pursuant to exemptions from registration
under Section 3(c) of the 1940 Act; (iv) any Adviser to an Insurance Fund that
is permitted to hold shares in an Insurance Fund consistent with the
requirements of regulations issued by the Treasury Department (individually a
"Treasury Regulation" and collectively the "Treasury Regulations"), specifically
Treasury Regulation Section 1.817-5 for the purpose of providing seed capital to
an Insurance Fund; and (v) any other Participating Insurance Company permitted
to hold shares of an Insurance Fund ("General Accounts").
Filing Date: The Application was filed on January 26, 2007, and amended and
restated on May 21, 2007.
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 September 26, 2007, and should be
accompanied by proof of service on Applicants in the form of an affidavit or,
for lawyers, a certificate of service. Hearing requests should state the nature
of the requester'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.
2
Addresses: The Commission: Secretary, Securities and Exchange Commission, 000 X
Xxxxxx, XX, Xxxxxxxxxx, XX 00000-0000; Applicants: c/o Xxxxxxx X. Xxxx, Esq.,
Secretary, Financial Investors Variable Insurance Trust, 0000 Xxxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000.
For Further Information Contact: Xxxxxxx X. Xxxx, Senior Counsel, or Xxxxxx X.
Xxxxxx, 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 X Xxxxxx, XX, Xxxx 0000, Xxxxxxxxxx, XX 00000 (telephone (202)
000-0000).
Applicants' Representations:
---------------------------
1. Each Insurance Fund is, or will be, registered under the 1940 Act as an
open-end management investment company. The Trust (File No. 811-21987) is
registered under the 1940 Act as a non-diversified management investment
company. Applicants state that the Trust's shares are registered under the
Securities Act of 1933, as amended (the "1933 Act) (File No. 333-139186) and the
investment adviser to the Trust, ALPS Advisers, Inc. is registered with the
Commission as an investment adviser under the Investment Advisers Act of 1940,
as amended.
2. Applicants state that the Existing Funds intend to, and other Insurance Funds
may in the future, offer Shares to separate accounts of affiliated and
unaffiliated insurance companies funding variable annuity or variable life
products. Applicants state that these separate accounts are, or will be,
registered as investment companies under the 1940 Act or will be exempt from
such registration (individually a "Separate Account" and collectively the
"Separate Accounts"). Insurance companies whose Separate Account(s) may now or
in the future own Shares are referred to herein as "Participating Insurance
Companies."
3
3. Applicants propose that the Funds be permitted to offer and/or sell shares to
Separate Accounts funding Variable Contracts issued by Participating Insurance
Companies. Applicants represent that the Participating Insurance Companies at
the time of their investment in the Insurance Funds either have established or
will establish their own Separate Accounts and design their own Variable
Contracts. Each Participating Insurance Company has or will have the legal
obligation of satisfying all applicable requirements under both state and
federal law. Applicants represent that each Participating Insurance Company on
behalf of its Separate Accounts has entered or will enter into an agreement with
each Insurance Fund in which it invests concerning participation by the
Participating Insurance Company in such Insurance Fund (a "Participation
Agreement"). The role of the Insurance Funds under this agreement, insofar as
the federal securities laws are applicable, will consist of, among other things,
offering shares to the Separate Accounts and complying with any conditions that
the Commission may impose.
4. Applicants propose that the Insurance Funds also be permitted to offer and/or
sell Shares to Qualified Plans administered by a Trustee. Section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), imposes certain
diversification standards on the underlying assets of Separate Accounts funding
Variable Contracts. The Code provides that Variable Contracts shall not be
treated as an annuity contract or life insurance policy for any period (or any
subsequent period) for which the underlying assets are not, in accordance with
regulations prescribed by the Treasury Department, (individually, a "Treasury
Regulation" and collectively the "Treasury Regulations"), adequately
diversified. On March 2, 1989, the Treasury Department issued Treasury
Regulations (Treas. Reg. Section 1.817-5) that established diversification
requirements for Variable Contracts, which require the Separate Accounts upon
which these contracts or policies are based to be diversified as provided in the
Treasury
4
Regulations. In the case of Separate Accounts that invest in underlying
investment companies, the Treasury Regulations provide a "look through" rule
that permits the Separate Account to look to the underlying investment company
for purposes of meeting the diversification requirements, provided that the
beneficial interests in the investment company are held only by the segregated
asset accounts of one or more insurance companies. However, the Treasury
Regulations also contain certain exceptions to this requirement, one of which
allows shares in an investment company to be held by the trustee of a qualified
pension or retirement plan without adversely affecting the tax status of
Variable Contracts (Treas. Reg. Section 1.817-5(f)(3)(iii)). Another exception
allows the investment manager of the investment company and certain companies
related to the investment manager to hold shares of the investment company, an
exception that is often used to provide the capital required by Section 14(a) of
the 1940 Act.
5. Applicants also propose that the Funds be permitted to offer and/or sell
shares to an Adviser for the purpose of providing initial capital to an
Insurance Fund and to General Accounts. The Regulations permit such sales to an
Adviser and to General Accounts so long as the return on shares held by each is
computed in the same manner as for shares held by the Separate Accounts, and the
Adviser and the General Accounts do not intend to sell shares of the Portfolio
held by it to the public. The Treasury Regulations impose an additional
restriction on sales to investment advisers, who may hold shares only in
connection with the creation of an Insurance Fund. Applicants anticipate that
sales in reliance on these provisions of the Treasury Regulations will be made
to an Adviser for the purpose of providing the initial capital for a Fund and
that any Shares purchased by an Adviser will be redeemed immediately if and when
the Adviser's investment advisory agreement terminates.
5
Applicants' Legal Analysis:
1. In connection with the funding of scheduled premium variable life insurance
contracts issued through a Separate Account registered as a unit investment
trust ("UIT") under the 1940 Act, Rule 6e-2(b)(15) provides partial exemptions
from Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act. Section 9(a)(2) of
the 1940 Act makes it unlawful for any company to serve as an investment adviser
or principal underwriter of any UIT, if an affiliated person of that company is
subject to a disqualification enumerated in Section 9(a)(1) or (2) of the 1940
Act. Sections 13(a), 15(a) and 15(b) of the 1940 Act have been deemed by the
Commission to require "pass-through" voting with respect to an underlying
investment company's shares. Rule 6e-2(b)(15) provides these exemptions apply
only where all of the assets of the UIT are shares of management investment
companies "which offer their shares exclusively to variable life insurance
separate accounts of the life insurer or of any affiliated life insurance
company." Therefore, the relief granted by Rule 6e-2(b)(15) is not available
with respect to a scheduled premium life insurance Separate Account that owns
shares of an underlying fund that also offers its shares to a variable annuity
Separate Account or flexible premium variable life insurance Separate Account of
the same company or any other affiliated insurance company. The use of a common
management investment company as the underlying investment vehicle for both
variable annuity and variable life insurance separate accounts of the same life
insurance company or of any affiliated life insurance company is referred to
herein as "mixed funding."
2. The relief granted by Rule 6e-2(b)(15) also 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 Separate Accounts funding
Variable Contracts of one or more unaffiliated life insurance companies. The use
of a common management investment company
6
as the underlying investment vehicle for variable annuity and/or variable life
insurance Separate Accounts of unaffiliated life insurance companies is referred
to herein as "shared funding."
3. Moreover, because the relief under Rule 6e-2(b)(15) is available only where
shares are offered exclusively to variable life insurance Separate Accounts of a
life insurer or any affiliated life insurance company, additional exemptive
relief is necessary if the Shares are also to be sold to Qualified Plans, an
Adviser and General Accounts (collectively, "Eligible Purchasers"). Applicants
note that if the Shares were sold only to Separate Accounts funding variable
annuity contracts and/or Eligible Purchasers, exemptive relief under Rule
6e-2(b)(15) would not be necessary. The relief provided for under this section
does not relate to Eligible Purchasers or to a registered investment company's
ability to sell its shares to Eligible Purchasers. The use of a common
management investment company as the underlying investment vehicle for Separate
Accounts funding Variable Contracts issued by affiliated and unaffiliated
insurance companies, and for Eligible Purchasers, is referred to herein as
"extended mixed and shared funding."
4. 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) provides partial exemptions from Sections 9(a), 13(a), 15(a) and
15(b) of the 1940 Act. The exemptions granted by Rule 6e-3(T)(b)(15) are
available only where all the assets of the Separate Account consist of the
shares of one or more registered management investment companies that offer to
sell their shares "exclusively to separate accounts of the life insurer, or of
any affiliated life insurance companies, 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 or which offer their shares to any such life insurance company in
consideration solely for advances made by the life insurer in connection with
the operation of the
7
separate account." Therefore, Rule 6e-3(T)(b)(15) permits mixed funding but does
not permit shared funding.
5. Moreover, because the relief under Rule 6e-3(T) is available only where
shares are offered exclusively to variable life insurance separate accounts of a
life insurer or any affiliated life insurance company, additional exemptive
relief is necessary if the shares of the Portfolios are also to be sold to
Eligible Purchasers, as described above. Applicants note that if the Shares were
sold only to Separate Accounts funding variable annuity contracts and/or
Eligible Purchasers, exemptive relief under Rule 6e-3(T)(b)(15) would not be
necessary. The relief provided for under this section does not relate to
Eligible Purchasers or to a registered investment company's ability to sell its
shares to Eligible Purchasers.
6. Applicants maintain, as discussed below, that there is no policy reason for
the sale of the Portfolios' shares to Eligible Purchasers to result in a
prohibition against, or otherwise limit a Participating Insurance Company from
relying on the relief provided by Rules 6e-2(b)(15) and 6e-3(T)(b)(15). However,
because the relief under Rules 6e-2(b)(15) and 6e-3(T)(b)(15) is available only
when shares are offered exclusively to Separate Accounts, additional exemptive
relief may be necessary if the shares of the Portfolios are also to be sold to
Eligible Purchasers. Applicants therefore request relief in order to have the
Participating Insurance Companies enjoy the benefits of the relief granted in
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) even where Eligible Purchasers are
investing in the relevant Insurance Fund. Applicants note that if the Shares
were to be sold only to Eligible Purchasers, and/or Separate Accounts funding
variable annuity contracts, exemptive relief under Rule 6e-2(b)(15) and Rule
6e-3(T)(b)(15) would be unnecessary. The relief provided for under Rules
6e-2(b)(15) and 6e-3(T)(b)(15) does not relate
8
to Eligible Purchasers, or to a registered investment company's ability to sell
its shares to Eligible Purchasers.
7. Consistent with the Commission's authority under Section 6(c) of the 1940 Act
to grant exemptive orders to a class or classes of persons and transactions, the
Application requests relief for the class consisting of Participating Insurance
Companies and their Separate Accounts (and to the extent necessary, investment
advisers, principal underwriters and depositors of such Separate Accounts).
8. In effect, the partial relief granted in Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
under the 1940 Act from the requirements of Section 9 of the 1940 Act limits the
amount of monitoring necessary to ensure compliance with Section 9 to that which
is appropriate in light of the policy and purposes of Section 9. 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 individuals in a large insurance complex, most
of whom will have no involvement in matters pertaining to investment companies
in that organization. Applicants assert that it is also unnecessary to apply
Section 9(a) of the 1940 Act to the many individuals in various unaffiliated
insurance companies (or affiliated companies of Participating Insurance
Companies) that may utilize the Insurance Funds as investment vehicles for
Variable Contracts. Applicants argue that there is no regulatory purpose in
extending the monitoring requirements to embrace a full application of Section
9(a)'s eligibility restrictions because of mixed funding or shared funding and
sales to Qualified Plans, an Adviser or General Accounts. Applicants represent
that the Participating Insurance Companies and Qualified Plans are not expected
to play any role in the management of the Insurance Funds. Applicants argue that
those individuals who participate in the management of the Insurance Funds will
remain the same
9
regardless of which Separate Accounts or Qualified Plans invest in the Insurance
Funds. Applying the monitoring requirements of Section 9(a) of the 1940 Act
because of investment by Separate Accounts of Participating Insurance Companies
or Qualified Plans would be unjustified and would not serve any regulatory
purpose. Furthermore, the increased monitoring costs could reduce the net rates
of return realized by contract owners and Qualified Plan holders.
9. Rules 6e-2(b)(15)(iii) and 6e-3(T)(b)(15)(iii) under the 1940 Act 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 contract owners
with respect to the investments of an underlying fund, or any contract between
such 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 Rules 6e-2 and 6e-3(T), respectively, under the 1940 Act).
Rules 6e-2(b)(15)(iii)(B) and 6e-3(T)(b)(15)(iii)(A)(2) provide that the
insurance company may disregard the voting instructions of its contract owners
if the contract owners initiate any change in an underlying fund'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), (b)(7)(ii)(B), and (b)(7)(ii)(C),
respectively, of Rules 6e-2 and 6e-3(T) under the 1940 Act).
10. Rule 6e-2 under the 1940 Act recognizes that a variable life insurance
contract, as an insurance contract, has important elements unique to insurance
contracts and is subject to extensive state regulation of insurance. In adopting
Rule 6e-2(b)(15)(iii), the Commission expressly recognized that state insurance
regulators have authority, pursuant to state insurance laws or regulations, to
disapprove or require changes in investment policies, investment advisers,
10
or principal underwriters. The Commission also expressly recognized that state
insurance regulators have authority to require an insurer to draw from its
general account to cover costs imposed upon the insurer by a change approved by
contract owners over the insurer's objection. The Commission, therefore, deemed
such exemptions necessary "to assure the solvency of the life insurer and
performance of its contractual obligations by enabling an insurance regulatory
authority or the life insurer to act when certain proposals reasonably could be
expected to increase the risks undertaken by the life insurer." In this respect,
flexible premium variable life insurance contracts are identical to scheduled
premium variable life insurance contracts. Applicants, therefore, assert that
the corresponding provisions of Rule 6e-3(T) under the 1940 Act undoubtedly were
adopted in recognition of the same factors.
11. Applicants also assert that the sale of Shares to Qualified Plans, an
Adviser and General Accounts will not have any impact on the relief requested
herein. With respect to the Qualified Plans, which are not registered as
investment companies under the 1940 Act, shares of a portfolio of an investment
company sold to a Qualified Plan must be held by the trustees of the Qualified
Plan pursuant to Section 403(a) of the Employee Retirement Income Security Act,
as amended ("ERISA"). Applicants note that (1) Section 403(a) of ERISA endows
Qualified Plan trustees with the exclusive authority and responsibility for
voting proxies provided neither of two enumerated exceptions to that provision
applies; (2) some of the Qualified Plans, 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; and (3) there is no
requirement to pass through voting rights to Qualified Plan participants.
12. Applicants argue that an Investment Manager and General Accounts are similar
in that they are not subject to any pass-through voting requirements. Applicants
therefore conclude that,
11
unlike the case with insurance company Separate Accounts, the issue of
resolution of material irreconcilable conflicts with respect to voting is not
present with Eligible Purchasers.
13. Applicants represent that where a Qualified Plan does not provide
participants with the right to give voting instructions, the trustee or named
fiduciary has responsibility to vote the shares held by the Qualified Plan. In
this circumstance, the trustee has a fiduciary duty to vote the shares in the
best interest of the Qualified Plan participants. Accordingly, even if an
Adviser or an affiliate of an Adviser were to serve in the capacity of trustee
or named fiduciary with voting responsibilities, an Adviser or its affiliates
would have a fiduciary duty to vote relevant Shares in the best interest of the
Qualified Plan participants.
14. Further, Applicants assert that even if a Qualified Plan were to hold a
controlling interest in a Portfolio, Applicants do not believe that such control
would disadvantage other investors in such Portfolio 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 Portfolio by a Qualified Plan will not
create any of the voting complications occasioned by mixed funding or shared
funding. Unlike mixed funding or shared funding, Applicants argue that Qualified
Plan investor voting rights cannot be frustrated by veto rights of insurers or
state regulators.
15. 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.
12
Applicants assert that the purchase of Shares by Qualified Plans that provide
voting rights does not present any complications not otherwise occasioned by
mixed or shared funding.
16. Applicants do not believe that sale of the shares of the Shares 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 those which would
otherwise exist between Variable Contract owners.
17. Applicants assert that permitting an Insurance Fund to sell its shares to an
Adviser or to the General Account of a Participating Insurance Company will
enhance management of each Insurance Fund without raising significant concerns
regarding material irreconcilable conflicts. Unlike the circumstances of many
investment companies that serve as underlying investment media for variable
insurance products, the Fund may be deemed to lack an insurance company
"promoter" for purposes of Rule 14a-2 under the 1940 Act. Accordingly, the Fund
and any other such Future Funds or Portfolios that are established as new
registrants will be subject to the requirements of Section 14(a) of the 1940
Act, which generally requires that an investment company have a net worth of
$100,000 upon making a public offering of its shares. Portfolios also will
require more limited amounts of initial capital in connection with the creation
of new series and the voting of initial shares of such series on matters
requiring the approval of shareholders. A potential source of the requisite
initial capital is a Portfolio's adviser or a Participating Insurance Company.
Either of these parties may have an interest in making the requisite capital
investments and in participating with an Insurance Fund in its organization.
Applicants note, however, that the provision of seed capital or the purchase of
shares in connection with the management of an Insurance Fund by its investment
adviser or by a
13
Participating Insurance Company may be deemed to violate the exclusivity
requirement of Rule 6e-2(b)(15) and/or Rule 6e-3(T)(b)(15).
18. Given the conditions of Treas. Reg. Section 1.817-5(f)(3) and the harmony of
interest between an Insurance Fund, on the one hand, and an Adviser or a
Participating Insurance Company, on the other, Applicants assert that little
incentive for overreaching exists. Furthermore, Applicants assert such
investment should not implicate the concerns discussed above regarding the
creation of material irreconcilable conflicts. Instead, Applicants argue that
permitting investments by an Adviser, or by General Accounts, will permit the
orderly and efficient creation of an Insurance Fund, and reduce the expense and
uncertainty of using outside parties at the early stages of the Insurance Fund's
operations.
Applicants' Conditions:
----------------------
Applicants agree that the order granting the requested relief shall be subject
to the following conditions:
1. A majority of the Board of Trustees (the "Board") of each Insurance Fund will
consist of persons who are not "interested persons" of the Insurance Fund, 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 trustee or trustees, then the operation of this condition
will be suspended: (a) for a period of 90 days if the vacancy or vacancies may
be filled by the Board; (b) for a period of 150 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 or by future rule.
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2. The Board of each Insurance Fund will monitor the Insurance Fund for the
existence of any material irreconcilable conflict between the interests of the
contract owners of all Separate Accounts and participants of all Qualified Plans
investing in the Insurance Fund, and determine what action, if any should 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 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
the Insurance Fund are being managed; (e) a difference in voting instructions
given by variable annuity contract owners, variable life insurance contract
owners, and trustees of the Qualified Plans; (f) a decision by a Participating
Insurance Company to disregard the voting instructions of 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 (on their own behalf, as well as by virtue
of any investment of General Account assets in an Insurance Fund), an Adviser,
and any trustee on behalf of a Qualified Plan that executes a Participation
Agreement upon becoming an owner of 10 percent or more of the assets of an
Insurance Fund (collectively, "Participants") will report any potential or
existing conflicts to the Board of the relevant Insurance Fund. Participants
will be responsible for assisting the Board in carrying out the Board's
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 of each
Participating Insurance Company to inform the Board whenever contract owner
voting
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instructions are disregarded, and, if pass-through voting is applicable, an
obligation by each Trustee for a 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 a contractual obligation of all Participating Insurance Companies
under their Participation Agreements with the relevant Insurance Fund, and these
responsibilities will be carried out with a view only to the interests of the
contract owners. The responsibility to report such information and conflicts,
and to assist the Board, also will be contractual obligations of all Qualified
Plans under their Participation Agreements, and such agreements will provide
that these 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 an Insurance Fund, or a
majority of the disinterested directors/trustees of such Board, that a material
irreconcilable conflict exists, then the relevant Participant will, at its
expense and to the extent reasonably practicable (as determined by a majority of
the disinterested directors/trustees), take whatever steps are necessary to
remedy or eliminate the material irreconcilable conflict, up to and including:
(a) withdrawing the assets allocable to some or all of the Separate Accounts
from the relevant Insurance Fund and reinvesting such assets in a different
investment vehicle including another Insurance Fund, submitting the question as
to whether such segregation should be implemented to a vote of all affected
contract or policy owners and, as appropriate, segregating the assets of any
appropriate group (i.e., variable annuity contract owners 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 contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
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If a material irreconcilable conflict arises because of a decision by a
Participating Insurance Company to disregard contract or policy owner voting
instructions, and that decision represents a minority position or would preclude
a majority vote, then the Participating Insurance Company may be required, at
the election of the relevant Insurance Fund, to withdraw such Participating
Insurance Company's Separate Account investment in the Insurance 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 Board determination of
a material irreconcilable conflict and to bear the cost of such remedial action
will be a contractual obligation of all Participants under their Participation
Agreement with the relevant Insurance Fund, and these responsibilities will be
carried out with a view only to the interests of contract owners and Qualified
Plan participants. For purposes of this Condition 4, a majority of the
disinterested directors/ trustees of the Board of each Insurance Fund will
determine whether or not any proposed action adequately remedies any material
irreconcilable conflict, but, in no event, will the Insurance Fund or an
Adviser, as relevant, be required to establish a new funding vehicle for any
Variable Contract. No Participating Insurance Company will be required by this
Condition 4 to establish a new funding vehicle for any Variable Contract if any
offer to do so has been declined by vote of a majority of the contract or policy
owners materially and adversely affected by the material irreconcilable
conflict. Further, no Qualified Plan will be required by this Condition 4 to
establish a new funding vehicle for the Qualified Plan if: (a) a majority of the
Qualified Plan participants materially and adversely affected by the
irreconcilable material conflict vote to decline such offer; or (b) pursuant to
documents governing the Qualified Plan, the Qualified Plan makes such decision
without a Qualified Plan participant vote.
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5. The Board of each Insurance Fund's determination of the existence of a
material irreconcilable conflict and its implications will be made known in
writing promptly to all Participants.
6. As to Variable Contracts issued by Separate Accounts registered under the
1940 Act, Participating Insurance Companies will provide pass-through voting
privileges to all Variable Contract owners as required by the 1940 Act as
interpreted by the Commission. However, as to Variable Contracts issued by
unregistered Separate Accounts, pass-through voting privileges will be extended
to contract owners to the extent granted by the issuing insurance company.
Accordingly, such Participants, where applicable, will vote the Shares held in
their Separate Accounts in a manner consistent with voting instructions timely
received from Variable Contract owners. Participating Insurance Companies will
be responsible for assuring that each Separate Account investing in the relevant
Insurance Fund calculates voting privileges in a manner consistent with other
Participants. The obligation to calculate voting privileges as provided in the
Application will be a contractual obligation of all Participating Insurance
Companies under their Participation Agreement with the relevant Insurance Fund.
Each Participating Insurance Company will vote shares for which it has not
received timely voting instructions, as well as shares held in its General
Account or otherwise attributed to it, in the same proportion as it votes those
shares for which it has received voting instructions. Each Qualified Plan will
vote as required by applicable law and governing Qualified Plan documents.
7. As long as the 1940 Act requires pass-through voting privileges to be
provided to Variable Contract owners, an Adviser, who has provided seed capital
for the Insurance Fund, and any General Account will vote their respective
Shares in the same proportion as all variable contract owners having voting
rights with respect to that Insurance Fund; provided, however, that an
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Adviser or any General Account shall vote its Shares in such other manner as may
be required by the Commission or its staff.
8. Each Insurance Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, which, for these purposes, shall be the persons having a
voting interest in the Shares, and, in particular, the Insurance Fund will
either provide for annual meetings (except to the extent that 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 each Insurance Fund is not, or will
not be, one of those trusts of the type 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 Insurance Fund will act in
accordance with the Commission's interpretations of the requirements of Section
16(a) with respect to periodic elections of directors/trustees and with whatever
rules the Commission may promulgate thereto.
9. An Insurance Fund will make its Shares available to the Separate Accounts and
Qualified Plans at or about the time it accepts any seed capital from an Adviser
or General Account of a Participating Insurance Company.
10. Each Insurance Fund has notified, or will notify, all Participants that
Separate Account prospectus disclosure or Qualified Plan prospectuses or other
Qualified Plan disclosure documents regarding potential risks of mixed and
shared funding may be appropriate. Each Insurance Fund will disclose, in its
prospectus that: (a) shares of the Existing Funds may be offered to Separate
Accounts funding both variable annuity contracts and variable life insurance
policies and, if applicable, to Qualified Plans; (b) due to differences in tax
treatment and other considerations, the interests of various contract owners
participating in the Insurance Fund and
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the interests of Qualified Plans investing in the Insurance Fund, if applicable,
may conflict; and (c) the Insurance Fund's Board 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.
11. If and to the extent that Rule 6e-2 and Rule 6e-3(T) under the 1940 Act are
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 each Insurance Fund and/or Participating Insurance Companies,
as appropriate, shall take such steps as may be necessary to comply with Rules
6e-2 and 6e-3(T), or Rule 6e-3, as such rules are applicable.
12. Each Participant, at least annually, will submit to the Board of Each
Insurance Fund such reports, materials, or data as a Board reasonably may
request so that the directors/trustees of the Board may fully carry out the
obligations imposed upon the Board by the conditions contained in the
Application. Such reports, materials, and data will be submitted more frequently
if deemed appropriate by the Board of an Insurance Fund. The obligations of the
Participants to provide these reports, materials, and data to the Board, when it
so reasonably requests, will be a contractual obligation of all Participants
under their Participation Agreements with the relevant Insurance Fund.
13. All reports of potential or existing conflicts received by the Board of each
Insurance Fund, and all Board action with regard to determining the existence of
a conflict, notifying Participants of a conflict and determining whether any
proposed action adequately remedies a conflict, will
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be properly recorded in the minutes of the Board or other appropriate records,
and such minutes or other records shall be made available to the Commission upon
request.
14. Each Insurance Fund will not accept a purchase order from a Qualified Plan
if such purchase would make the Qualified Plan an owner of 10 percent or more of
the assets of the Insurance Fund unless the Trustee for such Qualified Plan
executes an agreement with the Insurance Fund governing participation in the
Insurance Fund that includes the conditions set forth herein to the extent
applicable. A Trustee for a Qualified Plan will execute an application
containing an acknowledgement of this condition at the time of its initial
purchase of Shares.
Conclusions:
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Applicants submit that, for the reasons summarized above and to the extent
necessary or appropriate to provide for the transactions described herein, 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, in accordance with the
standards of Section 6(c) of the 1940 Act, are 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. Xxxxxx
Deputy Secretary
00
XXXXXX XXXXXX XX XXXXXXX
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT COMPANY ACT OF 1940
Release No. 27999 / September 27, 2007
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In the Matter of
FINANCIAL INVESTORS VARIABLE INSURANCE TRUST, ET AL.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
(812-13359)
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ORDER UNDER SECTION 6(c) OF THE INVESTMENT COMPANY ACT OF 1940 GRANTING
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
Financial Investors Variable Insurance Trust (the "Trust") and ALPS Advisers,
Inc. (the "Investment Adviser") filed an application on January 26, 2007, and an
amended and restated application on May 21, 2007, for an order under Section
6(c) of the Investment Company Act of 1940, as amended (the "1940 Act"),
granting 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 Trust and shares of any other
investment company or portfolio that is designed to fund insurance products and
for which the Investment Adviser or any of its affiliates, may serve in the
future as investment manager, investment adviser, subadviser, administrator,
principal underwriter, or sponsor (collectively, the "Insurance Funds") to be
sold to and held by: (a) separate accounts funding variable annuity contracts
and variable life insurance policies issued by both affiliated life insurance
companies and unaffiliated life insurance companies; (b) trustees of qualified
group pension and group retirement plans outside of the separate account
context; (c) separate accounts that are not registered as investment companies
under the 1940 Act pursuant to exemptions from registration under Section 3(c)
of the 1940 Act; (d) any adviser to an Insurance Fund for the purpose of
providing seed capital to an Insurance Fund; and (e) any other account of a
participating insurance company permitted to hold shares of an Insurance Fund.
A notice of the filing of the application was issued on September 4, 2007
(Investment Company Act Release No. 27965). The notice gave interested persons
an opportunity to request a hearing and stated that an order disposing of the
matter would be issued unless a hearing should be ordered. No request for a
hearing has been received, and the Commission has not ordered a hearing.
The matter has been considered, and it is found that the granting of the
requested exemptions is 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. Accordingly,
IT IS ORDERED, pursuant to Section 6(c) of the 1940 Act, that the requested
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, for Financial
Investors Variable Insurance Trust, et al. (812-13359) be, and hereby are,
granted, effective immediately.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.
Xxxxxxxx X. Xxxxxx
Deputy Secretary
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