AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 1 TO THE PARTICIPATION AGREEMENT ("Amendment No.
1"), made and entered into this 18th day of December, 1996, supplementing and
amending the Participation Agreement made and entered into the 27th day of
September, 1995 (the "Original Participation Agreement," and together with this
First Supplemental Amendment to Participation Agreement, the "Agreement") by and
between XXXXXX ADVISORS TRUST, an unincorporated business trust formed under the
laws of Massachusetts (the "Trust"), and SAFECO LIFE INSURANCE COMPANY, a
Washington life insurance company (the "Company"), on its own behalf and on
behalf of each separate account of the Company identified in the Agreement.
WHEREAS, the Trust currently serves as an investment vehicle for
certain accounts of the Company pursuant to the Original Participation
Agreement; and
WHEREAS, the Trust has applied for an order from the Securities and
Exchange Commission (the "SEC") (File No. 812-10198), granting Participating
Insurance Companies (as defined in the Original Participation Agreement) and
variable annuity and variable life separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act (as defined
in the Original Participation Agreement) and Rules 6e-2(b)(15) and
6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust
and each Series thereof to be sold to and held by variable annuity and variable
life insurance separate accounts of life insurance companies that may or may not
be affiliated with one another and qualified pension and retirement plans
outside of the separate account context (the "Exemptive Order"); and
WHEREAS, the Company and the Trust have agreed to hereby supplement and
amend the Original Participation Agreement in order to reflect the conditions
and undertakings that are expected to be imposed on the Company and the Trust by
virtue of such Exemptive Order;
NOW, THEREFORE, in consideration of their mutual promises, the Trust
and the Company agree as follows:
SECTION 1. Definitions
For all purposes of this Amendment No. 1, except as otherwise expressly
provided or unless the context otherwise requires:
(1) All references in this Amendment No. 1 and the Original
Participation Agreement to designated "Articles" and other subdivisions are to
the designated Articles and other subdivisions of the Original Participation
Agreement. The words "herein," "hereof," "hereto," "hereby" and "hereunder" and
other words of similar import refer to this Amendment No. 1 as a whole and not
to any particular "Section" or other subdivision.
(2) All terms used herein and not otherwise defined shall have the same
meanings as those given to such terms in the Original Participation Agreement,
and include the plural as well as the singular, and the Original Participation
Agreement is hereby amended to included any terms defined herein.
(3) Any references to the "Agreement" in the Original
Participation Agreement are hereby amended to include, collectively, the
Original Participation Agreement and this Amendment No. 1.
SECTION 2. Amendment to Article VII
Article VII of the Original Participation Agreement is hereby amended
to read as follows:
"ARTICLE VII. Potential Conflicts and Compliance With
Exemptive Order
7.1. The Trust Board will monitor the Trust for the existence
of any material irreconcilable conflict between the interests of the
Contract Owners of all Participating Accounts and of Qualified
Participants investing in the Trust and each Series thereof. 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 any Series are managed; (e) a difference in voting
instructions given by variable annuity contract and variable life
insurance contract owners; (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 Entity to disregard the voting
instructions of Qualified Participants. The Trust Board shall promptly
inform the Company in writing if it determines that a material
irreconcilable conflict exists and the implications thereof.
7.2 The Company shall report any potential or existing
conflicts to the Trust Board. The Company will be responsible for
assisting the Trust Board in carrying out its responsibilities by
providing the Trust Board with all information reasonably necessary for
the Trust Board to consider any issues raised. This responsibility
includes, but is not limited to, an obligation by the Company to inform
the Trust Board whenever it has determined to disregard Contract Owner
voting instructions. Such responsibilities shall be carried out by the
Participants with a view only to the interests of Contract Owners.
7.3. If it is determined by a majority of the Trust Board, or
a majority of the members of the Trust Board who are not interested
persons of the Trust, the Investment Adviser or any sub-adviser to any
of the Series (the "Independent Trustees"), that a material
irreconcilable conflict exists, the Company shall, at its expense and
to the extent reasonably practicable (as determined by a majority of
the Independent Trustees), take whatever steps are necessary to remedy
or eliminate the material irreconcilable conflict including: (a)
withdrawing the assets allocable to some or all of the separate
accounts from the Trust or any Series and reinvesting such assets in a
different investment medium, which may include another Series of the
Trust, or submitting the question of whether such segregation should be
implemented to a vote of all affected Contract Owners and, as
appropriate, segregating the assets of any appropriate group (i.e.,
annuity contract owners, life insurance contract owners, or variable
contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected
Contract Owners the option of making such a change; and (b)
establishing a new registered management investment company or managed
separate account.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract Owner voting instructions
and that decision represents a minority position or would preclude a
majority vote, the Company may be required, at the Trust's election, to
withdraw the Account's investment in the Trust and terminate this
Agreement and no charge or penalty will be imposed as a result of such
withdrawal. Any such withdrawal and termination must take place within
six (6) months after the Trust gives written notice that this provision
is being implemented, and until the end of that six month period the
Investment Adviser and the Trust shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of
the Trust.
7.5. If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with the majority of other state regulators, then the
Company will withdraw the Account's investment in the Trust and
terminate this Agreement within six months after the Trust Board
informs the Company in writing that it has determined that such
decision has created a material irreconcilable conflict. Until the end
of the foregoing six month period, the Investment Adviser and the Trust
shall continue to accept and implement orders by the Company for the
purchase (and redemption) of shares of the Trust.
7.6. For purposes of Sections 7.3 through 7.6 of this
Agreement, a majority of the Independent Trustees shall determine
whether any proposed action adequately remedies any material
irreconcilable conflict, but in no event will the Trust or the
Investment Adviser be required to establish a new funding medium for
the Contracts. The Company shall not be required by Section 7.3 to
establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Contract Owners materially
adversely affected by the material irreconcilable conflict. In the
event that the Trust Board determines that any proposed action does not
adequately remedy any material irreconcilable conflict, then the
Company will withdraw the Account's investment in the Trust and
terminate this Agreement within six (6) months after the Trust Board
informs the Company in writing of the foregoing determination.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Exemptive Order)
on terms and conditions materially different from those contained in
the Exemptive Order, then (a) the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with
Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the
extent such rules are applicable; and (b) Article V and Sections 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only
to the extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
7.8 The Company shall at least annually submit to the Trust
Board such reports, materials or data as the Trust Board may reasonably
request so that the Trust Board may fully carry out its obligations
under the Exemptive Order; provided, however, that the Board may
require the submission of such reports on data on a more frequent basis
if it so deems appropriate.
7.9 The Company, or any affiliate, will maintain at its home
office, available to the SEC, (a) a list of its officers, directors and
employees who participate directly in the management of administration
of any Account and/or (b) a list of its agents who, as registered
representatives, offer and sell Contracts."
SECTION 3. Schedules
Schedules 1, 2 and 3 to the Original Participation Agreement are hereby
amended to read as Schedules 1, 2 and 3 to this Amendment No.1, respectively.
SECTION 4. Miscellaneous
4.1 The captions in this Amendment No. 1 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.
4.2 This Amendment No. 1 may be executed simultaneously in two
or more counterparts, each of which together shall constitute one and the same
instrument.
4.3 If any provision of this Amendment No. 1 shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to be executed in its name and behalf by its duly authorized
office on the date specified below.
SAFECO LIFE INSURANCE COMPANY
(Company)
Date: January 27, 1997 By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Vice President
XXXXXX ADVISORS TRUST
(Trust)
Date: January 17, 1997 By: /s/ Xxxxxxx X. XxXxxxx
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Name: Xxxxxxx X. XxXxxxx
Title: Senior Vice President
