EXHIBIT (A)(8)(H)
Participation Agreement - BT Insurance Funds Trust
PARTICIPATION AGREEMENT
AMONG BT INSURANCE FUNDS TRUST AND ACACIA NATIONAL LIFE
INSURANCE COMPANY
THIS AGREEMENT made as of the 1st day of May, 2000 by and among BT
Insurance Funds Trust ("TRUST"), a Massachusetts business trust, Bankers Trust
Company ("ADVISER"), a New York banking corporation, and ACACIA NATIONAL LIFE
INSURANCE COMPANY ("ACACIA NATIONAL"), a life insurance company organized under
the laws of the Commonwealth of Virginia.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, TRUST is comprised of several series funds (each a "Portfolio"),
with those Portfolios currently available being listed on Appendix A hereto; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies"); and
WHEREAS, TRUST may also offer its shares to certain qualified pension and
retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has received an order from the SEC, granting Participating
Insurance Companies and their separate accounts exemptions from the provisions
of Sections 9(a), 13(a), 15(a) and 15(b) of the '40 Act, and Rules 6e-2(b)(15)
and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the
Portfolios of the TRUST to be sold to and held by Variable Contract Separate
Accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans ("Exemptive Order"); and
WHEREAS, ACACIA NATIONAL has established or will establish one or more
Separate Accounts to offer Variable Contracts and is desirous of having TRUST as
one of the underlying funding vehicles for such Variable Contracts; and
WHEREAS, ADVISER is a "bank" as defined in the Investment Advisers Act of
1940, as amended (the "Advisers Act") and as such is excluded from the
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definition of "Investment Adviser" and is not required to register as an
investment adviser pursuant to the Advisers Act; and
WHEREAS, ADVISER serves as the TRUST's investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, ACACIA NATIONAL intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
ACACIA NATIONAL at such shares' net asset value;
NOW, THEREFORE, in consideration of their mutual promises, ACACIA NATIONAL,
TRUST, and ADVISER agree as follows:
Article I. SALE OF TRUST SHARES
1.1 TRUST agrees to make available to the Separate Accounts of ACACIA
NATIONAL shares of the selected Portfolios as listed on Appendix B for
investment of purchase payments of Variable Contracts allocated to the
designated Separate Accounts as provided in TRUST's Registration Statement.
1.2 TRUST agrees to sell to ACACIA NATIONAL those shares of the selected
Portfolios of TRUST which ACACIA NATIONAL orders, executing such orders on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
ACACIA NATIONAL shall be the designee of TRUST for receipt of such orders from
the designated Separate Account and receipt by such designee shall constitute
receipt by TRUST; provided that ACACIA NATIONAL receives the order by 4:00 p.m.
New York time and TRUST receives notice from ACACIA NATIONAL by telephone or
facsimile (or by such other means as TRUST and ACACIA NATIONAL may agree in
writing) of such order by 8:00 a.m. New York time on the next Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which TRUST calculates its net asset value pursuant to the
rules of the SEC.
1.3 TRUST agrees to redeem on ACACIA NATIONAL's request, any full or
fractional shares of TRUST held by ACACIA NATIONAL, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption, in accordance with the provisions of
this Agreement and TRUST's Registration Statement. (In the event of a conflict
between the provisions of this Agreement and the Trust's Registration Statement,
the provisions of the Registration Statement shall govern.) For purposes of this
Section 1.3, ACACIA NATIONAL shall be the designee of TRUST for receipt of
requests for redemption from the designated Separate Account and receipt by such
designee shall
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constitute receipt by TRUST; provided that ACACIA NATIONAL receives the request
for redemption by 4:00 p.m. New York time and TRUST receives notice from ACACIA
NATIONAL by telephone or facsimile (or by such other means as TRUST and ACACIA
NATIONAL may agree in writing) of such request for redemption by 9:00 a.m. New
York time on the next Business Day.
1.4 TRUST shall furnish, as soon as it is announced by the applicable Fund,
and no later than each ex-dividend date, notice to ACACIA NATIONAL of any income
dividends or capital gain distributions payable on the shares of any Portfolio
of TRUST. ACACIA NATIONAL hereby elects to receive all such income dividends and
capital gain distributions as are payable on a Portfolio's shares in additional
shares of the Portfolio. TRUST shall notify ACACIA NATIONAL or its designee of
the number of shares so issued as payment of such dividends and distributions,
and, as applicable, ex-date, record date, payable date, distribution rate per
share, record date share balances, cash and invested payment amounts, and all
other information reasonably requested by ACACIA NATIONAL.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to ACACIA NATIONAL on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
In the event that adjustments are required to correct any error in the
computation of the net asset value of Portfolio shares, TRUST shall promptly
notify ACACIA NATIONAL after discovering the need for any adjustments which
result in a reimbursement of $150 or more to the Account for a Portfolio.
Notification may be made orally or via direct or indirect systems access. The
letter shall be written on TRUST letterhead, or the letterhead of TRUST'S
administrator, and must state for each day for which an error occurred the
incorrect price, the correct price, and to the extent communicated to the
Portfolio's shareholder, the reason for the price change. TRUST agrees that
ACACIA NATIONAL may send this in writing, or a derivation thereof (so long as
the deviation is approved in advance by TRUST, which approval shall not
unreasonable be withheld) to Contract owners who are affected by the price
change.
1.6 If the Account received amounts in excess of the amounts to which it
would otherwise have been entitled prior to an adjustment for an error, ACACIA
NATIONAL, upon request by TRUST, will make a good faith attempt to collect such
excess amounts from the accounts of the Contract owners. In no event, however,
shall ACACIA NATIONAL be liable to TRUST for any such amounts.
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1.7 If an adjustment is to be made in accordance with subsection 1.5 above
to correct an error which has caused the Account to receive an amount less that
that to which it is entitled, TRUST shall make all necessary adjustments (within
the parameters specified in section 1.9) to the shares owned in the Account and,
to the extent of any underpayment, distribute to ACACIA NATIONAL the amount of
such underpayment for credit to the accounts of the Contract owners.
1.8 At the end of each Business Day, ACACIA NATIONAL shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, ACACIA NATIONAL shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by ACACIA NATIONAL by 8:00 a.m. New York Time on the
Business Day next following ACACIA NATIONAL's receipt of such requests and
premiums in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.9 If ACACIA NATIONAL's order requests the purchase of TRUST shares,
ACACIA NATIONAL shall pay for such purchase by wiring federal funds to TRUST or
its designated custodial account on the day the order is transmitted by ACACIA
NATIONAL. If ACACIA NATIONAL's order requests a net redemption resulting in a
payment of redemption proceeds to ACACIA NATIONAL, TRUST shall use its best
efforts to wire the redemption proceeds to ACACIA NATIONAL by the next Business
Day, unless doing so would require TRUST to dispose of Portfolio securities or
otherwise incur additional costs. In any event, proceeds shall be wired to
ACACIA NATIONAL within the time period permitted by the '40 Act or the rules,
orders or regulations thereunder, and TRUST shall notify the person designated
in writing by ACACIA NATIONAL as the recipient for such notice of such delay by
3:00 p.m. New York Time on the same Business Day that ACACIA NATIONAL transmits
the redemption order to TRUST. If ACACIA NATIONAL's order requests the
application of redemption proceeds from the redemption of shares to the purchase
of shares of another Fund advised by ADVISER, TRUST shall so apply such proceeds
on the same Business Day that ACACIA NATIONAL transmits such order to TRUST.
1.10 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation
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1.817-5. Shares of the TRUST's Portfolios will not be sold directly to the
general public.
1.11 TRUST may refuse to sell shares of any Portfolio to any person, or
suspend or terminate the offering of the shares of or liquidate any Portfolio of
TRUST if such action is required by law or by regulatory authorities having
jurisdiction or is, in the sole discretion of the Board of Trustees of the TRUST
(the "Board"), acting in good faith and in light of its duties under federal and
any applicable state laws, deemed necessary, desirable or appropriate and in the
best interests of the shareholders of such Portfolios.
1.12 Issuance and transfer of Portfolio shares will be by book entry only.
Stock certificates will not be issued to ACACIA NATIONAL or the Separate
Accounts. Shares ordered from Portfolio will be recorded in appropriate book
entry titles for the Separate Accounts.
1.13 TRUST agrees to provide Acacia National a statement of TRUST's assets
as soon as practicable and in any event within 30 days after the end of each
calendar quarter.
Article II. REPRESENTATIONS AND WARRANTIES
2.1 ACACIA NATIONAL represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the Commonwealth of
Virginia and that it has legally and validly established each Separate Account
as a segregated asset account under such laws, and that The Advisors Group, the
principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "'34 Act").
2.2 ACACIA NATIONAL represents and warrants that it has registered or, prior
to any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the '40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
2.3 ACACIA NATIONAL represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the "'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts, and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal
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and state laws (including all applicable blue sky laws) and further that the
sale of the Variable Contracts shall comply in all material respects with
applicable state insurance law suitability requirements.
2.4 ACACIA NATIONAL represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal laws, and TRUST shall be registered under
the '40 Act prior to and at the time of any issuance or sale of such shares.
TRUST, subject to Section 1.9 above, shall amend its registration statement
under the '33 Act and the '40 Act from time to time as required in order to
effect the continuous offering of its shares. TRUST shall register and qualify
its shares for sale in accordance with the laws of the various states only if
and to the extent deemed advisable by TRUST.
2.6 TRUST represents and warrants that each Portfolio will comply with the
diversification requirements set forth in Section 817(h) of the Code, and the
rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify ACACIA NATIONAL immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply and will
immediately take all reasonable steps to adequately diversify the Portfolio to
achieve compliance.
2.7 TRUST represents and warrants that each Portfolio invested in by the
Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify ACACIA NATIONAL immediately upon
having a reasonable basis for believing it has ceased to so qualify or might not
so qualify in the future.
2.8 ADVISER represents and warrants that it shall perform its obligations
hereunder in compliance in all material respects with any applicable state and
federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 TRUST shall prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
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materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 TRUST or its designee shall provide ACACIA NATIONAL, free of charge,
with as many copies of the current prospectus (or prospectuses), statements of
additional information, annual and semi-annual reports and proxy statements for
the shares of the Portfolios as ACACIA NATIONAL may reasonably request for
distribution to existing Variable Contract owners whose Variable Contracts are
funded by such shares. TRUST or its designee shall provide ACACIA NATIONAL, at
ACACIA NATIONAL's expense, with as many copies of the current prospectus (or
prospectuses) for the shares as ACACIA NATIONAL may reasonably request for
distribution to prospective purchasers of Variable Contracts. If requested by
ACACIA NATIONAL, TRUST or its designee shall provide such documentation
(including a "camera ready" copy of the current prospectus (or prospectuses) as
set in type or, at the request of ACACIA NATIONAL, as a diskette in the form
sent to the financial printer) and other assistance as is reasonably necessary
in order for the parties hereto once a year (or more frequently if the
prospectus (or prospectuses) for the shares is supplemented or amended) to have
the prospectus for the Variable Contracts and the prospectus (or prospectuses)
for the TRUST shares printed together in one document. The expenses of such
printing will be apportioned between ACACIA NATIONAL and TRUST in proportion to
the number of pages of the Variable Contract and TRUST prospectus, taking
account of other relevant factors affecting the expense of printing, such as
covers, columns, graphs and charts; TRUST shall bear the cost of printing the
TRUST prospectus portion of such document for distribution only to owners of
existing Variable Contracts funded by the TRUST shares and ACACIA NATIONAL shall
bear the expense of printing the portion of such documents relating to the
Separate Account; provided, however, ACACIA NATIONAL shall bear all printing
expenses of such combined documents where used for distribution to prospective
purchasers or to owners of existing Variable Contracts not funded by the shares.
In the event that ACACIA NATIONAL requests that TRUST or its designee provide
TRUST's prospectus in a "camera ready" or diskette format, TRUST shall be
responsible for providing the prospectus (or prospectuses) in the format in
which it is accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus (or prospectuses) in such format (e.g. typesetting
expenses), and ACACIA NATIONAL shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses.
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3.3 TRUST will provide ACACIA NATIONAL with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios promptly after the
filing of each such document with the SEC or other regulatory authority. ACACIA
NATIONAL will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
Article IV. SALES MATERIALS
4.1 ACACIA NATIONAL will furnish, or will cause to be furnished, to TRUST
and ADVISER, each piece of sales literature or other promotional material in
which TRUST or ADVISER is named, at least fifteen (15) Business Days prior to
its intended use. No such material will be used if TRUST or ADVISER objects to
its use in writing within ten (10) Business Days after receipt of such material.
4.2 TRUST and ADVISER will furnish, or will cause to be furnished, to ACACIA
NATIONAL, each piece of sales literature or other promotional material in which
ACACIA NATIONAL or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if ACACIA
NATIONAL objects to its use in writing within ten (10) Business Days after
receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of ACACIA NATIONAL or concerning ACACIA
NATIONAL, the Separate Accounts, or the Variable Contracts issued by ACACIA
NATIONAL, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by ACACIA NATIONAL or its designee, except
with the written permission of ACACIA NATIONAL.
4.4 ACACIA NATIONAL and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time
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to time, or in sales literature or other promotional material approved by TRUST
or its designee, except with the written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public media),
sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. ("NASD")
rules, the '40 Act, the '33 Act or rules thereunder.
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Article V. POTENTIAL CONFLICTS
5.1 The parties acknowledge that TRUST has received an order from the SEC
granting relief from various provisions of the '40 Act and the rules thereunder
to the extent necessary to permit TRUST shares to be sold to and held by
Variable Contract separate accounts of both affiliated and unaffiliated
Participating Insurance Companies and Qualified Plans. The Exemptive Order
requires TRUST and each Participating Insurance Company to comply with
conditions and undertakings substantially as provided in this Section 5. The
TRUST will not enter into a participation agreement with any other Participating
Insurance Company unless it imposes the same conditions and undertakings as are
imposed on ACACIA NATIONAL hereby.
5.2 The Board will monitor TRUST for the existence of any material
irreconcilable conflict between the interests of Variable Contract owners of all
separate accounts and with participants of Qualified Plans investing in TRUST.
An irreconcilable material conflict may arise for a variety of reasons, which
may include: (a) an action by any state insurance regulatory authority; (b) a
change in applicable federal or state insurance, tax, or securities laws or
regulations, or a public ruling, private letter ruling or any similar action by
insurance, tax or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of TRUST are being managed; (e) a difference in voting instructions
given by Variable Contract owners; (f) a decision by a Participating Insurance
Company to disregard the voting instructions of Variable Contract owners and (g)
if applicable, a decision by a Qualified Plan to disregard the voting
instructions of plan participants.
5.3 ACACIA NATIONAL will report any potential or existing conflicts of
which it becomes aware to the Board. ACACIA NATIONAL will be responsible for
assisting the Board in carrying out its duties in this regard by providing the
Board with all information reasonably necessary for the Board to consider any
issues raised. The responsibility includes, but is not limited to, an obligation
by the ACACIA NATIONAL to inform the Board whenever it has determined to
disregard Variable Contract owner voting instructions. These responsibilities of
ACACIA NATIONAL will be carried out with a view only to the interests of the
Variable Contract owners.
5.4 If a majority of the Board or majority of its disinterested Trustees,
determines that a material irreconcilable conflict exists affecting ACACIA
NATIONAL, ACACIA NATIONAL, at its expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested Trustees),
will take any steps necessary to remedy or eliminate the
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irreconcilable material conflict, including; (a) withdrawing the assets
allocable to some or all of the Separate Accounts from TRUST or any Portfolio
thereof and reinvesting those assets in a different investment medium, which may
include another Portfolio of TRUST, or another investment company; (b)
submitting the question as to whether such segregation should be implemented to
a vote of all affected Variable Contract owners and as appropriate, segregating
the assets of any appropriate group (i.e., variable annuity or variable life
insurance Contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Variable
Contract owners the option of making such a change; and (c) establishing a new
registered management investment company (or series thereof) or managed separate
account. If a material irreconcilable conflict arises because of ACACIA
NATIONAL's decision to disregard Variable Contract owner voting instructions,
and that decision represents a minority position or would preclude a majority
vote, ACACIA NATIONAL may be required, at the election of TRUST, to withdraw the
Separate Account's investment in TRUST, and no charge or penalty will be imposed
as a result of such withdrawal. The responsibility to take such remedial action
shall be carried out with a view only to the interests of the Variable Contract
owners.
For the purposes of this Section 5.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
TRUST or ADVISER (or any other investment adviser of TRUST) be required to
establish a new funding medium for any Variable Contract. Further, ACACIA
NATIONAL shall not be required by this Section 5.4 to establish a new funding
medium for any Variable Contracts if any offer to do so has been declined by a
vote of a majority of Variable Contract owners materially and adversely affected
by the irreconcilable material conflict.
5.5 The Board's determination of the existence of an irreconcilable material
conflict and its implications shall be made known promptly and in writing to
ACACIA NATIONAL.
5.6 No less than annually, ACACIA NATIONAL shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials, and data shall be
submitted more frequently if deemed appropriate by the Board.
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Article VI. VOTING
6.1 ACACIA NATIONAL will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, ACACIA NATIONAL, where applicable, will vote shares of the
Portfolio held in its Separate Accounts in a manner consistent with voting
instructions timely received from its Variable Contract owners. ACACIA NATIONAL
will be responsible for assuring that each of its Separate Accounts that
participates in TRUST calculates voting privileges in a manner consistent with
other Participating Insurance Companies. ACACIA NATIONAL will vote shares for
which it has not received timely voting instructions, as well as shares it owns,
in the same proportion as its votes those shares for which it has received
voting instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act
or the rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Exemptive
Order, then TRUST, and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
Article VII. INDEMNIFICATION
7.1 INDEMNIFICATION BY ACACIA NATIONAL. ACACIA NATIONAL agrees to indemnify
and hold harmless TRUST, ADVISER and each of their Trustees, directors,
principals, officers, employees and agents and each person, if any, who controls
TRUST or ADVISER within the meaning of Section 15 of the '33 Act (collectively,
the "Indemnified Parties") against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
ACACIA NATIONAL, which consent shall not be unreasonably withheld) or litigation
or threatened litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of TRUST's shares or the Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Variable Contracts or contained in the
Variable Contracts (or any amendment or supplement to any of the
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foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished in writing to
ACACIA NATIONAL by or on behalf of TRUST for use in the registration
statement or prospectus for the Variable Contracts or in the Variable
Contracts or sales literature (or any amendment or supplement) or otherwise
for use in connection with the sale of the Variable Contracts or TRUST
shares; or
(b) arise out of or result from (i) statements or representations
(other than statements or representations contained in the registration
statement, prospectus or sales literature of TRUST not supplied by ACACIA
NATIONAL, or persons under its control) or (ii) wrongful conduct of ACACIA
NATIONAL or persons under its control, with respect to the sale or
distribution of the Variable Contracts or TRUST shares; or
(c)arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of TRUST or any amendment thereof or supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished in writing to TRUST by or on behalf of ACACIA NATIONAL; or
(d)arise as a result of any failure by ACACIA NATIONAL to provide
substantially the services and furnish the materials under the terms of
this Agreement; or
(e)arise out of or result from any material breach of any
representation and/or warranty made by ACACIA NATIONAL in this Agreement or
arise out of or result from any other material breach of this Agreement by
ACACIA NATIONAL.
7.2 ACACIA NATIONAL shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent that such
losses, claims, damages, liabilities or litigation are attributable to such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such
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Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
7.3 ACACIA NATIONAL shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified ACACIA NATIONAL in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify ACACIA NATIONAL of
any such claim shall not relieve ACACIA NATIONAL from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against an Indemnified Party, ACACIA NATIONAL shall be entitled to participate
at its own expense in the defense of such action. ACACIA NATIONAL also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from ACACIA NATIONAL to such party of ACACIA
NATIONAL's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and ACACIA
NATIONAL will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.4 INDEMNIFICATION BY TRUST. TRUST agrees to indemnify and hold harmless
ACACIA NATIONAL and each of its directors, officers, employees, and agents and
each person, if any, who controls ACACIA NATIONAL within the meaning of Section
15 of the '33 Act (collectively, the "Indemnified Parties") against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of TRUST which consent shall not be unreasonably withheld)
or litigation or threatened litigation (including legal and other expenses) to
which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of TRUST's shares or the Variable Contracts
and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of TRUST (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to
any
Page 14 of 23
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information
furnished in writing to ADVISER or TRUST by or on behalf of ACACIA NATIONAL
for use in the registration statement or prospectus for TRUST or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or TRUST shares; or
(b) arise out of or result from (i) statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by
ADVISER or TRUST or persons under its control) or (ii) gross negligence or
wrongful conduct or willful misfeasance of TRUST or persons under its
control, with respect to the sale or distribution of the Variable Contracts
or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts, or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished in writing to ACACIA NATIONAL for inclusion
therein by or on behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to provide substantially
the services and furnish the materials under the terms of this Agreement; or
(ii) a failure by a Portfolio(s) invested in by the Separate Account to
comply with the diversification requirements of Section 817(h) of the Code;
or (iii) a failure by a Portfolio(s) invested in by the Separate Account to
qualify as a "regulated investment company" under Subchapter M of the Code;
or
(e) arise out of or result from any material breach of any
representation and/or warranty made by TRUST in this Agreement or arise out
of or result from any other material breach of this Agreement by TRUST.
Page 15 of 23
7.5 TRUST shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation incurred or
assessed against an Indemnified Party to the extent that such losses, claims,
damages, liabilities or litigation are attributable to such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement.
7.6 TRUST shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified TRUST in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify TRUST of any such claim shall not relieve TRUST
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, TRUST shall
be entitled to participate at its own expense in the defense thereof. TRUST also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from TRUST to such party of TRUST's
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and TRUST will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
Article VIII. TERM; TERMINATION
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of ACACIA NATIONAL or TRUST at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to by the
parties;
Page 16 of 23
(b) At the option of ACACIA NATIONAL, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as determined
by ACACIA NATIONAL. Prompt notice of election to terminate shall be
furnished by ACACIA NATIONAL, said termination to be effective ten days
after receipt of notice unless TRUST makes available a sufficient number of
shares to reasonably meet the requirements of the Variable Contracts within
said ten-day period;
(c) At the option of ACACIA NATIONAL, upon the institution of formal
proceedings against TRUST by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which
would, in ACACIA NATIONAL's reasonable judgment, materially impair TRUST's
ability to meet and perform TRUST's obligations and duties hereunder. Prompt
notice of election to terminate shall be furnished by ACACIA NATIONAL with
said termination to be effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal proceedings
against ACACIA NATIONAL and/or its broker-dealer affiliates by the SEC, the
NASD, or any other regulatory body, the expected or anticipated ruling,
judgment or outcome of which would, in TRUST's reasonable judgment,
materially impair ACACIA NATIONAL's ability to meet and perform its
obligations and duties hereunder. Prompt notice of election to terminate
shall be furnished by TRUST with said termination to be effective upon
receipt of notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the
use of such shares as the underlying investment medium of Variable Contracts
issued or to be issued by ACACIA NATIONAL. Termination shall be effective
upon such occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to qualify as
annuity contracts or life insurance contracts, as applicable, under the
Code, or if TRUST reasonably believes that the Variable Contracts may fail
to so qualify. Termination shall be effective upon receipt of notice by
ACACIA NATIONAL;
Page 17 of 23
(g) At the option of ACACIA NATIONAL, upon TRUST's breach of any
material provision of this Agreement, which breach has not been cured to
the satisfaction of ACACIA NATIONAL within ten days after written notice of
such breach is delivered to TRUST;
(h) At the option of TRUST, upon ACACIA NATIONAL's breach of any
material provision of this Agreement, which breach has not been cured to the
satisfaction of TRUST within ten days after written notice of such breach is
delivered to ACACIA NATIONAL;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice;
In the event this Agreement is assigned without the prior written consent of
ACACIA NATIONAL, TRUST, and ADVISER, termination shall be effective immediately
upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to Section
8.2 hereof, TRUST at its option may elect to continue to make available
additional TRUST shares, as provided below, for so long as TRUST desires
pursuant to the terms and conditions of this Agreement, for all Variable
Contracts in effect on the effective date of termination of this Agreement
(hereinafter referred to as "Existing Contracts"). Specifically, without
limitation, if TRUST so elects to make additional TRUST shares available, the
owners of the Existing Contracts or ACACIA NATIONAL, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in TRUST,
redeem investments in TRUST and/or invest in TRUST upon the payment of
additional premiums under the Existing Contracts. In the event of a termination
of this Agreement pursuant to Section 8.2 hereof, TRUST and ADVISER, as promptly
as is practicable under the circumstances, shall notify ACACIA NATIONAL whether
TRUST elects to continue to make TRUST shares available after such termination.
If TRUST shares continue to be made available after such termination, the
provisions of this Agreement shall remain in effect and thereafter either TRUST
or ACACIA NATIONAL may terminate the Agreement, as so continued pursuant to this
Section 8.3, upon sixty (60) days' prior written notice to the other party.
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, ACACIA
NATIONAL shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to ACACIA NATIONAL's assets held in the
Separate Accounts), and ACACIA NATIONAL shall not
Page 18 of 23
prevent Variable Contract owners from allocating payments to a Portfolio that
was otherwise available under the Variable Contracts until thirty (30) days
after ACACIA NATIONAL shall have notified TRUST of its intention to do so.
Article IX. NOTICES
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to TRUST:
BT Insurance Funds Trust
c/o First Data Investor Services Group, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxx, Legal Department
AND
c/o BT Alex. Xxxxx
One South Street, Mail Stop 1-18-6
Xxxxxxxxx, XX 00000
Attn: Mutual Fund Services
If to ADVISER:
Bankers Trust Company
000 Xxxxxxx Xxxxxx, Mail Stop 2355
Xxx Xxxx, XX 00000
Attn.: Mutual Fund Marketing
If to ACACIA NATIONAL:
Xxxxxx-Xxxx X. Xxxxx, Xx.
General Counsel
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
Page 19 of 23
Article X. MISCELLANEOUS
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the State of New York. It shall also be
subject to the provisions of the federal securities laws and the rules and
regulations thereunder and to any orders of the SEC granting exemptive relief
therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the shareholders
of shares of any Portfolio nor the Trustees or officers of TRUST or any
Portfolio shall be personally liable hereunder. No Portfolio shall be liable for
the liabilities of any other Portfolio. All persons dealing with TRUST or a
Portfolio must look solely to the property of TRUST or that Portfolio,
respectively, for enforcement of any claims against TRUST or that Portfolio. It
is also understood that each of the Portfolios shall be deemed to be entering
into a separate Agreement with ACACIA NATIONAL so that it is as if each of the
Portfolios had signed a separate Agreement with ACACIA NATIONAL and that a
single document is being signed simply to facilitate the execution and
administration of the Agreement.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the NASD and
state insurance regulators) and shall permit such authorities reasonable access
to its books and records in connection with any investigation or inquiry
relating to this Agreement or the transactions contemplated hereby.
10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
Page 20 of 23
10.8 If the Agreement terminates, the parties agree that Article 7 and
Sections 10.5, 10.6 and 10.7 shall remain in effect after termination.
10.9 No provision of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by TRUST, ADVISER
and the ACACIA NATIONAL.
10.10 No failure or delay by a party in exercising any right or remedy under
this Agreement will operate as a waiver thereof and no single or partial
exercise of rights shall preclude a further or subsequent exercise. The rights
and remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
BT INSURANCE FUNDS TRUST
By:/s/Xxxxxxxxx Xxxxxxx
-----------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Secretary
BANKERS TRUST COMPANY
By: /s/Xxxxxxxx Xxxxx
----------------------
Name: Xxxxxxxx Xxxxx
Title: Director
ACACIA NATIONAL LIFE INSURANCE COMPANY
By:/s/Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: President
Page 21 of 23
APPENDIX A
to Participation Agreement by and among BT Insurance Funds Trust, Bankers
Trust Company, and Acacia National Life Insurance Company
LIST OF PORTFOLIOS:
--------------------
BT Insurance Funds Trust - Small Cap Index Fund
BT Insurance Funds Trust - Equity 500 Index Fund
BT Insurance Funds Trust - EAFE Equity Index Fund
Page 22 of 00
XXXXXXXX X
to Participation Agreement by and among BT Insurance Funds Trust, Bankers Trust
Company, and Acacia National Life Insurance Company.
LIST OF VARIABLE SEPARATE ACCOUNTS:
-----------------------------------
Acacia National Life Insurance Company Variable Life Separate Account I
(Separate Account I")
Acacia National Life Insurance Company Variable Annuity Separate Account II
(Separate Account II")
Page 23 of 23
