Exhibit (8)(j): Participation Agreement by and between Companion Life Insurance
Company and BT Insurance Funds Trust.
FUND PARTICIPATION AGREEMENT
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 Companion Life
Insurance Company ("LIFE COMPANY"), a life insurance company organized under the
laws of the State of New York.
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, LIFE COMPANY has established or will establish one or more
Separate Accounts to offer Variable Contracts and is desirous of having TRUST as
one of the underlying funding vehicles for such Variable Contracts; and
WHEREAS, ADVISER is a "bank" as defined in the Investment Advisers Act
of 1940, as amended (the "Advisers Act') and as such is excluded from the
definition of "Investment Adviser" and is not required to register as an
investment adviser pursuant to the Advisers Act; and
WHEREAS, ADVISER serves as the TRUST's investment adviser; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, LIFE COMPANY intends to purchase shares of the Portfolios to fund
the aforementioned Variable Contracts and TRUST is authorized to sell such
shares to LIFE COMPANY at such shares' net asset value;
NOW, THEREFORE, in consideration of their mutual promises, LIFE COMPANY,
TRUST, and ADVISER agree as follows:
Article I. SALE OF TRUST SHARES
--------------------
1.1 TRUST agrees to make available to the Separate Accounts of LIFE
COMPANY that are listed on Appendix B, shares of the selected Portfolios as
listed on Appendix A 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 LIFE COMPANY those shares of the selected
Portfolios of TRUST which LIFE COMPANY orders, executing such orders on a daily
basis at the net asset value next computed after receipt by TRUST or its
designee of the order for the shares of TRUST. For purposes of this Section 1.2,
LIFE COMPANY shall be the designee of TRUST for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by TRUST; provided that LIFE COMPANY receives the order by 4:00 p.m. New
York time and TRUST receives notice from LIFE COMPANY by telephone or facsimile
(or by such other means as TRUST and LIFE COMPANY 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.
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1.3 TRUST agrees to redeem on LIFE COMPANY's request, any full or
fractional shares of TRUST held by LIFE COMPANY, executing such requests on a
daily basis at the net asset value next computed after receipt by TRUST or its
designee of the request for redemption, 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, LIFE COMPANY shall be the designee of TRUST for receipt of requests
for redemption from the designated Separate Account and receipt by such designee
shall constitute receipt by TRUST; provided that LIFE COMPANY receives the
request for redemption by 4:00 p.m. New York time and TRUST receives notice from
LIFE COMPANY by telephone or facsimile (or by such other means as TRUST and LIFE
COMPANY 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, on or before each ex-dividend date, notice to
LIFE COMPANY of any income, dividends or capital gain distributions payable on
the shares of each Portfolio of TRUST. LIFE COMPANY hereby elects to receive all
such income, dividends and capital gain distributions as are payable on a
Portfolio's shares in additional shares of the Portfolio. LIFE COMPANY reserves
the right to revoke this election and to receive all such income, dividends and
capital gain distributions in cash. TRUST shall notify LIFE COMPANY or its
designee of the number of shares so issued as payment of such dividends and
distributions.
1.5 TRUST shall make the net asset value per share for the selected
Portfolio(s) available to LIFE COMPANY on a daily basis as soon as reasonably
practicable after the net asset value per share is calculated but shall use its
best efforts to make such net asset value available by 6:30 p.m. New York time.
If TRUST provides LIFE COMPANY with materially incorrect share net asset value
information through no fault of LIFE COMPANY, LIFE COMPANY on behalf of the
Separate Accounts, shall be entitled to an adjustment to the number of shares
purchased or redeemed to reflect the correct share net asset value. Any material
error in the calculation of net asset value per share, dividend or capital gain
information shall be reported promptly upon discovery to LIFE COMPANY.
1.6. At the end of each Business Day, LIFE COMPANY shall use the
information described in Section 1.5 to calculate Separate Account unit values
for the day. Using these unit values, LIFE COMPANY shall process each such
Business Day's Separate Account transactions based on requests and premiums
received by it by the close of trading on the floor of the New York Stock
Exchange (currently 4:00 p.m. New York time) to determine the net dollar amount
of TRUST shares which shall be purchased or redeemed at that day's closing net
asset value per share. The net purchase or redemption orders so determined shall
be transmitted to TRUST by LIFE COMPANY by 8:00 a.m. New York Time on the
Business Day next following LIFE COMPANY's receipt of such requests and premiums
in accordance with the terms of Sections 1.2 and 1.3 hereof.
1.7 If LIFE Company's order requests the purchase of Portfolio shares,
LIFE COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by LIFE
COMPANY. Upon receipt of the TRUST or its designated custodial account of the
Federal Funds so wired, such Funds shall cease to be the responsibility of LIFE
COMPANY and shall be the responsibility of the TRUST. If LIFE COMPANY's order
requests a net redemption resulting in a payment of redemption proceeds to LIFE
COMPANY, TRUST shall use its best efforts to wire the redemption proceeds to
LIFE COMPANY by the next Business Day, unless doing so would require TRUST to
dispose of Portfolio securities or otherwise incur additional costs. If proceeds
are not wired to LIFE COMPANY by the next Business Day, proceeds shall be wired
to LIFE COMPANY 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 LIFE COMPANY as the recipient for such notice of such delay by
3:00 p.m. New York Time on the same Business Day that LIFE COMPANY transmits the
redemption order to TRUST. If LIFE COMPANY's order requests the application of
redemption proceeds from the redemption of shares to the purchase of shares of
another Fund advised by ADVISER, TRUST shall so apply such proceeds on the same
Business Day that LIFE COMPANY transmits such order to TRUST.
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1.8 TRUST agrees that all shares of the Portfolios of TRUST will be sold
only to Participating Insurance Companies which have agreed to participate in
TRUST to fund their Separate Accounts and/or to Qualified Plans, all in
accordance with the requirements of Section 817(h)(4) of the Internal Revenue
Code of 1986, as amended ("Code") and Treasury Regulation 1.817-5. Shares of the
TRUST's Portfolios will not be sold directly to the general public.
1.9 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.
1.10 Issuance and transfer of Portfolio shares will be by book entry
only. Stock certificates will not be issued to LIFE COMPANY or the Separate
Accounts. Shares ordered from the Portfolios will be recorded in appropriate
book entry titles for each of the Separate Accounts.
Article II. REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 LIFE COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of New York and
that it has legally and validly established each Separate Account as a
segregated asset account under such laws, and that Mutual of Omaha Investor
Services, Inc., 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 LIFE COMPANY represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register each
Separate Account as a unit investment trust ("UIT") in accordance with the
provisions of the '40 Act and cause each Separate Account to remain so
registered to serve as a segregated asset account for the Variable Contracts,
unless an exemption from registration is available.
2.3 LIFE COMPANY represents and warrants that the Variable Contracts
will be registered under the Securities Act of 1933 (the"'33 Act") unless an
exemption from registration is available prior to any issuance or sale of the
Variable Contracts, and that the Variable Contracts will be issued and sold in
compliance in all material respects with all applicable federal and state laws
(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 LIFE COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Portfolio shares offered and
sold pursuant to this Agreement will be registered under the '33 Act and duly
authorized for issuance and sold in accordance with all applicable federal and
state laws, and TRUST shall be registered under the '40 Act prior to and at the
time of any issuance or sale of such shares. TRUST, subject to Section 1.9
above, shall amend its registration statements for Portfolio shares 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.
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2.6 TRUST represents and warrants that each Portfolio will comply with
the diversification requirements set forth in Section 817(h) of the Code, and
the rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing any Portfolio has ceased to comply 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 a
Separate Account will be treated as a "regulated investment company" under
Subchapter M of the Code, and will notify LIFE COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
2.8 ADVISER represents and warrants that it is lawfully organized and
validly existing under the laws of the State of New York and that it shall
perform its obligations hereunder in compliance in all material respects with
any applicable state and federal laws.
2.9 TRUST represents and warrants that its investment policies, fees and
expenses are and at all times shall remain in compliance with the laws of the
State of Nebraska to the extent required to perform this Agreement.
2. 10 TRUST represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Massachusetts and that it does
and will comply in all material respects with the '40 Act.
Article III. PROSPECTUS AND PROXY STATEMENTS
-------------------------------
3.1 TRUST shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Portfolios, preparation and filing of the documents listed in this Section 3.1
and all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 TRUST or its designee shall provide LIFE COMPANY, free of charge,
with as many copies of the current prospectus (or prospectuses), statements of
additional information, annual and semi-annual reports to shareholders, other
communications to shareholders and proxy statements for the shares of the
Portfolios as LIFE COMPANY may reasonably request for distribution to existing
Variable Contract owners whose Variable Contracts are funded by such shares.
TRUST or its designee shall provide LIFE COMPANY, at LIFE COMPANY's expense,
with as many copies of the current prospectus (or prospectuses) for the shares
as LIFE COMPANY may reasonably request for distribution to prospective
purchasers of Variable Contracts. If requested by LIFE COMPANY, 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
LIFE COMPANY, 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 LIFE COMPANY
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
LIFE COMPANY shall bear the expense of printing the portion of such documents
relating to the Separate Account; provided, however, LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY 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 LIFE COMPANY with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Portfolios within fifteen
days of the filing of each such document with the SEC or other regulatory
authority. LIFE COMPANY will provide TRUST with at least one complete copy of
all prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to a Separate Account within fifteen
days of the filing of each such document with the SEC or other regulatory
authority.
3.4 TRUST will provide LIFE COMPANY with as much notice as is reasonably
practicable of any proxy solicitation for any Portfolio.
3.5 TRUST will provide LIFE COMPANY with as much notice as is reasonably
practicable of any proxy solicitation for any Portfolio.
Article IV. SALES MATERIALS
---------------
4.1 LIFE COMPANY 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 reasonably
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
LIFE COMPANY, each piece of sales literature or other promotional material in
which LIFE COMPANY or its Separate Accounts are named, at least fifteen (15)
Business Days prior to its intended use. No such material will be used if LIFE
COMPANY reasonably objects to its use in writing within ten (10) Business Days
after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information
or make any representations on behalf of LIFE COMPANY or concerning LIFE
COMPANY, the Separate Accounts, or the Variable Contracts issued by LIFE
COMPANY, other than the information or representations contained in a
registration statement or prospectus for such Variable Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports of the Separate Accounts or reports prepared for
distribution to owners of such Variable Contracts, or in sales literature or
other promotional material approved by LIFE COMPANY or its designee, except with
the written permission of LIFE COMPANY.
4.4 LIFE COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time' or 'in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or
other promotional material" or words of similar import include, without
limitation, advertisements (such as material published, or designed for use, in
a newspaper, magazine or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures or other
public media), sales literature (such as any written communication distributed
or made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts, or
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, registration
statements, prospectuses, statements of additional information, shareholder
reports and proxy materials, and any other material constituting sales
literature or advertising under National Association of Securities Dealers, Inc.
("NASD") rules, the '40 Act, the '33 Act or rules thereunder.
Article V. POTENTIAL CONFLICTS
-------------------
5.1 The parties acknowledge that TRUST has received an order from the
SEC granting relief from various provisions of the '40 Act and the rules
thereunder to the extent necessary to permit Portfolio 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 LIFE COMPANY hereby.
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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 LIFE COMPANY will report any potential or existing conflicts of
which it becomes aware to the Board. LIFE COMPANY 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 LIFE COMPANY to inform the Board whenever it has determined to disregard
Variable Contract owner voting instructions. These responsibilities of LIFE
COMPANY 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
LIFE COMPANY, LIFE COMPANY, at its Expense and to the extent reasonably
practicable (as determined by a majority of the Board's disinterested Trustees),
will take any steps necessary to remedy or eliminate the irreconcilable material
conflict, including; (a) withdrawing the assets allocable to some or all of the
Separate Accounts from TRUST or any Portfolio thereof and reinvesting those
assets in a different investment medium, which may include another Portfolio of
TRUST, or another investment company; (b) submitting the question as to whether
such segregation should be implemented to a vote of all affected Variable
Contract owners and as appropriate, segregating the assets of any appropriate
group (i.e., variable annuity or variable life insurance Contract owners of one
or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to. the affected Variable Contract owners the option of
making such a change; and (c) establishing a new registered management
investment company (or series thereof) or managed separate account. If a
material irreconcilable conflict arises because of LIFE COMPANY's decision to
disregard Variable Contract owner voting instructions, and that decision
represents a minority position or would preclude a majority vote, LIFE COMPANY
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. Any such withdrawal must take place within six (6) months after
TRUST gives written notice that this provision is being implemented, and until
the end of that six month period TRUST shall continue to accept and implement
orders by LIFE COMPANY for the purchase (and redemption) of shares of the
Portfolios. 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, LIFE COMPANY
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 LIFE COMPANY.
5.6 No less than annually, LIFE COMPANY 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 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract owners so long as the SEC continues to interpret the '40 Act
as requiring pass-through voting privileges for Variable Contract owners.
Accordingly, LIFE COMPANY, 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. LIFE COMPANY 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. LIFE COMPANY 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 LIFE COMPANY. LIFE COMPANY 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" for purposes of this Section 7.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of LIFE COMPANY, which consent shall not be unreasonably
withheld) or litigation or threatened litigation (including legal and other
expenses), to which the Indemnified Parties may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) or settlements
are. related to the sale or acquisition of TRUST's shares or the Variable
Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration Statement
or prospectus for the Variable Contracts or contained in the Variable Contracts
(or any amendment or supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement or
omission was made in reliance upon and in conformity with information furnished
in writing to LIFE COMPANY by or on behalf of TRUST for use in the registration
statement or prospectus for the Variable Contracts or in the Variable Contracts
or sales literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Variable Contracts or Portfolio shares; or
(b) arise out of or result from (i) statements or representations (other
dm statements or representations contained in the registration statement,
prospectus or sales literature of TRUST not supplied by LIFE COMPANY, or persons
under its control) or (ii) wrongful conduct of LIFE COMPANY or persons under its
control, with respect to the sale or distribution of the Variable Contracts or
Portfolio 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 LIFE COMPANY; or
(d) arise as a result of any failure by LIFE COMPANY to provide
substantially the services and furnish the materials under the terms of this
Agreement; or
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(e) arise out of or result from any material breach of any
representation and/or warranty made by LIFE COMPANY in this Agreement or arise
out of or result from any other material breach of this Agreement by LIFE
COMPANY.
7.2 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party to the extent that such
losses, claims, damages, liabilities or litigation are attributable to such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
7.3 LIFE COMPANY shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified LIFE COMPANY in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on .any designated agent), but failure to notify LIFE COMPANY of
any such claim shall not relieve LIFE COMPANY from any liability which it may
have to the Indemnified Party against whom such action is brought otherwise than
on account of this indemnification provision. In case any such action is brought
against an Indemnified Party, LIFE COMPANY shall be entitled to participate at
its own expense in the defense of such action. LIFE COMPANY also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from LIFE COMPANY to such party of LIFE
COMPANY's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses of any additional counsel retained by it, and LIFE
COMPANY will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof other than reasonable costs of investigation.
7.4 Indemnification by TRUST. TRUST and ADVISER, jointly and severally,
agree to indemnify and hold harmless LIFE COMPANY and each of its directors,
officers, employees, and agents and each person, if any, who controls LIFE
COMPANY within the meaning of Section 15 of the '33 Act (collectively, the
"Indemnified Parties" for purposes of this Section 7.4) 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 Portfolio shares or the Variable Contracts
and:
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement or
prospectus or sales literature of TRUST (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in reliance
upon and in conformity with information furnished in writing to ADVISER or TRUST
by or on behalf of LIFE COMPANY for use in the registration statement or
prospectus for TRUST or in sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the Variable Contracts or
Portfolio shares; or
(b) arise out of or result from (i) statements or representations (other
dm 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 ADVISER or persons under
their control, with respect to the sale or distribution of the Variable
Contracts or Portfolio 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 LIFE COMPANY for inclusion therein by or on behalf of
TRUST or ADVISER; or
8
(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 any 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 any 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 or ADVISER in this Agreement or
arise out of or result from any other material breach of this Agreement by TRUST
or ADVISER.
7.5 Neither TRUST nor ADVISER shall 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 Neither TRUST nor ADVISER shall 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 or ADVISER from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise dm on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, TRUST and ADVISER shall be entitled to participate at their
own expense in the defense thereof. TRUST and ADVISER also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from TRUST or ADVISER to such party of an election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and TRUST or ADVISER will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
Article VIII. TERM; TERMINATION
-----------------
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated -in accordance with the, provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of LIFE COMPANY or TRUST at any time from the
date hereof upon 180 days' notice, with respect to some or all of the
Portfolios unless a shorter time is agreed to by the parties;
(b) At the option of LIFE COMPANY, if TRUST shares are not
reasonably available to meet the requirements of the Variable Contracts
as determined by LIFE COMPANY. Prompt notice of election to terminate
shall be furnished by LIFE COMPANY, said termination to be effective ten
days after receipt of notice unless TRUST makes available a sufficient
number of shares to reasonably meet the requirements of the Variable
Contracts within said ten-day period;
(c) At the option of LIFE COMPANY, upon the institution of formal
proceedings against TRUST by the SEC, the NASD, or any other regulatory
body, the expected or anticipated ruling, judgment or outcome of which
would, in LIFE COMPANY's reasonable judgment, materially impair TRUST's
ability to meet and perform TRUST's obligations and duties hereunder.
Prompt notice of election to terminate shall be furnished by LIFE
COMPANY with said termination to be effective upon receipt of notice;
9
(d) At the option of TRUST, upon the institution of formal
proceedings against LIFE COMPANY 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 LIFE COMPANY's ability to meet
and perform its obligations and duties hereunder. Prompt notice of
election to terminate shall be furnished by TRUST with said termination
to be effective upon receipt of notice;
(e) At the option of LIFE COMPANY, in the event TRUST's shares
are not registered, issued or sold in accordance with applicable state
or federal law, or such law precludes the use of such shares as the
underlying investment medium of Variable Contracts issued or to be
issued by LIFE COMPANY. Termination shall be effective upon such
occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to
qualify as annuity contracts or life insurance contracts, as applicable,
under the Code, or if TRUST reasonably believes that the Variable
Contracts may fail to so qualify. Termination shall be effective upon
receipt of notice by LIFE COMPANY;
(g) At the option of LIFE COMPANY, upon Trust's breach of any
material provision of this Agreement, which breach has not been cured to
the satisfaction of LIFE COMPANY within ten days after written notice of
such breach is delivered to TRUST;
(h) At the option of TRUST, upon LIFE COMPANY's breach of any
material provision of this Agreement,, which breach has not been cured
to the satisfaction of TRUST within ten days after written notice of
such breach is delivered to LIFE COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such
occurrence without notice;
(j) At the option of LIFE COMPANY, by written notice to TRUST,
with respect to any Portfolio in the event the Portfolio ceases to
qualify as a Regulated Investment Company under Subchapter M or fails to
comply with the Section 817(h) diversification requirements of the Code
and the Regulations thereunder, or if LIFE COMPANY reasonably believes
that such Portfolio may fail to qualify or so comply.
(k) At the option of TRUST, by written notice to LIFE COMPANY, if
TRUST shall determine, in its sole judgment exercised in good faith,
that LIFE COMPANY has suffered a material adverse change in its
financial condition since the date of this Agreement or is the subject
of material adverse publicity.
(1) At the option of LIFE COMPANY, by written notice to TRUST, if
LIFE COMPANY shall determine, in its sole judgment exercised in good
faith, that TRUST has suffered a material adverse change in its
financial condition since the date of this Agreement or is the subject
of material adverse publicity.
In the event this Agreement is assigned without the prior written
consent of LIFE COMPANY, 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, LIFE COMPANY at its option may elect to continue to purchase
additional Portfolio shares, as provided below, for so long as LIFE COMPANY
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 LIFE COMPANY so elects to purchase additional Portfolio shares,
the owners of the Existing Contracts or LIFE COMPANY, whichever shall have legal
authority to do so, shall be permitted to reallocate investments in the
Portfolios of the TRUST, redeem investments in the Portfolios of the TRUST
and/or invest in the Portfolios of the 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, LIFE COMPANY, within ten (10) days of
the date of the notice of termination, shall notify TRUST whether LIFE COMPANY
elects to continue to purchase Portfolio shares after such termination. If
Portfolio shares continue to be purchased after such, termination, the
provisions of this Agreement shall remain in effect. In no event shall the
election to continue by LIFE COMPANY be effective for more than six (6) months
after the date of termination.
10
8.4 Except as necessary to implement Variable Contract owner initiated
transactions, or as required by state insurance laws or regulations, LIFE
COMPANY shall not redeem the shares attributable to the Variable Contracts (as
opposed to the shares attributable to LIFE COMPANY's assets held in the Separate
Accounts), and LIFE COMPANY, shall not prevent Variable Contract owners from
allocating payments to a Portfolio that was otherwise available under the
Variable Contracts until thirty (30) days after the LIFE COMPANY shall have
notified TRUST of its intention to do so.
Article IX. NOTICES
-------
Any notice hereunder shall be given by registered or certified mail
return receipt requested to the other party at the address of
such party set forth below or at such other address as such party
may from time to time specify in writing to the other party.
If to TRUST:
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 LIFE COMPANY:
Companion Life Insurance Company
Attn:
Notice shall be deemed given on the date of receipt by the addressee as
evidenced by the return receipt.
11
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 LIFE COMPANY so that it is as if each of the
Portfolios had signed a separate Agreement with LIFE COMPANY 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.
Notwithstanding the generality of the foregoing, each party hereto further
agrees to furnish the Nebraska Insurance Director with any information or
reports in connection with services provided under this Agreement which such
Director may request in order to ascertain whether the variable annuity and
variable life operations of LIFE COMPANY are being conducted in a manner
consistent with the Nebraska variable annuity laws and regulations and any other
applicable law or regulations.
10.7 The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
10.8 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 LIFE COMPANY.
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
COMPANION LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Assistant Treasurer
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Appendix A
to Participation Agreement by and among BT Insurance Funds Trust, Bankers Trust
Company, and Companion Life Insurance Company.
List of Portfolios:
------------------
EAFE Equity Index Fund
Small Cap Index Fund
Appendix B
to Participation Agreement by and among BT Insurance Funds Trust, Bankers Trust
Company, and Companion Life Insurance Company.
List of Variable Separate Accounts:
----------------------------------
Companion Life Separate Account C
