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EXHIBIT 1.A(8)(a)
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 1st day of October, 1998, by and
between BT Insurance Funds Trust ("TRUST"), a Massachusetts business trust,
Bankers Trust Company ("ADVISER"), a New York banking corporation, and Western
Reserve Life Assurance Co. of Ohio ("LIFE COMPANY"), a life insurance company
organized under the laws of the State of Ohio.
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 TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares
of the Portfolio named in Appendix B to LIFE COMPANY at such shares' net asset
value;
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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 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 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 9:30 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 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 9:30 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 any 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. TRUST shall notify
LIFE COMPANY or its designee of the number of shares so issued as payment of
such dividends and distributions. Life Company reserves the right to revoke
this election and to receive all such dividends and distributions in cash.
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
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is calculated but shall use its best efforts to make such net asset value
available by 6:00 p.m. New York time each Business Day. 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 Each purchase, redemption and exchange order placed by LIFE
COMPANY shall be placed separately for each Portfolio and shall not be netted
with respect to any Portfolio. However, with respect to payment of the
purchase price by LIFE COMPANY and redemption of proceeds by the TRUST, LIFE
COMPANY and TRUST shall net purchase and redemption orders with respect to each
Portfolio and shall transmit one net payment for all Portfolios in accordance
with Section 1.7 hereof.
1.7 In the event net purchases, LIFE COMPANY shall pay for TRUST
shares by 3:00 p.m. New York time on the next Business Day after an order to
purchase the Shares is deemed to be received in accordance with the provisions
of Section 1.2 hereof. In the event of net redemptions, TRUST shall pay the
redemption proceeds by 3:00 p.m. New York time on the next Business Day after
an order to redeem the shares is deemed to be received in accordance with the
provisions of Section 1.3 hereof. All such payments shall be in federal funds
transmitted by wire. In any event, 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 any 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.
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 The TRUST will not sell shares of any Portfolio to any insurance
company or separate account unless an agreement containing provisions
substantially the same as Articles I, III, V, and VI of this Agreement are in
effect to govern such sales. The TRUST shall make available upon written
request from the Life Company a list of all other Participating Insurance
Companies. 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.
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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 Portfolio will be recorded in appropriate book
entry titles for 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 Ohio and that it
has legally and validly established each Separate Account as a segregated asset
account under such laws, and that AFSG Securities Corporation, 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
and further that the sale of the Variable Contracts shall comply in all
material respects with applicable state insurance law suitability requirements.
2.4 With respect to Sections 2.6 and 2.7 hereof, 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 use its best
efforts to 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 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.
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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 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. TRUST in its discretion will make reasonable efforts consistent
with market conditions and its investment objectives, to comply with applicable
state investment laws.
2.9 TRUST represents that it is lawfully organized and validly
existing under the laws of Massachusetts and that it does and will comply with
applicable provisions of the 0000 Xxx.
2.10 ADVISER represents and warrants that it shall perform its
obligations hereunder in compliance in all material respects with any
applicable state and federal laws.
2.11 TRUST and Adviser represent and warrant that all of their
directors, officers, partners and employees dealing with the money and/or
securities of the TRUST are and shall continue to be at all times covered by a
blanket fidelity bond or similar coverage for the benefit of the TRUST. The
bond shall be in an amount required by the applicable rules of the National
Association of Securities Dealers, Inc. ("NASD") and the federal securities
laws. The aforesaid bond shall include coverage for larceny and embezzlement
and shall be issued by a reputable bonding company. All parties shall make all
reasonable efforts to see that this bond or another bond containing these
provisions is always in effect, shall provide evidence thereof promptly to any
other party upon written notice requested therefor, and shall notify the other
parties promptly in the event that such coverage no longer applies.
2.12 (a) LIFE COMPANY acknowledges that TRUST's computer systems
which it will use in performing its duties under this Agreement (the "Trust
Systems") utilize ADVISOR-developed software code as well as interfaces, code
and data from other third party service providers and that neither TRUST nor
ADVISOR can ensure that such third parties will take action necessary to make
changes or enhancements required so that their software will be Year 2000
Compliant (as defined below) by December 31, 1998. However, ADVISOR warrants
that it will use all commercially reasonable efforts with the aim of having the
Trust Systems Year 2000 Compliant (as defined below) by December 31, 1998. The
determination of whether the Trust Systems are Year 2000 Compliant shall be
made by ADVISOR in good faith based upon its tests of the Trust System within
ADVISOR's own environment as well as in scenarios designed to duplicate certain
industry environments.
(b) For purposes of this Section, Year 2000 Compliant
shall mean that the Trust Systems shall be able to accurately process date
data, without creating any logical or mathematical inconsistencies, from, into
and between the twentieth and twenty-first centuries and after December 31,
1999, for any purpose under this Agreement.
Article III. PROSPECTUS, PROXY STATEMENTS AND OTHER INFORMATION
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
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voting instruction solicitation materials), prospectuses, statements of
additional information and Registration Statements 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 and proxy statements for
the shares of the Portfolios as LIFE COMPANY may reasonably request for
distribution to then-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 only bear the cost of printing the TRUST prospectus portion
of such document for distribution only to owners of then-existing Variable
Contracts funded by the TRUST shares; provided, however, LIFE COMPANY shall
bear all printing expenses of such combined documents where used for
distribution to prospective purchasers. 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.
3.3 TRUST will provide LIFE COMPANY with at least one complete copy
of all registration statements, prospectuses, statements of additional
information, annual and semi-annual reports and other shareholder
communications, proxy statements, sales literature and other promotional
materials, requests for no-action letters, 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. 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
promptly after the filing of each such document with the SEC or other
regulatory authority.
3.4 TRUST agrees to provide LIFE COMPANY within ten Business Days
after the end of a calendar month the following information with respect to
each Portfolio of the TRUST set forth in Appendix B, each as of the last
Business Day of such calendar month: the Portfolio's ten largest
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portfolio holdings (based on the percentage of the Portfolio's net assets) and
the industry sectors in which the Portfolio's investments are most heavily
weighted or the geographic regions in which the Portfolio's investments are
most heavily weighted (International funds only) and within 3 business days
after the end of a calendar month the year-to-date SEC standardized performance
data. In addition, TRUST agrees to provide to LIFE COMPANY a market commentary
from the Portfolio manager within approximately 45 days after the end of
calendar quarter, with respect to each Portfolio of the TRUST set forth in
Appendix B as of the last Business Day of such quarter and will provide upon
reasonable request after the end of a calendar quarter a list of the Portfolio
holdings (not audited or reconciled against the Fund's books or records) with
respect to each Portfolio set forth in Appendix B as of the last Business Day
of each such year. Also, the TRUST agrees to provide LIFE COMPANY, within ten
Business Days after a reasonable request is submitted to the TRUST by LIFE
COMPANY, the following information, each as of the date or dates specified in
such request: net asset value; net asset value per share, and other share
information. Trust acknowledges that such information may be furnished to LIFE
COMPANY's internal or independent auditors and to the insurance departments of
the various jurisdictions in which LIFE COMPANY does business.
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, or
in reports or proxy materials
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for the TRUST, 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 NASD rules, the '40 Act, the '33 Act or rules
thereunder.
4.6 No party shall use any other party's names, logos, trademarks or
service marks, whether registered or unregistered, without the prior written
consent of such other party, or after written consent therefor has been
revoked. TRUST and Adviser shall not use in advertising, publicity or
otherwise the name of LIFE COMPANY, or any of its affiliates nor any trade
name, trademark, trade device, service xxxx, symbol or any abbreviation,
contraction or simulation thereof of LIFE COMPANY, or its affiliates without
the prior written consent of LIFE COMPANY in each instance.
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 LIFE COMPANY 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 LIFE COMPANY will report any potential or existing conflicts of
which it becomes
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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. 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.
Article VI. VOTING
6.1 LIFE COMPANY will provide pass-through voting privileges to all
Variable Contract
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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.
LIFE COMPANY reserves the right to vote TRUST shares held in any
segregated asset account in its own right, to the extent permitted by law.
Participating Insurance Companies shall be responsible for assuring that each
of their separate accounts participating in the TRUST calculates voting
privileges in a manner consistent with other Participating Insurance Companies
and as required by the Exemptive Order.
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. Except to the extent provided
in sections 7.2 and 7.3 hereof, 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") 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 reasonable legal and other expenses), to which
the Indemnified Parties may become subject under any statute, regulation, at
common law or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof) or settlements are related to the
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
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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 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 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 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
(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
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party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation, unless (i) the indemnifying party
and the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parities by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
7.4 Indemnification by ADVISER. ADVISER agrees 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") against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of ADVISER 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 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 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 ADVISER 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
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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 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
(d) arise as a result of (i) a failure by TRUST or ADVISER 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 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 ADVISER 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 ADVISER 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 ADVISER 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 ADVISER of any such claim shall not
relieve ADVISER 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, ADVISER shall be entitled to participate at its own
expense in the defense thereof. ADVISER also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from ADVISER to such party of ADVISER's election to assume the
defense thereof, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and 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, unless (i) the indemnifying party and the
Indemnified Party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
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Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
7.7 Indemnification by TRUST. TRUST agrees 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") 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:
(i) arise as a result of any failure by the TRUST to provide the
services and furnish the materials under the terms of this
Agreement (including a failure to comply with the
diversification requirements of Section 817 (h) of the Code);
or
(ii) 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.
7.8 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, unless (i)
the indemnifying party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
Article VIII. TERM; TERMINATION
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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 90 days' notice, 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 with said termination to be effective upon receipt
of notice;
(c) At the option of LIFE COMPANY, upon the institution of
formal proceedings against TRUST or ADVISER 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 or ADVISER's ability to meet and perform TRUST's or
ADVISER'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;
(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) 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 or ADVISER's
material
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breach of any 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 or ADVISER;
(h) At the option of TRUST, upon LIFE COMPANY's material breach
of any 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 upon the receipt of any
necessary regulatory approvals or the vote of the Contract
owners having an interest in a Separate Account (or any
subaccount) to substitute the shares of another investment
company for the corresponding Portfolio shares of the TRUST
in accordance with the terms of the Contracts for which
those Portfolio shares have been selected to serve as the
underlying investment media. LIFE COMPANY shall give 60
days prior written notice to TRUST of the date of any
proposed vote or other action taken to replace TRUST's
shares;
(k) At the option of TRUST, upon a determination of TRUST's
Board, or a majority of the disinterested Board members,
that an irreconcilable material conflict exists;
(l) 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, COMPANY may require TRUST to continue to make available
additional TRUST shares, as provided below, 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, the owners of the
Existing Contracts, 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, LIFE COMPANY as
promptly as is practicable under the circumstances, shall notify TRUST whether
LIFE COMPANY elects to continue to make TRUST shares available after such
termination. If LIFE COMPANY shares continue to be made available after such
termination, the provisions of this Agreement shall remain in effect and
thereafter either TRUST or LIFE COMPANY 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, LIFE
COMPANY shall not redeem the shares
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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 Investors Services Group, Inc.
0 Xxxxxxxx Xxxxx
00 Xxxxx Xxxxxx, Xxxx Xxxx X00000
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxx, Legal Department
Copy to:
BT Xxxx Xxxxx
0 Xxxxx Xxxxxx
Mail Stop 1-18-6
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Mutual Fund Services
If to ADVISER:
Bankers Trust Company - U.S. Investment Management
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxx Xxxxxxxxxx, Mail Stop 2355
If to LIFE COMPANY:
Western Reserve Life Insurance Company of Ohio
0000 Xxxxxxxx Xxxx X.X.
Xxxxx Xxxxxx, Xxxx 00000
Attn: Extraordinary Markets Individual Division
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Notice shall be deemed given on the date of receipt by the addressee
as evidenced by the return receipt.
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.
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.
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10.9 Each party represents that the execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly authorized by all necessary corporate or trust action, as applicable,
by such party, and when so executed and delivered this Agreement will be the
valid and binding obligation of such party enforceable in accordance with its
terms.
10.10 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.
10.11 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:
Title: Securtary
BANKERS TRUST COMPANY
By: /s/ XXXXX X. XXXXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
WESTERN RESERVE LIFE ASSURANCE CO.
OF OHIO
By: /s/ XXXX X. XXXXXX
--------------------------------
Name: Xxxx X. Xxxxxx
Title: President
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APPENDIX A
Small Cap Fund
International Equity Fund
EAFE Equity Index Fund
Equity 500 Index Fund
Small Cap Index Fund
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APPENDIX B
Small Cap Fund
International Equity Fund
EAFE Equity Index Fund
Equity 500 Index Fund
Small Cap Index Fund
21
