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EXHIBIT 8(j)
TRUST PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the 9th day of July, 1997, by and among
SAFECO Resource Series Trust, an unincorporated business trust organized under
the laws of the State of Delaware ("Trust"), SAFECO Asset Management Company, a
Washington corporation ("Adviser"), and IL Annuity and Insurance Company ("Life
Company"), a life insurance company organized under the laws of the State of
Massachusetts.
WHEREAS, Trust is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended ("'40
Act"), as an open-end, diversified management investment company; and
WHEREAS, Trust is organized as a series fund comprised of several
portfolios, with those then currently available under this Agreement being
listed on Schedule A hereto, as it may be amended from time to time
("Portfolios"); 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 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 obtained 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(a)(2), 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 (File No. 812-9658)
("Exemptive Order"); and
WHEREAS, Life Company has established or will establish one or more
separate accounts ("Separate Accounts") to offer Variable Contracts and desires
to have the Trust as one of the underlying funding vehicles for certain
Variable Contracts to be issued by Life Company as set forth on Schedule A
hereto, as it may be amended from time to time; and
WHEREAS, Adviser is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940, as amended, and acts 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
to Life Company at 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, as provided in its Registration Statement, to make
available to the Separate Accounts, and any sub-accounts thereof, shares of the
selected Portfolios as listed on Schedule B hereto, as it may be amended from
time to time, for investment of purchase payments of Variable Contracts
allocated to the designated Separate Accounts.
1.2 Trust agrees to sell to Life Company those shares of the
selected Portfolios which Life Company orders. Orders which are sent by Life
Company to Trust and received by Trust by 8:00 a.m. Pacific time, will be
executed by Trust at the net asset value determined on the prior Business Day.
Any orders received by Trust after 8:00 a.m. and prior to 1:00 p.m. Pacific
time, will be executed by Trust at the net asset value next computed pursuant
to the rules of the SEC. For purposes of this Section 1.2, Trust hereby
appoints Life Company as its designee for receipt of such orders from the
designated Separate Account and receipt by such designee shall constitute
receipt by Trust; provided that 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 receipt of such orders by 8:00 a.m. Pacific time on the
next following 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
each Business Day 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. For purposes
of this Section 1.3, Life Company hereby appoints Trust as its designee for
receipt of requests for redemption from the designated Separate Account and
receipt by such designee shall constitute receipt by Trust; provided that 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 receipt of such
request for redemption by 8:00 a.m. Pacific time on the next following Business
Day.
1.4 In the event that Life Company's order results in a net purchase
of Portfolio shares, Life Company shall pay for Portfolio shares by 11:00 a.m.
Pacific time on the same Business Day that the notice of order to purchase
Trust shares is made in accordance with the provisions of this section. If
Life Company's order requests a net redemption resulting in a payment of
redemption proceeds to Life Company, Trust shall normally pay and transmit the
proceeds of redemptions of Portfolio shares by 11:00 a.m. Pacific time on the
same Business Day that the notice of a redemption order is received in
accordance with the provisions of this Agreement, unless doing so would require
Trust to dispose of Portfolio securities or otherwise incur additional costs.
In any event, proceeds shall be wired to Life Company within three (3) Business
Days or such longer period permitted by the '40 Act or the rules, orders or
regulations thereunder, and Trust shall
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notify the person designated in writing by Life Company as the recipient for
such notice of such delay by 1:00 p.m. Pacific time 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 the same Business Day that Life Company transmits such
order to Trust. Any payment made pursuant to this Section 1.4 shall be in
federal funds transmitted by wire.
1.5 Trust will provide to Life Company closing net asset value per
share for the selected Portfolio(s) at the close of trading each Business Day.
In any event, Trust shall use its best efforts to make the net asset value per
share for each Portfolio available by 3:30 p.m. Pacific time each Business Day,
and as soon as reasonably practicable after the net asset value per share for
each Portfolio is calculated, and shall calculate such net asset value in
accordance with the Trust's Registration Statement. Any material error in the
calculation of the net asset value of the Portfolios shall be reported
immediately 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. Pacific 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. Orders
will be sent directly, via facsimile (or by such other means as Trust and Life
Company may agree in writing), to Trust or such other person as the Trust may
designate.
1.7 Trust agrees that all shares of the Portfolios 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) of the Internal Revenue Code of 1986,
as amended ("Code") and Treasury Regulation 1.817-5. Shares of the Portfolios
will not be sold directly to the general public.
1.8 Trust shall furnish, on or before the ex-dividend date, notice
to Life Company of any income dividends or capital gain distributions payable
on the shares of any Portfolio. 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.
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 if such action is required by law or by
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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 Portfolio(s) will be recorded in appropriate
book entry titles for the Separate Accounts.
1.11 Each party has the right to rely on information or confirmations
provided by each other party (or by any affiliate of each other party) and
shall not be liable in the event that an error is a result of any
misinformation supplied by any other party or any such affiliate. If a mistake
is caused in supplying such information or confirmations, which results in a
reconciliation with incorrect information, the amount required to make a
Variable Contract owner's or participant's account whole shall be borne by the
party providing the incorrect information.
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 its state of
domicile and that it has legally and validly established each Separate Account
as a segregated asset account under such laws, and that IL Securities, Inc.,
the principal underwriter for the Variable Contracts, is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended.
2.2 Life Company represents and warrants that it has registered or,
prior to any issuance or sale of the Variable Contracts, will register and
maintain the registration of each Separate Account as a unit investment trust
in accordance with the provisions of the '40 Act, 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, as amended ("'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 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.
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2.5 Life Company represents and warrants that its directors,
officers, and employees, if any, dealing with the money and/or securities of
Trust are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage in an amount not less than $2 million. The aforesaid
bond shall include coverage for larceny and embezzlement and shall be issued by
a reputable bonding company. Life Company agrees that any amounts received
under such bond that arise from the arrangements contemplated by this Agreement
shall be held by Life Company for the benefit of Trust.
2.6 Adviser and Trust represent and warrant that their directors,
officers, and employees, if any, dealing with the money and/or securities of
Trust are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage in an amount not less than the minimal coverage as
required currently by Rule 17g-1 of the '40 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include coverage for
larceny and embezzlement and shall be issued by a reputable bonding company.
Adviser and Trust agree that any amounts received under such bond that arise
from the arrangements contemplated by this Agreement shall be held by them for
the benefit of Trust.
2.7 Adviser and Trust make no representation as to whether any
aspect of Trust's operations (including, but not limited to, fees and expenses
and investment policies) complies with the insurance laws or regulations of the
various states. Trust agrees that it will make every reasonable effort to
remain in material compliance with the applicable laws of such states of whose
requirements Life Company informs it.
2.8 Trust represents and warrants that it is duly organized and in
good standing under the laws of its state of domicile and that it is in
compliance and will comply in all material respects with the '40 Act.
2.9 Trust represents and warrants that Trust shares offered and sold
pursuant to this Agreement will be registered under the '33 Act 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 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.
2.10 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 or might not
so comply and will immediately take all reasonable steps to adequately
diversify the Portfolio to achieve compliance.
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2.11 Trust represents and warrants that each Portfolio invested in by
the Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year 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.
2.12 Adviser represents and warrants that it is and will remain duly
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended, and licensed in all material respects under all applicable federal
and state securities laws and shall perform its obligations hereunder in
compliance in all material respects with any applicable state and federal laws.
Article III. PROSPECTUS AND PROXY STATEMENTS
3.1 Trust shall prepare and be responsible for filing with the SEC
and any state regulators requiring such filing all shareholder reports,
notices, proxy materials (or similar materials such as voting instruction
solicitation 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 At least annually, Trust or its designee shall provide Life
Company with the current prospectus, statement of additional information and
any supplements thereto for the shares of the Portfolios listed on Schedule A,
in the form of "camera ready" copy as set in type or, at the request of Life
Company, as a diskette in the form sent to the financial printer. Trust shall
be responsible for providing the prospectus and/or statement of additional
information in the format (i.e., "camera ready" or diskette) in which it is
accustomed to formatting prospectuses and/or statements of additional
information and shall bear the expense of providing the prospectus and/or
statement of additional information, and any supplements thereto, 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 and/or
statements of additional information. At Life Company's option and expense,
once a year (or more frequently if the prospectus and/or statement of
additional information for the shares is supplemented or amended), Life Company
may cause Trust's prospectus and/or statement of additional information to be
printed separately and/or together in one document with the prospectus and/or
statement of additional information for other investment companies and/or for
the Variable Contracts. Life Company shall be responsible for the costs of
printing Trust's prospectus and/or statement of additional information, either
separately or in combination as aforesaid, and of distribution to existing
Variable Contract owners ("Owners") whose Variable Contracts are funded by such
shares and to prospective purchasers of Variable Contracts.
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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 Trust or the
Portfolios promptly after the filing of each such document with the SEC or
other regulatory authority. The prospectus for the Portfolios shall state that
the statement of additional information for the Portfolios is available from
Trust or its designated agent, and such statement shall be provided free of
charge to any Variable Contract Owner or participant who requests a copy. 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 currently does not make and does not intend to make any
payments to finance distribution expenses pursuant to Rule 12b-1 under the '40
Act or otherwise, although it may make such payments in the future. To the
extent that it decides to finance distribution expenses pursuant to Rule 12b-1,
Trust undertakes to have its Board of Trustees, a majority of whom are not
interested persons of Trust, formulate and approve any plan under Rule 12b-1 to
finance distribution expenses. Trust will notify Life Company of the adoption
of any plan under Rule 12b-1.
Article IV. SALES MATERIALS
4.1 Life Company will furnish, or will cause to be furnished, to
Trust and Adviser for review, each piece of sales literature or other
promotional material in which Trust, or any selected Portfolio thereof, or
Adviser is named, before such material is submitted to any regulatory body for
review, and in any event, at least fifteen (15) Business Days prior to its use.
No such material will be used if Trust or Adviser objects to its use in writing
within fifteen (15) Business Days after receipt of such material.
4.2 Advertising and sales literature with respect to Life Company,
the Separate Accounts and/or the Variable Contracts prepared by Trust, Adviser
or any affiliate thereof will be submitted to Life Company for review before
such material is submitted to any regulatory body for review, and in any event,
at least fifteen (15) Business Days prior to its use. No such material will be
used if Life Company objects to its use in writing within fifteen (15) 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
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Contracts, or in sales literature or other promotional material approved by
Life Company or its designee, without 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 reports of
the Trust or reports prepared for distribution to owners of shares of the Trust
or for Owners of the Variable Contracts, or in sales literature or other
promotional material approved by Trust or its designee, without 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, electronic media,
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 or the '33
Act.
4.6 Trust and Adviser agree and acknowledge that Life Company has
applied for trademark protection of the marks "Visionary", "Visionary Variable
Annuity", and "Visionary Choice Variable Annuity" (collectively, the "Visionary
Marks") and that Life Company believes it will be granted exclusive rights to
the Visionary Marks in the field of insurance underwriting. Trust and Adviser
further agree and acknowledge that all use of any designation comprised in
whole or in part of the Visionary Marks under this Agreement shall inure to the
benefit of Life Company. Except as provided in Section 4.2, neither Trust nor
Adviser shall use any Visionary Marks on behalf of itself or any affiliate in
any registration statement, advertisement, sales literature or other materials
without the prior written consent of Life Company. Upon termination of this
Agreement for any reason, Trust and Adviser shall cease all use of any
Visionary Marks as soon as reasonably practicable.
Article V. ADMINISTRATION OF SEPARATE ACCOUNTS
5.1 Administrative services to Owners/participants of the Variable
Contracts issued by Life Company shall be the responsibility of Life Company
and shall not be the responsibility of Trust or Adviser. Adviser recognizes
Life Company as the sole shareholder of fund shares issued under this
Agreement. From time to time, Adviser may pay amounts from its past profits to
Life Company for providing certain administrative services for Trust or its
Portfolios, or for providing
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Owners with other services that relate to Trust. These services may include,
among other things, sub-accounting services, answering inquiries of Owners
regarding the Portfolios, transmitting, on behalf of Trust, proxy statements,
annual reports, updated prospectus and other communications to Variable
Contract Owners regarding Trust and its Portfolios and such other related
services as Trust and Life Company may from time to time agree. In
consideration of the savings resulting from such arrangement, and to compensate
Life Company for its costs, Adviser agrees to pay to Life Company an amount
equal to 25 basis points (0.25%) per annum of the average aggregate amount
invested by Life Company in the Portfolios under this Agreement. Payment of
such amounts by Adviser will not increase the fees paid by Trust, the
Portfolios or their shareholders.
5.2 The parties agree that Adviser's payments to Life Company are
for administrative services only and do not constitute payment in any manner
for investment advisory services or for costs of distribution.
5.3 For the purposes of computing the administrative fee
reimbursement contemplated by this Article V, the average aggregate amount
invested by Life Company over a one-month period shall be computed by totaling
Life Company's aggregate investment (share net asset value multiplied by total
number of shares held by Life Company) on each Business Day during the month
and dividing by the total number of Business Days during each month.
5.4 Adviser will calculate the reimbursement of administrative
expenses at the end of each calendar quarter and will make such reimbursement
to Life Company within thirty (30) days thereafter. The reimbursement check
will be accompanied by a statement showing the calculation of the monthly
amounts payable by Adviser and such other supporting data as may be reasonably
requested by Life Company.
Article VI. POTENTIAL CONFLICTS
6.1 Life Company has received a copy of the amended and restated
application for exemptive relief filed by Trust and certain affiliates on
December 20, 1995 with the SEC and the Exemptive Order issued by the SEC on
January 17, 1996, in response thereto. Life Company has reviewed the
conditions to the requested relief set forth in such application for exemptive
relief.
6.2 The Board will monitor Trust for the existence of any material
irreconcilable conflict between the interests of Variable Contract Owners of
all separate accounts investing in Trust. A material irreconcilable 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/participants; (f) a decision by a Participating Insurance Company to
disregard the voting
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instructions of Variable Contract Owners/participants and (g) if applicable, a
decision by a Qualified Plan to disregard the voting instructions of plan
participants.
6.3 Life Company will report any potential or existing conflicts 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,
including, but 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.
6.4 If a majority of the Board or majority of its disinterested
members 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 members),
will take any steps necessary to remedy or eliminate the material
irreconcilable conflict as determined by a majority of the Board's
disinterested members, 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 an alternative investment 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 6.4, a majority of the disinterested
members of the Board shall determine whether or not any proposed action
adequately remedies any material irreconcilable 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 6.4 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 material irreconcilable conflict.
6.5 Trust shall give Life Company prompt written notice of the
Board's determination of the existence of a material irreconcilable conflict
and its implications.
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6.6 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 under this Article VI. Such reports,
materials and data shall be submitted more frequently if deemed appropriate by
the Board.
Article VII. VOTING
7.1 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, when applicable, will distribute to Variable
Contract Owners and participants all proxy material furnished by Adviser and
will vote shares of the Portfolios 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 it votes those shares for
which it has received voting instructions. Life Company reserves the right to
disregard the voting instructions of participants/Owners to the extent such
action is permitted by Rules 6e-2 or 6e-3(T) under the '40 Act and is permitted
under applicable state insurance laws affecting Trust.
7.2 Trust shall notify Life Company of Trust's intent to file proxy
solicitation materials with the SEC as soon as practicable prior to such
filing. Life Company and its agents shall not oppose or interfere with the
solicitation of proxies for Portfolio shares held for Variable Contract Owners
and participants, unless required to by applicable law. Trust shall notify
Life Company of any shareholder proposal upon its inclusion in the proxy
solicitation materials filed with the SEC.
7.3 Trust shall comply with all provisions of the '40 Act requiring
voting by shareholders, and in particular Trust will either provide for annual
meetings or comply with Section 16(c) of the '40 Act (although Trust is not one
of the trusts described in Section 16(c) of that Act) as well as Sections 16(a)
and, if and when applicable, 16(b). Further, Trust shall act in accordance
with the SEC's interpretation of the requirements of Section 16(a) with respect
to periodic elections of trustees and with whatever rule the SEC may promulgate
with respect thereto.
7.4 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.
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Article VIII. INDEMNIFICATION
8.1 Indemnification by Life Company. Life Company agrees to
indemnify and hold harmless Trust, Adviser and each of their 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 Sections 8.1, 8.2, 8.3
and 8.4 of this Article VIII) 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
(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
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 or sales literature of 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 to Life Company or an
affiliate thereof by or on behalf of Trust for use in the
registration statement or prospectus for the Variable Contracts
or in the Variable Contracts or sales literature (or any
amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or Trust shares; or
(b) arise out of or as a result of 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 an affiliate thereof) or
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 to Trust for inclusion
therein by or on behalf of Life Company; or
(d) arise out of any failure by Life Company to provide in all
material respects the specified 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.
8.2 Life Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of 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 or to Trust or Adviser, whichever is applicable.
8.3 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 on any designated
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 thereof. 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.
8.4 Trust or Adviser agrees promptly to notify Life Company of the
commencement of any litigation or proceedings against it or any of its
officers, trustees or directors in connection with the issuance or sale of the
shares of the selected Portfolio(s) or the operations of the Trust.
8.5 Indemnification by Trust and Adviser. Trust and Adviser 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 the purposes of Sections 8.5, 8.6, 8.7 and 8.8 of
this Article VIII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of Trust or
Adviser, which consent shall not be unreasonably withheld) or 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
shares or the Variable Contracts and:
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(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 to Adviser or Trust
or an affiliate thereof 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 as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Variable Contracts not supplied by Trust, Adviser or an
affiliate thereof) or wrongful conduct of Trust or Adviser or
persons under their control, with respect to the sale or
distribution of 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 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 to Life Company for
inclusion therein by or on behalf of Trust; or
(d) arise out of any failure by Trust or Adviser to provide in all
material respects the specified services and furnish the
materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to
comply with the diversification requirements specified in
Section 2.10 of this Agreement); 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.
8.6 Trust or Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by reason
of 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 or to Life Company or the Separate Accounts, whichever is applicable.
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8.7 Trust or 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 Trust or 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 on any designated
party (or after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify Trust or Adviser 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
than on account of this indemnification provision. In case any such action is
brought against an Indemnified Party, Trust or Adviser shall be entitled to
participate, at its own expense, in the defense thereof. Trust or 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 Trust or 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 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.
8.8 Life Company agrees promptly to notify Trust or Adviser of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Variable Contracts
or the operation of each Separate Account.
Article IX. TERM; TERMINATION
9.1 This Agreement shall be effective as of the date hereof and
shall continue in force until terminated in accordance with the provisions
herein.
9.2 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, 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 (10) 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 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
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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;
(d) At the option of Trust, upon the institution
of formal proceedings against Life Company or
the principal underwriter for the Variable
Contracts 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 federal and/or state law and any
applicable rules and regulations thereunder,
or such law precludes the use of such shares
as the underlying investment media for
Variable Contracts issued or to be issued by
Life Company. Termination shall be effective
upon such occurrence without notice;
(f) Upon the receipt of any necessary regulatory
approvals, or requisite vote of Variable
Contract Owners or participants having an
interest in the Portfolios, to substitute for
shares of the Portfolios the shares of
another investment company in accordance with
the terms of the applicable Variable
Contracts. Life Company shall give sixty
(60) days' written notice to Adviser of any
proposed request for regulatory approvals or
vote to replace the Portfolios' shares;
(g) 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;
(h) 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
thirty (30) days after written notice of such
breach is delivered to Trust;
(i) 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 thirty (30)
days after written notice of such breach is
delivered to Life Company;
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(j) At the option of Trust, if the Variable
Contracts are not registered, issued or sold
in accordance with applicable federal and/or
state law and any applicable rules and
regulations thereunder. Termination shall be
effective immediately upon such occurrence
without notice; and
(k) 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.
9.3 If the need for substitution of the shares of another investment
company, pursuant to Section 26(b) of the '40 Act, arises out of the failure of
the Portfolios' shares to be registered, issued or sold to Life Company in
conformance with federal law, or such law precludes the use of shares of the
Portfolios as underlying investment media for Variable Contracts issued or to
be issued by the Company as a result of a failure of Trust to comply with such
law, the expenses of obtaining such order shall be reimbursed by Adviser.
Adviser shall cooperate with Life Company in connection with such application.
9.4 Notwithstanding any termination of this Agreement pursuant to
Section 9.2 hereof, and unless the further sale of shares of the Portfolios is
proscribed by applicable law or the SEC or other regulatory body, Trust will
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 9.2 hereof, Trust and
Adviser, as promptly as is practicable under the circumstances, shall notify
Life Company whether Trust under applicable law may continue to make Trust
shares available after such termination. If Trust shares continue to be made
available after such termination, the provisions of this Agreement shall remain
in effect and thereafter either Trust or Life Company may terminate the
Agreement, as so continued pursuant to this Section 9.4, upon sixty (60) days'
prior written notice to the other party.
9.5 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 sixty (60) days after Life Company shall have notified
Trust of its intention to do so.
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Article X. 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 Life Company: IL Annuity and Insurance Company
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Trust: SAFECO Resource Series Trust
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Controller
If to Adviser: SAFECO Asset Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Division
Notice shall be deemed given on the date of receipt by the addressee
as evidenced by the return receipt.
Article XI. MISCELLANEOUS
11.1 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.
11.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
11.3 This Agreement may not be assigned by any party without the
written consent of all parties.
11.4 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.
11.5 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Washington.
It shall also be subject to the
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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.
11.6 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.
11.7 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.
11.8 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights, remedies
and obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
11.9 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 Life Company.
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IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Trust Participation Agreement as of the date and year
first above written.
SAFECO Resource Series Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Controller
SAFECO Asset Management Company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
IL Annuity and Insurance Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
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SCHEDULE A
SAFECO Resource Series Trust - Portfolios
Equity Portfolio
Growth Portfolio
IL Annuity and Insurance Company - Variable Contracts
Visionary Choice Variable Annuity
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SCHEDULE B
Separate Accounts and Sub-Accounts Selected Portfolios
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IL Annuity and Insurance Company Separate Account I
Safeco Resource Equity Portfolio Sub-Account Equity Portfolio
Safeco Resource Growth Portfolio Sub-Account Growth Portfolio
